10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C.  20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2015

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 or 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 of 1934 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   ☒   NO   ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

YES   ☒   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 ☒ 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 Exchange Act.)

YES   ☐   NO   ☒

As of November 6, 2015, there were 11,362,149 shares of the registrant’s Common Stock, par value $0.10 per share, outstanding.

Part I – Financial Information		3
	Item 1. Financial Statements	3
	Consolidated Balance Sheets	3
	Consolidated Statements of Earnings (unaudited)	4
	Consolidated Statements of Comprehensive Income (unaudited)	5
	Consolidated Statement of Shareholders’ Equity (unaudited)	6
	Consolidated Statements of Cash Flows (unaudited)	7
	Notes to Interim Consolidated Financial Statements	8
	Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operation.	29
	Forward-Looking Statements	29
	Critical Accounting Policies	30
	Results of Operations	30
	Analysis of Balance Sheet	37
	Liquidity and Capital	38
	Asset Quality	40
	Item 3. Quantitative and Qualitative Disclosures About Market Risk.	43
	Item 4. Controls and Procedures.	43
Part II – Other Information		44
	Item 1. Legal Proceedings.	44
	Item 1A. Risk Factors.	44
	Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.	44
	Item 3. Defaults Upon Senior Securities.	44
	Item 4. Mine Safety Disclosures.	44
	Item 5. Other Information.	44
	Item 6. Exhibits.	45

Part I – Financial Information

Item 1. Financial Statements.

MidSouth Bancorp, Inc. and Subsidiaries Consolidated Balance Sheets (dollars in thousands, except share data)
	September 30, 2015 (unaudited)			December 31, 2014 (audited)
Assets
Cash and due from banks, including required reserves of $8,782 and $10,019, respectively	$	38,386		$	45,142
Interest-bearing deposits in banks	82,538			39,031
Federal funds sold	4,513			2,699
Securities available-for-sale, at fair value (cost of $281,885 at September 30, 2015 and $272,588 at December 31, 2014)	285,485			276,984
Securities held-to-maturity (fair value of $122,488 at September 30, 2015 and $141,593 at December 31, 2014)	121,043			141,201
Other investments	12,063			9,990
Loans	1,301,452			1,284,431
Allowance for loan losses	(18,939		)	(11,226		)
Loans, net	1,282,513			1,273,205
Bank premises and equipment, net	68,718			69,958
Accrued interest receivable	6,655			6,635
Goodwill	42,171			42,171
Intangibles	6,004			6,834
Cash surrender value of life insurance	13,548			13,659
Other real estate	4,661			4,234
Other assets	6,010			4,997
Total assets	$	1,974,308		$	1,936,740
Liabilities and Shareholders’ Equity
Liabilities:
Deposits:
Non-interest-bearing	$	406,118		$	390,863
Interest-bearing	1,137,303			1,194,371
Total deposits	1,543,421			1,585,234
Securities sold under agreements to repurchase	92,085			62,098
Short-term Federal Home Loan Bank advances	70,000			25,000
Long-term Federal Home Loan Bank advances	25,958			26,277
Junior subordinated debentures	22,167			22,167
Other liabilities	6,713			6,952
Total liabilities	1,760,344			1,727,728
Commitments and contingencies
Shareholders’ equity:
Series B Preferred stock, no par value; 5,000,000 shares authorized, 32,000 shares issued and outstanding at September 30, 2015 and December 31, 2014	32,000			32,000
Series C Preferred stock, no par value; 100,000 shares authorized, 91,256 shares issued and outstanding at September 30, 2015 and 93,680 shares issued and outstanding at December 31, 2014	9,126			9,368
Common stock, $0.10 par value; 30,000,000 shares authorized, 11,361,839 and 11,340,736 shares issued and outstanding, respectively	1,136			1,149
Additional paid-in capital	110,482			112,744
Unearned ESOP shares	(1,155		)	(250		)
Accumulated other comprehensive income	2,340			2,857
Treasury stock – 0 and 150,967 shares at September 30, 2015 and December 31, 2014, respectively	—			(3,295		)
Retained earnings	60,035			54,439
Total shareholders’ equity	213,964			209,012
Total liabilities and shareholders’ equity	$	1,974,308		$	1,936,740

See notes to unaudited consolidated financial statements.

3

MidSouth Bancorp, Inc. and Subsidiaries Consolidated Statements of Earnings (unaudited) (in thousands, except per share data)
	Three Months Ended September 30,				Nine Months Ended September 30,
	2015		2014		2015		2014
Interest income:
Loans, including fees	$	17,992	$	18,273	$	54,314	$	53,525
Securities and other investments:
Taxable	1,850		1,965		5,628		6,164
Nontaxable	536		652		1,679		2,007
Federal funds sold	1		2		5		4
Time and interest bearing deposits in other banks	40		15		112		42
Other investments	113		109		273		268
Total interest income	20,532		21,016		62,011		62,010
Interest expense:
Deposits	883		859		2,751		2,588
Securities sold under agreements to repurchase	249		210		721		588
Other borrowings and payables	109		108		309		320
Junior subordinated debentures	150		327		451		994
Total interest expense	1,391		1,504		4,232		4,490
Net interest income	19,141		19,512		57,779		57,520
Provision for loan losses	3,800		1,175		10,900		2,925
Net interest income after provision for loan losses	15,341		18,337		46,879		54,595
Non-interest income:
Service charges on deposits	2,231		2,556		6,488		7,385
Gain on sale of securities, net	—		—		1,243		128
ATM and debit card income	1,823		1,808		5,529		5,375
Income from death benefit on BOLI/executive officer life insurance	—		—		160		3,000
Other charges and fees	786		1,830		2,553		3,484
Total non-interest income	4,840		6,194		15,973		19,372
Non-interest expenses:
Salaries and employee benefits	7,653		8,287		23,792		25,588
Occupancy expense	3,815		3,834		11,365		11,314
FDIC insurance	391		269		1,003		783
Other	4,705		5,467		13,696		14,997
Total non-interest expenses	16,564		17,857		49,856		52,682
Income before income taxes	3,617		6,674		12,996		21,285
Income tax expense	1,028		2,202		3,817		5,839
Net earnings	2,589		4,472		9,179		15,446
Dividends on preferred stock	172		174		517		524
Net earnings available to common shareholders	$	2,417	$	4,298	$	8,662	$	14,922
Earnings per share:
Basic	$	0.22	$	0.38	$	0.77	$	1.32
Diluted	$	0.21	$	0.37	$	0.75	$	1.28
Weighted average number of shares outstanding:
Basic	11,312		11,314		11,321		11,283
Diluted	11,831		11,955		11,848		11,904
Dividends declared per common share	$	0.09	$	0.09	$	0.27	$	0.26

See notes to unaudited consolidated financial statements.

4

MidSouth Bancorp, Inc. and Subsidiaries Consolidated Statements of Comprehensive Income (unaudited) (in thousands)
	Three Months Ended September 30,						Nine Months Ended September 30,
	2015			2014			2015			2014
Net earnings	$	2,589		$	4,472		$	9,179		$	15,446
Other comprehensive income (loss), net of tax:
Unrealized gains (losses) on securities available-for-sale:
Unrealized holding gains (losses) arising during the year	1,717			(405		)	447			4,116
Less: reclassification adjustment for gains on sales of securities available-for-sale	—			—			(1,243		)	(128		)
Total other comprehensive income (loss), before tax	1,717			(405		)	(796		)	3,988
Income tax effect related to items of other comprehensive income (loss)	(601		)	142			279			(1,396		)
Total other comprehensive income (loss), net of tax	1,116			(263		)	(517		)	2,592
Total comprehensive income	$	3,705		$	4,209		$	8,662		$	18,038

See notes to unaudited consolidated financial statements.

5

MidSouth Bancorp, Inc. and Subsidiaries Consolidated Statement of Shareholders’ Equity (unaudited) For the Nine Months Ended September 30, 2015 (in thousands, except share and per share data)
	Preferred Stock					Common Stock					Additional Paid-in Capital			Unearned ESOP Shares			Accumulated Other Comprehensive Income			Treasury Stock			Retained Earnings
	Shares		Amount			Shares		Amount																		Total
Balance - December 31, 2014	125,680		$	41,368		11,491,703		$	1,149		$	112,744		$	(250	)	$	2,857		$	(3,295	)	$	54,439		$	209,012
Net earnings	—		—			—		—			—			—			—			—			9,179			9,179
Dividends on Series B and Series C preferred stock	—		—			—		—			—			—			—			—			(517		)	(517		)
Dividends on common stock, $0.27 per share	—		—			—		—			—			—			—			—			(3,066		)	(3,066		)
Conversion of Series C preferred stock to common stock	(2,424	)	(242		)	13,448		1			241			—			—			—			—			—
Reclassification of treasury stock per the LBCA (1)	—		—			(150,967	)	(15		)	(3,280		)							3,295						—
Increase in ESOP obligation, net of repayments	—		—			—		—			—			(905		)	—			—			—			(905		)
Exercise of stock options	—		—			7,655		1			98			—			—			—			—			99
Tax benefit resulting from distribution from Directors Deferred Compensation Plan	—		—			—		—			420			—			—			—			—			420
Stock option and restricted stock compensation expense	—		—			—		—			259			—			—			—			—			259
Change in accumulated other comprehensive income	—		—			—		—			—			—			(517		)	—			—			(517		)
Balance – September 30, 2015	123,256		$	41,126		11,361,839		$	1,136		$	110,482		$	(1,155	)	$	2,340		$	—		$	60,035		$	213,964

See notes to unaudited consolidated financial statements.

⁽¹⁾ See Note 1 for an explanation of the elimination of treasury stock under the Louisiana Business Corporation Act.

6

MidSouth Bancorp, Inc. and Subsidiaries Consolidated Statements of Cash Flows (unaudited) (in thousands)
	For the Nine Months Ended September 30,
	2015			2014
Cash flows from operating activities:
Net earnings	$	9,179		$	15,446
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation	4,652			4,518
Accretion of purchase accounting adjustments	(1,003		)	(1,924		)
Provision for loan losses	10,900			2,925
Deferred tax (benefit) expense	(1,633		)	2,034
Amortization of premiums on securities, net	2,141			2,432
(Accretion) amortization of other investments	(1		)	4
Stock option expense	253			355
Restricted stock expense	6			—
Net gain on sale of investment securities	(1,243		)	(128		)
Net gain on sale of other real estate owned	(13		)	(1,081		)
Net write down of other real estate owned	111			31
Net (gain) loss on sale/disposal of premises and equipment	(8		)	232
Income recognized from death benefit on bank owned life insurance	(160		)	—
Change in accrued interest receivable	(20		)	45
Change in accrued interest payable	(48		)	(240		)
Change in other assets & other liabilities, net	481			(2,006		)
Net cash provided by operating activities	23,594			22,643
Cash flows from investing activities:
Proceeds from maturities and calls of securities available-for-sale	55,874			33,466
Proceeds from maturities and calls of securities held-to-maturity	19,299			10,778
Proceeds from sale of securities available-for-sale	40,277			22,153
Purchases of securities available-for-sale	(105,486		)	—
Purchases of securities held-to-maturity	—			(1,104		)
Proceeds from redemptions of other investments	—			150
Redemption of Capital Securities related to MidSouth Statutory Trust I	—			217
Proceeds from sale of other investments	898			—
Purchases of other investments	(2,970		)	(567		)
Net change in loans	(20,669		)	(111,329		)
Proceeds from bank owned life insurance death benefit	498			—
Purchases of premises and equipment	(3,439		)	(4,265		)
Proceeds from sale of premises and equipment	35			743
Proceeds from sale of other real estate owned	857			3,315
Purchase of other real estate owned	(351		)	—
Net cash used in investing activities	(15,177		)	(46,443		)
Cash flows from financing activities:
Change in deposits	(41,728		)	2,244
Change in securities sold under agreements to repurchase	29,987			17,048
Borrowings on Federal Home Loan Bank advances	150,000			10,000
Repayments of Federal Home Loan Bank advances	(105,047		)	(45		)
Redemption of MidSouth Statutory Trust I	—			(7,217		)
Repayments of notes payable	—			(1,000		)
Purchase of treasury stock	—			(9		)
Proceeds and tax benefit from exercise of stock options	99			611
Tax benefit resulting from distribution from Directors Deferred Compensation Plan	420			—
Payment of dividends on preferred stock	(519		)	(530		)
Payment of dividends on common stock	(3,064		)	(2,818		)
Net cash provided by financing activities	30,148			18,284
Net increase (decrease) in cash and cash equivalents	38,565			(5,516		)
Cash and cash equivalents, beginning of period	86,872			59,731
Cash and cash equivalents, end of period	$	125,437		$	54,215
Supplemental cash flow information:
Interest paid	$	4,280		$	4,730
Income taxes paid	5,180			5,815
Noncash investing and financing activities:
Transfer of loans to other real estate	1,031			317
Change in accrued common stock dividends	3			121
Change in accrued preferred stock dividends	(2		)	(6		)
Financed sales of other real estate	—			84
Net change in loan to ESOP	(905		)	(267		)

See notes to unaudited consolidated financial statements.

7

MidSouth Bancorp, Inc. and Subsidiaries

Notes to Interim Consolidated Financial Statements

September 30, 2015

(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 (“GAAP”), the financial position of MidSouth Bancorp, Inc. (the “Company”) and its subsidiaries as of September 30, 2015 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 2014 Annual Report on Form 10-K.

The results of operations for the nine-month period ended September 30, 2015 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 GAAP 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 GAAP 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 2014 Annual Report on Form 10-K.

Recent Accounting Pronouncements — ASU 2015-01, Income Statement - Extraordinary and Unusual Items (Subtopic 225-20): Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items was issued as part of the FASB's simplification initiative. ASU 2015-01 eliminates the concept of extraordinary items. The effective date of this Update is for fiscal years beginning on or after December 15, 2015 and interim periods within those annual periods. Adoption of this Update is not expected to have a material effect on the Company’s consolidated financial statements or the interim notes to the consolidated financial statements.

ASU 2015-03, Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs was also issued as part of the FASB's simplification initiative. The amendments in this ASU require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. Currently, debt issuance costs are presented as an asset on the balance sheet. The FASB notes within the ASU, capitalized debt issuance costs do not meet the definition of an asset and are more akin to a debt discount, thereby reducing the carrying amount of the proceeds received. The effective date of this Update is for fiscal years beginning on or after December 15, 2015 and interim periods within those annual periods. Adoption of this Update is not expected to have a material effect on the Company’s consolidated financial statements or the interim notes to the consolidated financial statements.

Louisiana Business Corporation Act — Effective January 1, 2015, companies incorporated under Louisiana law became subject to the Louisiana Business Corporation Act. Provisions of the Louisiana Business Corporation Act eliminate the concept of treasury stock. Rather, shares purchased by the Company constitute authorized but unissued shares. Accounting principles generally accepted in the United States of America state that accounting for treasury stock shall conform to state law. The Company's consolidated financial statements as of September 30, 2015 reflect this change. The cost of shares purchased by the Company has been allocated to common stock and additional paid-in capital balances.

8

2. Investment Securities

The portfolio of investment securities consisted of the following (in thousands):

	September 30, 2015
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Available-for-sale:
Obligations of state and political subdivisions	$	36,500	$	979	$	48	$	37,431
GSE mortgage-backed securities	88,813		2,981		55		91,739
Collateralized mortgage obligations: residential	148,819		690		927		148,582
Collateralized mortgage obligations: commercial	5,653		9		45		5,617
Mutual funds	2,100		16		—		2,116
	$	281,885	$	4,675	$	1,075	$	285,485
	December 31, 2014
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Available-for-sale:
U.S. Government sponsored enterprises	$	10,339	$	—	$	112	$	10,227
Obligations of state and political subdivisions	43,079		1,555		29		44,605
GSE mortgage-backed securities	106,208		3,183		288		109,103
Collateralized mortgage obligations: residential	62,093		266		1,520		60,839
Collateralized mortgage obligations: commercial	24,462		190		107		24,545
Other asset-backed securities	24,041		321		19		24,343
Collateralized debt obligation	266		952		—		1,218
Mutual funds	2,100		4		—		2,104
	$	272,588	$	6,471	$	2,075	$	276,984

	September 30, 2015
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Held-to-maturity:
Obligations of state and political subdivisions	$	43,933	$	552	$	38	$	44,447
GSE mortgage-backed securities	58,420		1,212		82		59,550
Collateralized mortgage obligations: residential	11,284		—		250		11,034
Collateralized mortgage obligations: commercial	7,406		51		—		7,457
	$	121,043	$	1,815	$	370	$	122,488
	December 31, 2014
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Held-to-maturity:
Obligations of state and political subdivisions	$	45,914	$	267	$	192	$	45,989
GSE mortgage-backed securities	67,268		1,080		164		68,184
Collateralized mortgage obligations: residential	12,709		—		479		12,230
Collateralized mortgage obligations: commercial	15,310		53		173		15,190
	$	141,201	$	1,400	$	1,008	$	141,593

9

With the exception of two private-label collateralized mortgage obligations (“CMOs”) with a combined balance remaining of $34,000 at September 30, 2015, all of the Company’s CMOs are government-sponsored enterprise (“GSE”) securities.

The amortized cost and fair value of debt securities at September 30, 2015 by contractual maturity are shown in the following table (in thousands) with the exception of other asset-backed securities, mortgage-backed securities, CMOs, and the collateralized debt obligation.   Expected maturities may differ from contractual maturities for mortgage-backed securities and CMOs because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

	Amortized Cost		Fair Value
Available-for-sale:
Due in one year or less	$	5,074	$	5,114
Due after one year through five years	19,498		20,120
Due after five years through ten years	9,540		9,832
Due after ten years	2,388		2,365
Mortgage-backed securities and collateralized mortgage obligations:
Residential	237,632		240,321
Commercial	5,653		5,617
Mutual funds	2,100		2,116
	$	281,885	$	285,485
	Amortized Cost		Fair Value
Held-to-maturity:
Due in one year or less	$	473	$	475
Due after one year through five years	2,923		2,960
Due after five years through ten years	11,105		11,273
Due after ten years	29,432		29,739
Mortgage-backed securities and collateralized mortgage obligations:
Residential	69,704		70,584
Commercial	7,406		7,457
	$	121,043	$	122,488

Details concerning investment securities with unrealized losses are as follows (in thousands):

	September 30, 2015
	Securities with losses under 12 months				Securities with losses over 12 months				Total
	Fair Value		Gross Unrealized  Loss		Fair Value		Gross Unrealized Loss		Fair Value		Gross Unrealized Loss
Available-for-sale:
Obligations of state and  political subdivisions	$	3,190	$	48	$	—	$	—	$	3,190	$	48
GSE mortgage-backed  securities	15,860		45		3,754		10		19,614		55
Collateralized mortgage  obligations: residential	33,689		128		31,772		799		65,461		927
Collateralized mortgage  obligations: commercial	—		—		3,073		45		3,073		45
	$	52,739	$	221	$	38,599	$	854	$	91,338	$	1,075

10

	December 31, 2014
	Securities with losses under 12 months				Securities with losses over 12 months				Total
	Fair Value		Gross Unrealized Loss		Fair Value		Gross Unrealized Loss		Fair Value		Gross Unrealized Loss
Available-for-sale:
U.S. Government sponsored enterprises	$	4,973	$	32	$	5,254	$	80	$	10,227	$	112
Obligations of state and  political subdivisions	2,029		29		—		—		2,029		29
GSE mortgage-backed  securities	6,668		25		21,538		263		28,206		288
Collateralized mortgage  obligations: residential	9,366		53		37,997		1,467		47,363		1,520
Collateralized mortgage  obligations: commercial	—		—		3,747		107		3,747		107
Other asset-backed securities	6,401		19		—		—		6,401		19
	$	29,437	$	158	$	68,536	$	1,917	$	97,973	$	2,075

	September 30, 2015
	Securities with losses under 12 months				Securities with losses over 12 months				Total
	Fair Value		Gross Unrealized Loss		Fair Value		Gross Unrealized Loss		Fair Value		Gross Unrealized Loss
Held-to-maturity:
Obligations of state and political subdivisions	$	6,544	$	19	$	1,302	$	19	$	7,846	$	38
GSE mortgage-backed securities	—		—		7,309		82		7,309		82
Collateralized mortgage obligations: residential	—		—		11,034		250		11,034		250
	$	6,544	$	19	$	19,645	$	351	$	26,189	$	370
	December 31, 2014
	Securities with losses under 12 months				Securities with losses over 12 months				Total
	Fair Value		Gross Unrealized Loss		Fair Value		Gross Unrealized Loss		Fair Value		Gross Unrealized Loss
Held-to-maturity:
Obligations of state and political subdivisions	$	11,761	$	35	$	13,263	$	157	$	25,024	$	192
GSE mortgage-backed securities	—		—		8,142		164		8,142		164
Collateralized mortgage obligations: residential	—		—		12,230		479		12,230		479
Collateralized mortgage obligations: commercial	7,599		173		—		—		7,599		173
	$	19,360	$	208	$	33,635	$	800	$	52,995	$	1,008

Management evaluates each quarter whether unrealized losses on securities represent impairment that is other than temporary. For debt securities, the Company considers its intent to sell the securities or if it is more likely than not the Company will be required to sell the securities.  If such impairment is identified, based upon the intent to sell or the more likely than not threshold, the carrying amount of the security is reduced to fair value with a charge to earnings. Upon the result of the aforementioned review, management

11

then reviews for potential other than temporary impairment based upon other qualitative factors.  In making this evaluation, management considers changes in market rates relative to those available when the security was acquired, changes in market expectations about the timing of cash flows from securities that can be prepaid, performance of the debt security, and changes in the market’s perception of the issuer’s financial health and the security’s credit quality.  If determined that a debt security has incurred other than temporary impairment, then the amount of the credit related impairment is determined.  If a credit loss is evident, the amount of the credit loss is charged to earnings and the non-credit related impairment is recognized through other comprehensive income.

As of September 30, 2015, 42 securities had unrealized losses totaling 1.21% of the individual securities’ amortized cost basis and 0.36% of the Company’s total amortized cost basis.  Of the 42 securities, 20 had been in an unrealized loss position for over twelve months at September 30, 2015.  These 20 securities had an amortized cost basis and unrealized loss of $59.4 million and $1.2 million, respectively.  The unrealized losses on debt securities at September 30, 2015 resulted from changing market interest rates over the yields available at the time the underlying securities were purchased.  Management identified no impairment related to credit quality.  At September 30, 2015, management had the intent and ability to hold impaired securities and no impairment was evaluated as other than temporary.  As a result, no other than temporary impairment losses were recognized during the three months ended September 30, 2015.

During the nine months ended September 30, 2015, the Company sold 21 securities classified as available-for-sale at a net gain of $1.2 million.  Of the 21 securities sold, 11 were sold with gains totaling $1.4 million and 10 securities were sold at a loss of $135,000.  During the nine months ended September 30, 2014, the Company sold 4 securities classified as available-for-sale at a net gain of $128,000. All of the securities were sold at a gain.

Securities with an aggregate carrying value of approximately $287.2 million and $279.8 million at September 30, 2015 and December 31, 2014, respectively, were pledged to secure public funds on deposit and for other purposes required or permitted by law.

3. Credit Quality of Loans and Allowance for Loan Losses

The loan portfolio consisted of the following (in thousands):

	September 30, 2015			December 31, 2014
Commercial, financial and agricultural	$	482,452		$	467,147
Real estate - construction	74,279			68,577
Real estate – commercial	473,319			467,172
Real estate – residential	151,667			154,602
Installment loans to individuals	113,199			119,328
Lease financing receivable	4,790			4,857
Other	1,746			2,748
	1,301,452			1,284,431
Less allowance for loan losses	(18,939		)	(11,226		)
	$	1,282,513		$	1,273,205

The Company monitors loan concentrations and evaluates individual customer and aggregate industry leverage, profitability, risk rating distributions, and liquidity for each major standard industry classification segment.  At September 30, 2015, one industry segment concentration, the oil and gas industry, constituted more than 10% of the loan portfolio.  The Company’s exposure in the oil and gas industry, including related service and manufacturing industries, totaled approximately $295.6 million, or 22.7% of total loans.  Additionally, the Company’s exposure to loans secured by commercial real estate is monitored.  At September 30, 2015, loans secured by commercial real estate (including commercial construction, farmland and multifamily loans) totaled approximately $529.0 million.  Of the $529.0 million, $473.3 million represent CRE loans, 53% of which are secured by owner-occupied commercial properties.  Of the $529.0 million in loans secured by commercial real estate, $20.0 million, or 3.8%, were on nonaccrual status at September 30, 2015.

Allowance for Loan Losses

The allowance for loan losses is a valuation account available to absorb probable losses on loans. All losses are charged to the allowance for loan losses when the loss actually occurs or when a determination is made that a loss is likely to occur. Recoveries

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are credited to the allowance for loan losses at the time of recovery.  Quarterly, the probable level of losses in the existing portfolio is estimated through consideration of various factors.  Based on these estimates, the allowance for loan losses is increased by charges to earnings and decreased by charge‑offs (net of recoveries).

The allowance is composed of general reserves and specific reserves.  General reserves are determined by applying loss percentages to segments of the portfolio.  The loss percentages are based on each segment’s historical loss experience, generally over the past twelve to eighteen months, and adjustment factors derived from conditions in the Company’s internal and external environment.  All loans considered to be impaired are evaluated on an individual basis to determine specific reserve allocations in accordance with GAAP.  Loans for which specific reserves are provided are excluded from the calculation of general reserves.

Loans acquired in business combinations are initially recorded at fair value, which includes an estimate of credit losses expected to be realized over the remaining lives of the loans, and therefore no corresponding allowance for loan losses is recorded for these loans at acquisition. Methods utilized to estimate any subsequently required allowance for loan losses for acquired loans not deemed credit-impaired at acquisition are similar to originated loans; however, the estimate of loss is based on the unpaid principal balance and then compared to any remaining unaccreted purchase discount. To the extent that the calculated loss is greater than the remaining unaccreted purchase discount, an allowance is recorded for such difference.

The Company has an internal loan review department that is independent of the lending function to challenge and corroborate the loan grade assigned by the lender and to provide additional analysis in determining the adequacy of the allowance for loan losses.

A rollforward of the activity within the allowance for loan losses by loan type and recorded investment in loans for the nine months ended September 30, 2015 and 2014 is as follows (in thousands):

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	September 30, 2015
				Real Estate
	Coml, Fin, and Agric			Constru-ction			Commercial			Residential			Installment loans to individuals			Lease financing receivable		Other		Total
Allowance for loan losses:
Beginning balance	$	5,729		$	954		$	2,402		$	810		$	1,311		$	16	$	4	$	11,226
Charge-offs	(2,310		)	(76		)	(169		)	(45		)	(883		)	—		—		(3,483		)
Recoveries	185			1			20			10			80			—		—		296
Provision	8,016			(62		)	2,107			(104		)	923			13		7		10,900
Ending balance	$	11,620		$	817		$	4,360		$	671		$	1,431		$	29	$	11	$	18,939
Ending balance: individually evaluated for impairment	$	2,569		$	26		$	1,739		$	147		$	216		$	—	$	—	$	4,697
Ending balance: collectively evaluated for impairment	$	9,051		$	791		$	2,621		$	524		$	1,215		$	29	$	11	$	14,242
Loans:
Ending balance	$	482,452		$	74,279		$	473,319		$	151,667		$	113,199		$	4,790	$	1,746	$	1,301,452
Ending balance: individually evaluated for impairment	$	29,185		$	212		$	19,928		$	1,796		$	386		$	—	$	—	$	51,507
Ending balance: collectively evaluated for impairment	$	453,267		$	74,067		$	452,758		$	149,788		$	112,813		$	4,790	$	1,746	$	1,249,229
Ending balance: loans acquired with deteriorated credit quality	$	—		$	—		$	633		$	83		$	—		$	—	$	—	$	716

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	September 30, 2014
				Real Estate
	Coml, Fin, and Agric			Constr-uction			Commercial			Residential			Installment loans to individuals			Lease financing receivable			Other		Total
Allowance for loan losses:
Beginning balance	$	3,906		$	1,046		$	1,389		$	1,141		$	1,273		$	21		$	3	$	8,779
Charge-offs	(2,084		)	(1		)	(93		)	(188		)	(566		)	—			—		(2,932		)
Recoveries	101			—			398			44			110			—			—		653
Provision	2,731			103			(345		)	(8		)	450			(6		)	—		2,925
Ending balance	$	4,654		$	1,148		$	1,349		$	989		$	1,267		$	15		$	3	$	9,425
Ending balance: individually evaluated for impairment	$	853		$	3		$	55		$	87		$	140		$	—		$	—	$	1,138
Ending balance: collectively evaluated for impairment	$	3,801		$	1,145		$	1,294		$	902		$	1,127		$	15		$	3	$	8,287
Loans:
Ending balance	$	452,065		$	86,315		$	430,930		$	153,915		$	116,340		$	5,285		$	3,523	$	1,248,373
Ending balance: individually evaluated for impairment	$	2,662		$	106		$	3,312		$	1,073		$	426		$	—		$	—	$	7,579
Ending balance: collectively evaluated for impairment	$	449,403		$	86,209		$	426,942		$	152,742		$	115,914		$	5,285		$	3,523	$	1,240,018
Ending balance: loans acquired with deteriorated credit quality	$	—		$	—		$	676		$	100		$	—		$	—		$	—	$	776

Non-Accrual and Past Due Loans

Loans are considered past due if the required principal and interest payment have not been received as of the date such payments were due.  Loans are placed on non-accrual status when, in management’s opinion, the probability of collection of interest is deemed insufficient to warrant further accrual.  For loans placed on non-accrual status, the accrual of interest is discontinued and subsequent payments received are applied to the principal balance.  Interest income is recorded after principal has been satisfied and as payments are received.  Non-accrual loans may be returned to accrual status if all principal and interest amounts contractually owed are reasonably assured of repayment within a reasonable period and there is a period of at least six months to one year of repayment performance by the borrower depending on the contractual payment terms.

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An age analysis of past due loans (including both accruing and non-accruing loans) is as follows (in thousands):

			September 30, 2015
	30-59 Days Past Due		60-89 Days Past Due		Greater than 90 Days Past Due		Total Past Due		Current		Total Loans		Recorded Investment > 90 days  and Accruing
Commercial, financial, and agricultural	$	4,065	$	3,124	$	3,879	$	11,068	$	471,384	$	482,452	$	23
Commercial real estate - construction	93		99		12		204		55,484		55,688		—
Commercial real estate - other	7,252		2,745		16,999		26,996		446,323		473,319		—
Residential - construction	—		—		172		172		18,419		18,591		—
Residential - prime	1,383		264		1,378		3,025		148,642		151,667		—
Consumer - credit card	38		11		27		76		5,683		5,759		27
Consumer - other	1,228		162		329		1,719		105,721		107,440		32
Lease financing receivable	—		—		—		—		4,790		4,790		—
Other loans	148		—		—		148		1,598		1,746		—
	$	14,207	$	6,405	$	22,796	$	43,408	$	1,258,044	$	1,301,452	$	82
	December 31, 2014
	30-59 Days Past Due		60-89 Days Past Due		Greater than 90 Days Past Due		Total Past Due		Current		Total Loans		Recorded Investment > 90 days and Accruing
Commercial, financial, and agricultural	$	2,179	$	654	$	2,556	$	5,389	$	461,758	$	467,147	$	26
Commercial real estate - construction	15		—		105		120		43,390		43,510		97
Commercial real estate - other	4,989		270		2,464		7,723		459,449		467,172		—
Residential - construction	431		—		—		431		24,636		25,067		—
Residential - prime	1,843		523		704		3,070		151,532		154,602		—
Consumer - credit card	5		19		18		42		5,970		6,012		18
Consumer - other	671		392		107		1,170		112,146		113,316		46
Lease financing receivable	—		—		—		—		4,857		4,857		—
Other loans	134		—		—		134		2,614		2,748		—
	$	10,267	$	1,858	$	5,954	$	18,079	$	1,266,352	$	1,284,431	$	187

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Non-accrual loans are as follows (in thousands):

	September 30, 2015		December 31, 2014
Commercial, financial, and agricultural	$	29,171	$	2,642
Commercial real estate – construction	39		54
Commercial real estate - other	19,952		6,429
Residential - construction	172		—
Residential - prime	1,896		1,194
Consumer - credit card	—		—
Consumer - other	386		382
Lease financing receivable	—		—
Other	—		—
	$	51,616	$	10,701

The amount of interest that would have been recorded on non-accrual loans, had the loans not been classified as non-accrual, totaled approximately $1.3 million and $392,000 for the nine months ended September 30, 2015 and 2014, respectively.  Interest actually received on non-accrual loans subsequent to their transfer to non-accrual status totaled at September 30, 2015 and 2014 was $19,000 and $93,000, respectively.

Impaired Loans

Loans are considered impaired when, based upon current information, it is probable the Company will be unable to collect all amounts due according to the contractual terms of the loan agreement.  All loans classified as special mention, substandard, or doubtful, based on credit risk rating factors, are reviewed to determine whether impairment testing is appropriate.  An allowance for each impaired loan is calculated based on the present value of expected future cash flows discounted at the loan’s effective interest rate or at the loan’s observable market price or the fair value of the collateral if the loan is collaterally dependent.  All impaired loans are reviewed, at a minimum, on a quarterly basis.  Existing valuations are reviewed to determine if additional discounts or new appraisals are required.  After this review, when comparing the resulting collateral valuation to the outstanding loan balance, if the discounted collateral value exceeds the loan balance no specific allocation is reserved.  Acquired impaired loans are generally not subject to individual evaluation for impairment and are not reported with impaired loans or troubled debt restructurings, even if they would otherwise qualify for such treatment.

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 Loans that are individually evaluated for impairment are as follows (in thousands):

	September 30, 2015
	Recorded Investment		Unpaid Principal  Balance		Related Allowance		Average Recorded Investment		Interest  Income Recognized
With no related allowance recorded:
Commercial, financial, and agricultural	$	22,149	$	22,412	$	—	$	21,863	$	703
Commercial real estate – construction	39		39		—		40		—
Commercial real estate – other	5,440		5,440		—		6,244		47
Residential – prime	1,144		1,164		—		1,211		11
Residential – construction	55		55		—		273		1
Consumer – other	30		30		—		33		—
Subtotal:	28,857		29,140		—		29,664		762
With an allowance recorded:
Commercial, financial, and agricultural	7,036		7,036		2,569		4,604		159
Commercial real estate – other	14,488		14,488		1,739		12,932		33
Residential – prime	652		652		147		599		5
Residential – construction	118		118		26		59		—
Consumer – other	356		371		216		322		4
Subtotal:	22,650		22,665		4,697		18,516		201
Totals:
Commercial	49,152		49,415		4,308		45,683		942
Residential	1,969		1,989		173		2,142		17
Consumer	386		401		216		355		4
Grand total:	$	51,507	$	51,805	$	4,697	$	48,180	$	963

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	December 31, 2014
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
With no related allowance recorded:
Commercial, financial, and agricultural	$	438	$	521	$	—	$	554	$	—
Commercial real estate – construction	54		54		—		58		—
Commercial real estate – other	1,921		1,921		—		1,885		17
Residential – prime	543		543		—		534		15
Consumer – other	78		78		—		72		—
Subtotal:	3,034		3,117		—		3,103		32
With an allowance recorded:
Commercial, financial, and agricultural	2,218		2,333		1,010		1,394		35
Commercial real estate – construction	—		—		—		19		—
Commercial real estate – other	4,467		4,467		1,484		2,416		220
Residential – prime	529		548		68		452		3
Consumer – other	299		313		179		252		4
Subtotal:	7,513		7,661		2,741		4,533		262
Totals:
Commercial	9,098		9,296		2,494		6,326		272
Residential	1,072		1,091		68		986		18
Consumer	377		391		179		324		4
Grand total:	$	10,547	$	10,778	$	2,741	$	7,636	$	294

Credit Quality

The Company manages credit risk by observing written underwriting standards and lending policy established by the Board of Directors and management to govern all lending activities.  The risk management program requires that each individual loan officer review his or her portfolio on a quarterly basis and assign recommended credit ratings on each loan.  These efforts are supplemented by independent reviews performed by a loan review officer 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.

Loans can be classified into the following three risk rating grades: pass, special mention, and substandard/doubtful.  Factors considered in determining a risk rating grade include debt service capacity, capital structure/liquidity, management, collateral quality, industry risk, company trends/operating performance, repayment source, revenue diversification/customer concentration, quality of financial information, and financing alternatives.  Pass grade signifies the highest quality of loans to loans with reasonable credit risk, which may include borrowers with marginally adequate financial performance, but have the ability to repay the debt.  Special mention loans have potential weaknesses that warrant extra attention from the loan officer and other management personnel, but still have the ability to repay the debt.  Substandard classification includes loans with well-defined weaknesses with risk of potential loss.  Loans classified as doubtful are considered to have little recovery value and are charged off.

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The following tables present the classes of loans by risk rating (in thousands):

			September 30, 2015
Commercial Credit Exposure
Credit Risk Profile by Creditworthiness Category
			Commercial, financial, and agricultural		Commercial real estate - construction		Commercial real estate - other		Total		% of Total
Pass			$	417,600	$	55,525	$	417,095	$	890,220	88.02	%
Special mention			23,104		34		20,277		43,415		4.29	%
Substandard			41,521		129		35,947		77,597		7.67	%
Doubtful			227		—		—		227		0.02	%
			$	482,452	$	55,688	$	473,319	$	1,011,459	100.00	%
Residential Credit Exposure
Credit Risk Profile by Creditworthiness Category
					Residential - construction		Residential - prime		Total		% of Total
Pass					$	18,419	$	147,721	$	166,140	97.58	%
Special mention					—		1,326		1,326		0.78	%
Substandard					172		2,620		2,792		1.64	%
					$	18,591	$	151,667	$	170,258	100.00	%
Consumer and Commercial Credit Exposure
Credit Risk Profile Based on Payment Activity
	Consumer - credit card		Consumer - other		Lease financing receivable		Other		Total		% of Total
Performing	$	5,721	$	107,022	$	4,790	$	1,746	$	119,279	99.62	%
Nonperforming	38		418		—		—		456		0.38	%
	$	5,759	$	107,440	$	4,790	$	1,746	$	119,735	100.00	%

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	December 31, 2014
Commercial Credit Exposure
Credit Risk Profile by Creditworthiness Category
			Commercial, financial, and agricultural		Commercial real estate - construction		Commercial real estate - other		Total		% of Total
Pass			$	456,221	$	43,320	$	440,281	$	939,822	96.11	%
Special mention			4,861		132		7,120		12,113		1.24	%
Substandard			5,541		58		19,771		25,370		2.60	%
Doubtful			524		—		—		524		0.05	%
			$	467,147	$	43,510	$	467,172	$	977,829	100.00	%
Residential Credit Exposure
Credit Risk Profile by Creditworthiness Category
					Residential - construction		Residential - prime		Total		% of Total
Pass					$	25,067	$	150,664	$	175,731	97.81	%
Special mention					—		1,184		1,184		0.66	%
Substandard					—		2,754		2,754		1.53	%
					$	25,067	$	154,602	$	179,669	100.00	%
Consumer and Commercial Credit Exposure
Credit Risk Profile Based on Payment Activity
	Consumer - credit card		Consumer - other		Lease financing receivable		Other		Total		% of Total
Performing	$	5,995	$	112,893	$	4,857	$	2,748	$	126,493	99.65	%
Nonperforming	17		423		—		—		440		0.35	%
	$	6,012	$	113,316	$	4,857	$	2,748	$	126,933	100.00	%

Troubled Debt Restructurings

A troubled debt restructuring (“TDR”) is a restructuring of a debt made by the Company to a debtor for economic or legal reasons related to the debtor’s financial difficulties that it would not otherwise consider.  The Company grants the concession in an attempt to protect as much of its investment as possible.

Information about the Company’s TDRs is as follows (in thousands):

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	September 30, 2015
	Current		Past Due Greater Than 30 Days		Nonaccrual TDRs		Total TDRs
Commercial, financial and agricultural	$	18	$	—	$	21,324	$	21,342
Real estate - commercial	—		150		—		150
	$	18	$	150	$	21,324	$	21,492
	December 31, 2014
	Current		Past Due Greater Than 30 Days		Nonaccrual TDRs		Total TDRs
Commercial, financial and agricultural	$	21	$	—	$	234	$	255
Real estate - commercial	155		—		—		155
	$	176	$	—	$	234	$	410

During the three months ended September 30, 2015, there were no loans identified as a TDR. There was one TDR totaling $21.1 million that defaulted on the modified terms during the three months ended September 31, 2015.  During the three months ended September 30, 2014, there were no loans identified as a TDR, and there were no defaults on any loans that were modified as TDRs during the preceding twelve months.  During the nine months ended September 30, 2015, there was one loan relationship with a pre-modification balance of $21.4 million identified as a TDR after conversion of the loans to interest only for a limited amount of time. There was one TDR totaling $21.1 million that defaulted on the modified terms during the nine months ended September 31, 2015. During the nine months ended September 30, 2014, there was one loan relationship with a pre-modification balance of $1.2 million identified as a TDR through a modification of the original loan terms, and there were no defaults on any loans that were modified as TDRs during the preceding twelve months.  For purposes of the determination of an allowance for loan losses on these TDRs, as an identified TDR, the Company considers a loss probable on the loan and, as a result is reviewed for specific impairment in accordance with the Company’s allowance for loan loss methodology.  If it is determined losses are probable on such TDRs, either because of delinquency or other credit quality indicator, the Company establishes specific reserves for these loans. As of September 30, 2015, there were no commitments to lend additional funds to debtors owing sums to the Company whose terms have been modified in TDRs.

4. Intangibles

A summary of core deposit intangible assets as of September 30, 2015 and December 31, 2014 is as follows (in thousands):

	September 30, 2015			December 31, 2014
Gross carrying amount	$	11,674		$	11,674
Less accumulated amortization	(5,670		)	(4,840		)
Net carrying amount	$	6,004		$	6,834

5. Other Comprehensive Income

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The following is a summary of the tax effects allocated to each component of other comprehensive income (loss) (in thousands):

	Three Months Ended September 30,
	2015							2014
	Before Tax Amount		Tax Effect			Net of Tax Amount		Before Tax Amount			Tax Effect		Net of Tax Amount
Other comprehensive income (loss):
Securities available-for-sale:
Change in unrealized gains (losses) during period	$	1,717	$	(601	)	$	1,116	$	(405	)	$	142	$	(263	)
Reclassification adjustment for gains included in net income	—		—			—		—			—		—
Total other comprehensive income (loss)	$	1,717	$	(601	)	$	1,116	$	(405	)	$	142	$	(263	)

	Nine Months Ended September 30,
	2015									2014
	Before Tax Amount			Tax Effect			Net of Tax Amount			Before Tax Amount			Tax Effect			Net of Tax Amount
Other comprehensive (loss) income:
Securities available-for-sale:
Change in unrealized gains during period	$	447		$	(156	)	$	291		$	4,116		$	(1,441	)	$	2,675
Reclassification adjustment for gains included in net income	(1,243		)	435			(808		)	(128		)	45			(83		)
Total other comprehensive (loss) income	$	(796	)	$	279		$	(517	)	$	3,988		$	(1,396	)	$	2,592

The reclassifications out of accumulated other comprehensive income into net income are presented below (in thousands):

	Three Months Ended September 30,
	2015			2014
Details about Accumulated Other Comprehensive Income Components	Reclassifications Out of Accumulated Other Comprehensive Income		Income Statement Line Item	Reclassifications Out of Accumulated Other Comprehensive Income		Income Statement  Line Item
Unrealized gains and losses on securities available-for-sale:
	$	—	Gain on sale of securities, net	$	—	Gain on sale of securities, net
	—		Tax expense	—		Tax expense
	$	—	Net of tax	$	—	Net of tax

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	Nine Months Ended September 30,
	2015				2014
Details about Accumulated Other Comprehensive Income Components	Reclassifications Out of Accumulated Other Comprehensive Income			Income Statement Line Item	Reclassifications Out of Accumulated Other Comprehensive Income			Income Statement  Line Item
Unrealized gains and losses on securities available-for-sale:
	$	(1,243	)	Gain on sale of securities, net	$	(128	)	Gain on sale of securities, net
	435			Tax expense	45			Tax expense
	$	(808	)	Net of tax	$	(83	)	Net of tax

6. Declaration of Dividends

A first quarter dividend of $0.09 per share for holders of common stock of record on March 13, 2015 was declared on January 21, 2015, and was paid on April 1, 2015.  On January 21, 2015, the Company also declared a 1.00% dividend for holders of its Series C preferred stock of record on April 1, 2015, which was paid on April 15, 2015. On April 15, 2015, the Company declared a second quarter dividend of $0.09 per share for holders of common stock of record on June 15, 2015, and was paid on July 1, 2015. On April 15, 2015, the Company also declared a 1.00% dividend for holders of its Series C preferred stock of record on July 1, 2015, which was paid on July 15, 2015. On July 15, 2015, the Company declared a third quarter dividend of $0.09 per share for holders of common stock of record on September 15, 2015 to be paid on October 1, 2015. On July 15, 2015, the Company also declared a 1.00% dividend for holders of its Series C preferred stock of record on October 1, 2015 to be paid on October 15, 2015. On October 21, 2015, the Company declared a fourth quarter dividend of $0.09 per share for holders of common stock of record on December 15, 2015 to be paid on January 4, 2016. On October 21, 2015, the Company also declared a 1.00% dividend for holders of its Series C preferred stock of record on January 4, 2016 to be paid on January 15, 2016.

7. Earnings Per Common Share

Following is a summary of the information used in the computation of earnings per common share (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2015		2014		2015		2014
Net earnings available to common shareholders	$	2,417	$	4,298	$	8,662	$	14,922
Dividends on Series C preferred stock	92		94		277		284
Adjusted net earnings available to common shareholders	$	2,509	$	4,392	$	8,939	$	15,206
Weighted average number of common shares outstanding used in computation of basic earnings per common share	11,312		11,314		11,321		11,283
Effect of dilutive securities:
Stock options	12		92		20		77
Convertible preferred stock and warrants	507		549		507		544
Weighted average number of common shares outstanding plus effect of dilutive securities – used in computation of diluted earnings per share	11,831		11,955		11,848		11,904

Options and warrants on 234,206 shares of common stock and 11,250 shares of restricted stock were not included in computing diluted earnings per share for the quarter and nine months ended September 30, 2015 because the effects of these shares were anti-dilutive as a result of the exercise price of such options.  Options to acquire 7,355 and 24,855 shares of common stock were not included in computing diluted earnings per share for the quarter and nine months ended September 30, 2014, respectively, because the effects of these shares were anti-dilutive as a result of the exercise price of such options. 

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8. Fair Value Measurement

The Company groups assets and liabilities 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 – Valuation is based upon quoted prices for identical instruments traded in active markets.

Level 2 – Valuation is based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market.

Level 3 – Valuation is generated from model-based techniques that use at least one significant assumption not observable in the market.  These unobservable assumptions reflect estimates of assumptions that market participants would use in pricing the asset or liability.  Valuation techniques include use of option pricing models, discounted cash flow models and similar techniques.

Following is a description of valuation methodologies used for assets and liabilities which are either recorded or disclosed at fair value.

Cash and Due From Banks, Interest-Bearing Deposits in Banks and Federal Funds Sold—The carrying value of these short-term instruments is a reasonable estimate of fair value.

Securities Available-for-Sale—Securities available-for-sale are recorded at fair value on a recurring basis.  Fair value measurement is based upon quoted prices, if available.  If quoted prices are not available, fair values are measured using independent pricing models or other model-based valuation techniques such as the present value of future cash flows, adjusted for the security’s credit rating, prepayment assumptions and other factors such as credit loss assumptions.  Level 1 securities include those traded on an active exchange, such as the New York Stock Exchange and U.S. Treasury securities that are traded by dealers or brokers in active over-the-counter market funds.  Securities are classified as Level 2 within the valuation hierarchy when the Company obtains fair value measurements from an independent pricing service.  The fair value measurements consider observable data that may include dealer quotes, market spreads, cash flows, the U.S. Treasury yield curve, live trading levels, trade execution data, market consensus prepayment speeds, credit information, and the bond’s terms and conditions, among other things. Level 2 inputs are used to value U.S. Agency securities, mortgage-backed securities, asset-backed securities, municipal securities, single issue trust preferred securities, certain pooled trust preferred securities, collateralized debt obligations and certain equity securities that are not actively traded.

Securities Held-to-Maturity—The fair value of securities held-to-maturity is estimated using the same measurement techniques as securities available-for-sale.

Other Investments—The carrying value of other investments is a reasonable estimate of fair value.

Loans—For disclosure purposes, the fair value of fixed rate loans is estimated by discounting the future cash flows using the current rates at which similar loans would be made to borrowers with similar credit ratings.  For variable rate loans, the carrying amount is a reasonable estimate of fair value.  The Company does not record loans at fair value on a recurring basis.  No adjustment to fair value is taken related to illiquidity discounts.  However, from time to time, a loan is considered impaired and an allowance for loan losses is established.  Loans for which it is probable that payment of interest and principal will not be made in accordance with the contractual terms of the loan agreement are considered impaired.  Once a loan is identified as individually impaired, management uses one of three methods to measure impairment, which, include collateral value, market value of similar debt, and discounted cash flows.  Those impaired loans not requiring an allowance represent loans for which the fair value of the expected repayments or collateral exceed the recorded investments in such loans.  Impaired loans where an allowance is established based on the fair value of collateral or where the loan balance has been charged down to fair value require classification in the fair value hierarchy.  When the fair value of the collateral is based on an observable market price or a current appraised value, the Company records the impaired loan as nonrecurring Level 2.  When an appraised value is not available or management determines the fair value of the collateral is further impaired below the appraised value and adjusts the appraisal value by taking an additional discount for market conditions and there is no observable market price, the Company records the impaired loan as nonrecurring Level 3.

For non-performing loans, collateral valuations currently in file are reviewed for acceptability in terms of timeliness and applicability.  Although each determination is made based on the facts and circumstances of each credit, generally valuations are no longer considered acceptable when there has been physical deterioration of the property from when it was last appraised, or there has been a significant change in the underlying assumptions of the appraisal.  If the valuation is deemed to be unacceptable,

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a new appraisal is ordered.  New appraisals are typically received within 4-6 weeks.  While awaiting new appraisals, the valuation in the file is utilized, net of discounts.  Discounts are derived from available relevant market data, selling costs, taxes, and insurance.  Any perceived collateral deficiency utilizing the discounted value is specifically reserved (as required by ASC Topic 310) until the new appraisal is received or charged off.  Thus, provisions or charge-offs are recognized in the period the credit is identified as non-performing.

The following sources are utilized to set appropriate discounts: in-market real estate agents, current local sales data, bank history for devaluation of similar property, Sheriff’s valuations and buy/sell contracts.  If a real estate agent is used to market and sell the property, values are discounted 10% for selling costs.  Additional discounts may be applied if research from the above sources indicates a discount is appropriate given devaluation of similar property from the time of the initial valuation.

Other Real Estate—Other real estate (“ORE”) properties are adjusted to fair value upon transfer of the loans to other real estate, and annually thereafter to insure other real estate assets are carried at the lower of carrying value or fair value.  Exceptions to obtaining initial appraisals are properties where a buy/sell agreement exists for the loan value or greater, or where a Sheriff’s valuation has been received for properties liquidated through a Sheriff sale.  Fair value is based upon independent market prices, appraised values of the collateral or management’s estimation of the value of the collateral.  When the fair value of the collateral is based on an observable market price or a current appraised value, the Company records the ORE as nonrecurring Level 2.  When an appraised value is not available or management determines the fair value of the collateral is further impaired below the appraised value and adjusts the appraisal value by taking an additional discount for market conditions and there is no observable market prices, the Company records the ORE asset as nonrecurring Level 3.

Cash Surrender Value of Life Insurance Policies—Fair value for life insurance cash surrender value is based on cash surrender values indicated by the insurance companies.

Deposits—The fair value of demand deposits, savings accounts, NOW accounts, and money market deposits is the amount payable on demand at the reporting date.  The fair value of fixed maturity certificates of deposit is estimated by discounting the future cash flows using the rates currently offered for deposits of similar remaining maturities.  The estimated fair value does not include customer related intangibles.

Securities Sold Under Agreements to Repurchase—The fair value approximates the carrying value of securities sold under agreements to repurchase due to their short-term nature.

Short-term Federal Home Loan Bank Advances—The fair value approximates the carrying value of short-term FHLB advances due to their short-term nature.

Long-term Federal Home Loan Bank Advances—The fair value of long-term FHLB advances is estimated using a discounted cash flow analysis that applies interest rates currently being offered on similar types of borrowings with similar terms.

Junior Subordinated Debentures—For junior subordinated debentures that bear interest on a floating basis, the carrying amount approximates fair value.  For junior subordinated debentures that bear interest on a fixed rate basis, the fair value is estimated using a discounted cash flow analysis that applies interest rates currently being offered on similar types of borrowings.

Commitments to Extend Credit, Standby Letters of Credit and Credit Card Guarantees—Because commitments to extend credit and standby letters of credit are generally short-term and made using variable rates, the carrying value and estimated fair value associated with these instruments are immaterial.

Assets Recorded at Fair Value

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

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	Assets / Liabilities Measured at Fair Value at		Fair Value Measurements at September 30, 2015
Description	September 30, 2015		Level 1		Level 2		Level 3
Available-for-sale securities:
Obligations of state and political subdivisions	$	37,431	$	—	$	37,431	$	—
GSE mortgage-backed securities	91,739		—		91,739		—
Collateralized mortgage obligations: residential	148,582		—		148,582		—
Collateralized mortgage obligations: commercial	5,617		—		5,617		—
Mutual funds	2,116		2,116		—		—

	Assets / Liabilities Measured at Fair Value at		Fair Value Measurements at December 31, 2014
Description	December 31, 2014		Level 1		Level 2		Level 3
Available-for-sale securities:
U.S. Government sponsored enterprises	$	10,227	$	—	$	10,227	$	—
Obligations of state and political subdivisions	44,605		—		44,605		—
GSE mortgage-backed securities	109,103		—		109,103		—
Collateralized mortgage obligations: residential	60,839		—		60,839		—
Collateralized mortgage obligations: commercial	24,545		—		24,545		—
Other asset-backed securities	24,343		—		24,343		—
Collateralized debt obligation	1,218		—		1,218		—
Mutual funds	2,104		2,104		—		—

Certain assets and liabilities are measured at fair value on a nonrecurring basis and are included in the table below (in thousands).  Impaired loans are Level 2 assets measured using appraisals from external parties of the collateral less any prior liens.  Other real estate properties are also Level 2 assets measured using appraisals from external parties.

	Assets / Liabilities Measured at Fair Value at		Fair Value Measurements at September 30, 2015
Description	September 30, 2015		Level 1		Level 2		Level 3
Impaired loans	$	14,966	$	—	$	14,966	$	—
Other real estate	4,661		—		4,661		—
	Assets / Liabilities Measured at Fair Value at		Fair Value Measurements at December 31, 2014
Description	December 31, 2014		Level 1		Level 2		Level 3
Impaired loans	$	5,051	$	—	$	5,051	$	—
Other real estate	4,234		—		4,234		—

Limitations

Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial instrument.  These estimates do not reflect any premium or discount that could result from offering for sale at one time the Company’s holdings of a particular financial instrument.  Because no market exists for a significant portion of the Company’s financial instruments, fair value estimates are based on many judgments.  These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision.  Changes in assumptions could significantly affect the estimates.

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Fair value estimates are based on existing on and off-balance sheet financial instruments without attempting to estimate the value of anticipated future business and the value of assets and liabilities that are not considered financial instruments.  Significant assets and liabilities that are not considered financial instruments include deferred income taxes and premises and equipment.  In addition, the tax ramifications related to the realization of the unrealized gains and losses can have a significant effect on fair value estimates and have not been considered in the estimates.

The carrying amounts and estimated fair values of the Company’s financial instruments are as follows at September 30, 2015 and December 31, 2014 (in thousands):

			Fair Value Measurements at September 30, 2015 Using:
	Carrying Value		Level 1		Level 2		Level 3
Financial assets:
Cash and due from banks, interest-bearing deposits in banks and federal funds sold	$	125,437	$	125,437	$	—	$	—
Securities available-for-sale	285,485		2,116		283,369		—
Securities held-to-maturity	121,043		—		122,488		—
Other investments	12,063		12,063		—		—
Loans, net	1,282,513		—		14,966		1,282,506
Cash surrender value of life insurance policies	13,548		—		13,548		—
Financial liabilities:
Non-interest-bearing deposits	406,118		—		406,118		—
Interest-bearing deposits	1,137,303		—		918,792		218,328
Securities sold under agreements to repurchase	92,085		92,085		—		—
Short-term Federal Home Loan Bank advances	70,000		—		70,000		—
Long-term Federal Home Loan Bank advances	25,958		—		—		26,956
Junior subordinated debentures	22,167		—		22,167		—

			Fair Value Measurements at December 31, 2014 Using:
	Carrying Value		Level 1		Level 2		Level 3
Financial assets:
Cash and due from banks, interest-bearing deposits in banks and federal funds sold	$	86,872	$	86,872	$	—	$	—
Securities available-for-sale	276,984		2,104		274,880		—
Securities held-to-maturity	141,201		—		141,593		—
Other investments	9,990		9,990		—		—
Loans, net	1,273,205		—		5,051		1,277,882
Cash surrender value of life insurance policies	13,659		—		13,659		—
Financial liabilities:
Non-interest-bearing deposits	390,863		—		390,863		—
Interest-bearing deposits	1,194,371		—		943,255		251,291
Securities sold under agreements to repurchase	62,098		62,098		—		—
Short-term Federal Home Loan Bank advances	25,000		—		25,000		—
Long-term Federal Home Loan Bank advances	26,277		—		—		27,193
Junior subordinated debentures	22,167		—		22,167		—

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

MidSouth Bancorp, Inc. (the “Company”) is a financial 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”).  We offer complete banking services to commercial and retail customers in Louisiana and south and central Texas with 58 locations and are connected to a worldwide ATM network that provides customers with access to more than 55,000 surcharge-free ATMs.  We are community oriented and focus primarily on offering commercial and consumer loan and deposit services to individuals, small businesses, and middle market businesses.

The following discussion and analysis identifies significant factors that have affected our financial position and operating results during the periods included in the financial statements accompanying this report.  We encourage you to read this discussion in conjunction with our consolidated financial statements and the notes thereto presented herein and with the financial statements, the notes thereto, and related Management’s Discussion and Analysis of Financial Condition and Results of Operation in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014.

Forward-Looking Statements

Certain statements included in this Report, other than statements of historical fact, are forward-looking statements (as such term is defined in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and the regulations thereunder), which are intended to be covered by the safe harbors created thereby. Forward-looking statements include, but are not limited to certain statements under the captions “Business,” “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

The words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “plan,” “will,” “would,” “could,” “should,” “guidance,” “potential,” “continue,” “project,” “forecast,” “confident,” and similar expressions are typically used to identify forward-looking statements.  These statements are based on assumptions and assessments made by management in light of their experience and their perception of historical trends, current conditions, expected future developments and other factors they believe to be appropriate.  Any forward-looking statements are not guarantees of our future performance and are subject to risks and uncertainties and may be affected by various factors that may cause actual results, developments and business decisions to differ materially from those in the forward-looking statements.  Some of the factors that may cause actual results, developments and business decisions to differ materially from those contemplated by such forward-looking statements include the factors discussed under the caption “Risk Factors” in our 2014 Annual Report on form 10-K and under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this Report and the following:

• changes in interest rates and market prices that could affect the net interest margin, asset valuation, and expense levels;

• changes in local economic and business conditions, including, without limitation, changes related to the oil and gas industries, that could adversely affect customers and their ability to repay borrowings under agreed upon terms, adversely affect the value of the underlying collateral related to their borrowings, and reduce demand for loans;

• increased competition for deposits and loans which could affect compositions, rates and terms;

• changes in the levels of prepayments received on loans and investment securities that adversely affect the yield and value of the earning assets;

• a deviation in actual experience from the underlying assumptions used to determine and establish our allowance for loan losses (“ALL”), which could result in greater than expected loan losses;

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

• the timing, ability to complete and the impact of proposed and/or future acquisitions, the success or failure of integrating acquired operations, and the ability to capitalize on growth opportunities upon entering new markets;

• the timing, ability to complete and the impact of proposed and/or future efficiency initiatives;

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

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

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

• legislative and regulatory changes, including the changes in the regulatory capital framework under the Federal Reserve Board’s Basel III regulatory capital reforms, the impact of regulations under the Dodd-Frank  Wall Street Reform and Consumer Protection Act of 2010 (the “Dodd-Frank Act”), including the implementation of the Consumer Financial Protection Bureau, and other changes in banking, securities and tax laws and regulations and their application by our regulators, changes in the scope and cost of Federal Deposit Insurance Corporation (“FDIC”) insurance and other coverage;

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• regulations and restrictions resulting from our participation in government sponsored programs such as the U.S. Treasury’s Small Business Lending Fund, including potential retroactive changes in such programs;

• changes in accounting principles, policies, and guidelines applicable to financial holding companies and banking;

• acts of war, terrorism, cyber intrusion, weather, or other catastrophic events beyond our control; and

• the ability to manage the risks involved in the foregoing.

We can give no assurance that any of the events anticipated by the forward-looking statements will occur or, if any of them does, what impact they will have on our results of operations and financial condition.  We disclaim any intent or obligation to publicly update or revise any forward-looking statements, regardless of whether new information becomes available, future developments occur or otherwise.

Critical Accounting Policies

Certain critical accounting policies affect the more significant judgments and estimates used in the preparation of the consolidated financial statements.  Our significant accounting policies are described in the notes to the consolidated financial statements included in this report. The accounting principles we follow and the methods of applying these principles conform to accounting principles generally accepted in the United States of America (“GAAP”) and general banking practices.  Our most critical accounting policy relates to the determination of the allowance for loan losses, which reflects the estimated losses resulting from the inability of its borrowers to make loan payments.  The determination of the adequacy of the allowance involves significant judgment and complexity and is based on many factors.  If the financial condition of our borrowers were to deteriorate, resulting in an impairment of their ability to make payments, the estimates would be updated and additional provisions for loan losses may be required.  See Asset Quality – Nonperforming Assets and Allowance for Loan Losses and Note 1 and Note 3 of the footnotes to the consolidated financial statements.

Another of our critical accounting policies relates to the valuation of goodwill, intangible assets and other purchase accounting adjustments.  We account for acquisitions in accordance with ASC Topic No. 805, which requires the use of the purchase method of accounting.  Under this method, we are required to record assets acquired and liabilities assumed at their fair value, including intangible assets.  Determination of fair value involves estimates based on internal valuations of discounted cash flow analyses performed, third party valuations, or other valuation techniques that involve subjective assumptions.  Additionally, the term of the useful lives and appropriate amortization periods of intangible assets is subjective.  Resulting goodwill from an acquisition under the purchase method of accounting represents the excess of the purchase price over the fair value of net assets acquired.  Goodwill is not amortized, but is evaluated for impairment annually or more frequently if deemed necessary.  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.  Given the instability of the economic environment, it is reasonably possible that the methodology of the assessment of potential loan losses and goodwill impairment could change in the near-term or could result in impairment going forward.

A third critical accounting policy relates to deferred tax assets and liabilities.  We record deferred tax assets and deferred tax liabilities for future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis.  Future tax benefits, such as net operating loss carry forwards, are recognized to the extent that realization of such benefits is more likely than not.  Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which the assets and liabilities are expected to be recovered or settled.  The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income tax expense in the period that includes the enactment date.  In the event the future tax consequences of differences between the financial reporting bases and the tax bases of our assets and liabilities results in deferred tax assets, an evaluation of the probability of being able to realize the future benefits indicated by such assets is required.  A valuation allowance is provided when it is more likely than not that a portion or the full amount of the deferred tax asset will not be realized.  In assessing the ability to realize the deferred tax assets, management considers the scheduled reversals of deferred tax liabilities, projected future taxable income, and tax planning strategies.  A deferred tax liability is not recognized for portions of the allowance for loan losses for income tax purposes in excess of the financial statement balance.  Such a deferred tax liability will only be recognized when it becomes apparent that those temporary differences will reverse in the foreseeable future.  A tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur.  The amount recognized is the largest amount of tax benefit that is greater than 50% more likely of being realized on examination.  For tax positions not meeting the “more likely than not” test, no tax benefit is recorded.

Results of Operations

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Earnings Analysis

We reported net earnings available to common shareholders of $2.4 million for the third quarter of 2015, compared to net earnings available to common shareholders of $4.3 million reported for the third quarter of 2014.  Diluted earnings for the third quarter of 2015 were $0.21 per common share, compared to $0.37 per common share reported for the third quarter of 2014.  The third quarter of 2014 included efficiency consultant expenses of $200,000, $394,000 of losses on disposal of fixed assets, a $258,000 loss on redemption of Trust Preferred Securities and a $1.1 million gain on the sale of a commercial property held as ORE. Excluding these non-operating income and expenses, operating earnings per share for the third quarter of 2014 was $0.36.

Operating revenues from consolidated operations decreased $646,000 in quarterly comparison. Net interest income decreased $371,000 in quarterly comparison primarily due to a $281,000 decrease in interest income earned on loans and a $231,000 decrease in interest income on investment securities which declined in volume. The decrease in interest income on loans and investment securities was partially offset by a $177,000 decrease in interest expense on junior subordinated debentures. Excluding non-operating income of $1.1 million for the third quarter of 2014, noninterest income decreased $275,000 in quarterly comparison, from $5.1 million for the three months ended September 30, 2014 to $4.8 million for the three months ended September 30, 2015. The decrease in noninterest income resulted primarily from a $325,000 reduction in service charges on deposit accounts, including NSF fees.

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

Dividends paid on the Series B Preferred Stock issued to the Treasury resulting from our participation in the Small Business Lending Fund (“SBLF”) totaled $80,000 for the third quarter of 2015 based on a dividend rate of 1.00%.  The dividend rate is set at 1.00% through February 25, 2016.  The Series C Preferred Stock issued with the December 28, 2012 acquisition of PSB Financial Corporation (“PSB”) paid dividends totaling $92,000 for the three months ended September 30, 2015.

In year-over-year comparison, net earnings available to common shareholders decreased $6.3 million, from $14.9 million at September 30, 2014 to $8.7 million at September 30, 2015. The decrease resulted primarily from a $8.0 million increase in the provision for loan losses. The first nine months of 2014 included $3.0 million of executive officer life insurance proceeds, $1.1 million in gain on sale of ORE, $128,000 in gain on sales of securities, $360,000 of efficiency consultant expenses, $189,000 of expenses related to the loss of an executive officer, $394,000 in losses on disposal of fixed assets and a $258,000 loss on redemption of Trust Preferred Securities. The first nine months of 2015 included $1.2 million in gain on sales of securities and $160,000 of income from a death benefit on bank owned life insurance. Excluding these non-operating revenues and expenses, net earnings available to common shareholders decreased $4.3 million in year-over-year comparison. In addition to the increase in loan loss provision, a decrease of $595,000 in noninterest income contributed to the decrease in operating earnings. The increase in the provision for loan losses and the decrease in noninterest income were partially offset by a $259,000 increase in net interest income, a $1.6 million decrease in operating noninterest expenses and a $2.3 million decrease in income tax expense.

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

Net Interest Income

Our primary source of earnings is net interest income, which is the difference between interest earned on loans and investments and interest paid on deposits and other 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.  Our net interest margin on a taxable equivalent basis, which is net interest income as a percentage of average earning assets, was 4.34% and 4.61% for the three months ended September 30, 2015 and 2014, respectively.   Tables 1 and 3 and tables 2 and 4 below analyze the changes in net interest income in the three months ended September 30, 2015 and 2014 and the nine months ended September 30, 2015 and 2014, respectively.

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

Investment securities totaled $406.5 million, or 20.6% of total assets at September 30, 2015, versus $433.4 million, or 22.9% of total assets at September 30, 2014. The investment portfolio had an effective duration of 3.5 years and a net unrealized gain of $3.6 million at September 30, 2015. The average volume of investment securities decreased $23.5 million in prior year quarterly comparison. The average tax equivalent yield on investment securities decreased 13 basis points, from 2.70% to 2.57%. The $23.5 million decrease in the average volume of investment securities was used to fund loan growth during the same period.

The average yield on all earning assets decreased 31 basis points in prior year quarterly comparison, from 4.96% for the third quarter of 2014 to 4.65% for the third quarter of 2015. Excluding the impact of purchase accounting adjustments, the average yield on total earning assets decreased 29 basis points, from 4.80% to 4.51% for the three month periods ended September 30, 2014 and 2015, respectively, primarily due to the decline in the average rate earned on loans and investment securities.

The impact to interest expense of a $34.0 million increase in the average volume of interest- bearing liabilities was offset by a 4 basis point decrease in the average rate paid on interest- bearing liabilities, from 0.46% at September 30, 2014 to 0.42% at September 30, 2015. Excluding purchase accounting adjustments on acquired certificates of deposit and FHLB borrowings, the average rate paid on interest-bearing liabilities was 0.51% for the third quarter of 2014 and declined to 0.45% for the third quarter of 2015.

The average volume of notes payable for the three months ended September 30, 2015 of $26.0 million consisted of long-term FHLB advances.  The average volume of notes payable of $26.6 million for the three months ended September 30, 2014 consisted of long-term FHLB advances and a note payable with First National Bankers Bank.  The FHLB advances are fixed rate advances with rates ranging from 1.99% to 5.06% and have a range of maturities from October 2015 to January 2019.  The FHLB advances are collateralized by a blanket lien on first mortgages and other qualifying loans.  The note payable with First National Bankers Bank was paid off in the third quarter of 2014.  The interest rate on the note was equal to New York Prime.  Short-term FHLB advances totaled $70.0 million at September 30, 2015.  The advances mature in October 2015 and January 2016 and bear interest rates ranging from 0.10% to 0.30%.  

As a result of these changes in volume and yield on earning assets and interest-bearing liabilities, the FTE net interest margin decreased 27 basis points, from 4.61% for the third quarter of 2014 to 4.34% for the third quarter of 2015. Excluding purchase accounting adjustments on loans, deposits and FHLB borrowings, the FTE margin decreased 25 basis points, from 4.42% for the third quarter of 2014 to 4.17% for the third quarter of 2015.

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

Interest expense decreased $258,000 in year-over-year comparison primarily due to the redemption of $7.2 million of the Company's Statutory Trust 1 and Capital Securities in the third quarter of 2014 that resulted in a decrease in the volume of junior subordinated debentures and the average rate paid on the debentures. The average rate paid on total interest-bearing liabilities decreased 5 basis points, from 0.47% at September 30, 2014 to 0.42% at September 30, 2015. Excluding purchase accounting adjustments, the average rate paid on interest-bearing liabilities decreased 6 basis points, from 0.52% at September

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30, 2014 to 0.46% at September 30, 2015. The FTE net interest margin decreased 24 basis points, from 4.62% for the nine months ended September 30, 2014 to 4.38% for the nine months ended September 30, 2015. Excluding purchase accounting adjustments, the FTE net interest margin decreased 14 basis points, from 4.38% to 4.24% for the nine months ended September 30, 2014 and 2015, respectively, primarily due to a decline in the average rate earned on loans.

Table 1 Consolidated Average Balances, Interest and Rates (in thousands)
	Three Months Ended September 30,
	2015							2014
	Average Volume			Interest		Average Yield/Rate		Average Volume			Interest		Average Yield/Rate
Assets
Investment securities1
Taxable	$	341,192		$	1,850	2.17	%	$	351,645		$	1,965	2.24	%
Tax exempt2	73,523			818		4.45	%	86,528			996		4.60	%
Total investment securities	414,715			2,668		2.57	%	438,173			2,961		2.70	%
Federal funds sold	3,349			1		0.12	%	3,143			2		0.25	%
Time and interest bearing deposits in other banks	62,086			40		0.25	%	22,922			15		0.26	%
Other investments	10,508			113		4.30	%	12,090			109		3.61	%
Total loans3	1,285,991			17,992		5.55	%	1,232,196			18,273		5.88	%
Total earning assets	1,776,649			20,814		4.65	%	1,708,524			21,360		4.96	%
Allowance for loan losses	(15,853		)					(8,978		)
Nonearning assets	188,556							193,063
Total assets	$	1,949,352						$	1,892,609
Liabilities and shareholders’ equity
Total interest bearing deposits	$	1,150,190		$	883	0.30	%	$	1,132,132		$	859	0.30	%
Securities sold under repurchase agreements	89,025			249		1.11	%	70,587			210		1.18	%
Federal funds purchased	—			—		—		70			—		—	%
Short-term FHLB advances	31,196			16		0.20	%	28,913			13		0.18	%
Notes payable	26,007			93		1.40	%	26,640			95		1.40	%
Junior subordinated debentures	22,167			150		2.65	%	26,247			327		4.88	%
Total interest bearing liabilities	1,318,585			1,391		0.42	%	1,284,589			1,504		0.46	%
Demand deposits	409,118							392,927
Other liabilities	7,026							9,802
Shareholders’ equity	214,623							205,291
Total liabilities and shareholders’ equity	$	1,949,352						$	1,892,609
Net interest income and net interest spread				$	19,423	4.23	%				$	19,856	4.50	%
Net interest margin						4.34	%						4.61	%

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

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^2.  Interest income of $282,000 for 2015 and $344,000 for 2014 is added to interest earned on tax-exempt obligations to reflect tax equivalent yields using a tax rate of 35%.

^3.  Interest income includes loan fees of $1,394,000 for 2015 and $1,580,000 for 2014.  Nonaccrual loans are included in average balances and income on such loans is recognized on a cash basis.

Table 2 Consolidated Average Balances, Interest and Rates (in thousands)
	Nine Months Ended September 30,
	2015							2014
	Average Volume			Interest		Average Yield/Rate		Average Volume			Interest		Average Yield/Rate
Assets
Investment securities1
Taxable	$	340,898		$	5,628	2.20	%	$	375,969		$	6,164	2.19	%
Tax exempt2	76,281			2,564		4.48	%	88,742			3,062		4.60	%
Total investment securities	417,179			8,192		2.62	%	464,711			9,226		2.65	%
Federal funds sold	3,463			5		0.19	%	2,775			4		0.19	%
Time and interest bearing deposits in other banks	59,151			112		0.25	%	21,857			42		0.25	%
Other investments	10,109			273		3.60	%	11,767			268		3.04	%
Total loans3	1,298,844			54,314		5.59	%	1,195,357			53,525		5.99	%
Total earning assets	1,788,746			62,896		4.70	%	1,696,467			63,065		4.97	%
Allowance for loan losses	(14,176		)					(8,734		)
Nonearning assets	189,244							192,087
Total assets	$	1,963,814						$	1,879,820
Liabilities and shareholders’ equity
Total interest bearing deposits	$	1,174,399		$	2,751	0.31	%	$	1,147,843		$	2,588	0.30	%
Securities sold under repurchase agreements	84,434			721		1.14	%	60,522			588		1.30	%
Federal funds purchased	—			—		—		305			2		0.86	%
Short-term FHLB advances	28,956			37		0.17	%	26,356			31		0.16	%
Notes payable	26,113			272		1.37	%	26,540			272		1.35	%
Other borrowings/payables	—			—		—	%	602			15		3.29	%
Junior subordinated debentures	22,167			451		2.68	%	28,327			994		4.63	%
Total interest bearing liabilities	1,336,069			4,232		0.42	%	1,290,495			4,490		0.47	%
Demand deposits	407,077							380,590
Other liabilities	7,752							8,188
Shareholders’ equity	212,916							200,547
Total liabilities and shareholders’ equity	$	1,963,814						$	1,879,820
Net interest income and net interest spread				$	58,664	4.28	%				$	58,575	4.50	%
Net interest margin						4.38	%						4.62	%

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

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^2.  Interest income of $885,000 for 2015 and $1,055,000 for 2014 is added to interest earned on tax-exempt obligations to reflect tax equivalent yields using a tax rate of 35%.

^3.  Interest income includes loan fees of $3,945,000 for 2015 and $4,322,000 for 2014.  Nonaccrual loans are included in average balances and income on such loans is recognized on a cash basis.

Table 3 Changes in Taxable-Equivalent Net Interest Income (in thousands)
	Three Months Ended September 30, 2015 compared to September 30, 2014
	Total Increase			Change Attributable To
	(Decrease)			Volume			Rates
Taxable-equivalent earned on:
Investment securities
Taxable	$	(115	)	$	(58	)	$	(57	)
Tax exempt	(178		)	(146		)	(32		)
Federal funds sold	(1		)	—			(1		)
Time and interest bearing deposits in other banks	25			25			—
Other investments	4			(15		)	19
Loans, including fees	(281		)	778			(1,059		)
Total	(546		)	584			(1,130		)
Interest paid on:
Interest bearing deposits	24			14			10
Securities sold under repurchase agreements	39			53			(14		)
Federal funds purchased	—			—			—
Short-term FHLB advances	3			1			2
Notes payable	(2		)	(2		)	—
Junior subordinated debentures	(177		)	(44		)	(133		)
Total	(113		)	22			(135		)
Taxable-equivalent net interest income	$	(433	)	$	562		$	(995	)

Note: In Table 3, changes due to volume and rate have generally been allocated to volume and rate changes in proportion to the relationship of the absolute dollar amounts to the changes in each.

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Table 4 Changes in Taxable-Equivalent Net Interest Income (in thousands)
	Nine Months Ended September 30, 2015 compared to September 30, 2014
	Total Increase			Change Attributable To
	(Decrease)			Volume			Rates
Taxable-equivalent earned on:
Investment securities
Taxable	$	(536	)	$	(579	)	$	43
Tax exempt	(498		)	(421		)	(77		)
Federal funds sold	1			1			—
Time and interest bearing deposits in other banks	70			71			(1		)
Other investments	5			(41		)	46
Loans, including fees	789			4,460			(3,671		)
Total	(169		)	3,491			(3,660		)
Interest paid on:
Interest bearing deposits	163			61			102
Securities sold under repurchase agreements	133			210			(77		)
Federal funds purchased	(2		)	(2		)	—
Short-term FHLB advances	6			4			2
Notes payable	—			(2		)	2
Other borrowings/payables	(15		)	(15		)	—
Junior subordinated debentures	(543		)	(182		)	(361		)
Total	(258		)	74			(332		)
Taxable-equivalent net interest income	$	89		$	3,417		$	(3,328	)

Note: In Table 4, changes due to volume and rate have generally been allocated to volume and rate changes in proportion to the relationship of the absolute dollar amounts to the changes in each.

Non-interest Income

Non-interest income decreased $1.4 million in quarterly comparison, from $6.2 million for the three months ended September 30, 2014 to $4.8 million for the three months ended September 30, 2015.  The third quarter of 2014 included a $1.1 million gain on the sale of a commercial property held as ORE. Excluding this non-operating item, noninterest income decreased $275,000 in quarterly comparison.  The decrease in noninterest income resulted primarily from a $325,000 reduction in service charges on deposit accounts. For the nine-month period ended September 30, 2015, non-interest income totaled $16.0 million compared to $19.4 million for the nine months ended September 30, 2014, a net decrease of $3.4 million year-over-year. The first nine months of 2015 included $1.2 million of gain on sales of securities and $160,000 of income recognized from a death benefit on bank owned life insurance recorded in non-interest income. The first nine months of 2014 included $3.0 million of executive officer life insurance proceeds and a $1.1 million gain on the sale of ORE. Excluding non-operating income, decreases in noninterest income consisted primarily of $897,000 in service charges on deposit accounts, which was partially offset by a $154,000 increase in ATM and debit card income and a $235,000 increase in mortgage banking fees.

The decreases in service charges on deposit accounts of $325,000 in quarterly comparison and $897,000 in year-over-year comparison resulted primarily from a declining trend in the volume of NSF transactions. The $154,000 increase in ATM and debit card income in year-over-year comparison is primarily due to an increase in interchange fee income as a result of higher transaction volume.

Mortgage banking fees increased $235,000 for the first nine months of 2015 compared to the first nine months of 2014.In January 2014, we restructured our mortgage lending department and as a result were able to offer more competitive mortgage loan products to our customers and generate more volume in correspondent and brokered mortgage loans.

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Non-interest Expense

Third quarter 2015 noninterest expenses decreased $1.3 million compared to third quarter 2014. The second quarter of 2014 included efficiency consultant expenses of $200,000, $394,000 of losses on disposal of fixed assets and a $258,000 loss on redemption of Trust Preferred Securities. Excluding these non-operating items, noninterest expenses decreased $441,000 in quarterly comparison. A decrease of $634,000 in salaries and benefits costs was partially offset by increases of $122,000 in FDIC premiums and $73,000 in expenses on ORE and other repossessed assets.

Noninterest expense decreased $2.8 million in year-to-date comparison, from $52.7 for the nine months ended September 30, 2014 to $49.9 million for the nine months ended September 30, 2015. The first nine months of 2014 included $1.2 million of non-operating expenses. In addition to the $852,000 of non-operating expenses recorded in the third quarter of 2014 as described above, 2014 non-operating costs included $160,000 in additional efficiency consultant expenses and $189,000 in expenses associated with the death of an executive officer. Excluding the non-operating expenses in 2014, decreases in noninterest expense primarily included $1.7 million in salaries and benefits costs, $173,000 in credit reporting expense and $126,000 in the cost of printing and supplies. The decreased expenses were partially offset by a $156,000 increase in legal and professional fees and a $221,000 increase in FDIC premiums.

A reduction in the number of full-time equivalent (“FTE”) employees from 560 FTE employees at September 30, 2014 to 535 FTE employees at September 30, 2015 reduced salaries expense by $1.1 million year-over-year, which included a $450,000 reduction in annual incentive compensation accruals.  The 25 FTE employee decrease was achieved primarily through attrition and process improvement initiatives over the twelve month period.  The $1.7 million decrease in salaries and benefits costs also included a $625,000 decrease in group health costs.

Analysis of Balance Sheet

Total consolidated assets at September 30, 2015 and December 31, 2014 were $2.0 billion and $1.9 billion, respectively.  Deposits totaled $1.5 billion at September 30, 2015 and December 31, 2014.  Our stable core deposit base, which excludes time deposits, decreased $10.4 million and accounted for 85.7% of deposits at September 30, 2015 compared to 84.1% of deposits at year end 2014.

Securities available-for-sale totaled $285.5 million at September 30, 2015, an increase of $8.5 million from $277.0 million at December 31, 2014.  The securities available-for-sale portfolio increased primarily due to $105.5 million in purchases of securities, which were offset by $55.9 million in calls, maturities and pay-downs and $40.3 million in sales of securities.  During the nine months ended September 30, 2015, we sold lower yielding asset backed securities and US Government sponsored enterprises securities and reinvested those funds primarily in higher yielding CMOs.  Securities held-to-maturity decreased $20.2 million, from $141.2 million at December 31, 2014 to $121.0 million at September 30, 2015.  The investment securities portfolio had an effective duration of 3.5 years and a net unrealized gain of $3.6 million at September 30, 2015.

Total loans grew $17.0 million, or 1.3% for the nine months ended September 30, 2015.  The first nine months of 2015 included a $10.8 million decline in the balance of loans in the indirect auto loan program, which the Bank exited at the end of 2014. Net of the decrease in the indirect auto loan program and excluding a CD secured loan of $20.0 million, loans increased $7.8 million, or 0.6% for the nine months ended September 30, 2015. 

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Table 5 Composition of Loans (in thousands)
	September 30, 2015			December 31, 2014
Commercial, financial, and agricultural (C&I)	$	482,452		$	467,147
Real estate – construction	74,279			68,577
Real estate – commercial (CRE)	473,319			467,172
Real estate – residential	151,667			154,602
Installment loans to individuals	113,199			119,328
Lease financing receivable	4,790			4,857
Other	1,746			2,748
	$	1,301,452		$	1,284,431
Less allowance for loan losses	(18,939		)	(11,226		)
Net loans	$	1,282,513		$	1,273,205

Our energy-related loan portfolio at September 30, 2015 totaled $295.6 million, or 22.7% of total loans, including a $20.0 million CD secured loan, up from $266.4 million at June 30, 2015.  The majority of MidSouth’s energy lending is focused on oil field service companies.  Of the 442 total relationships in our energy-related loan portfolio, 18 relationships totaling $41.2 million were classified, with $29.1 million on nonaccrual status at September 30, 2015. Substantial paydown activity after September 30, 2015 reduced the energy-related loan portfolio by approximately $35.8 million.

At September 30, 2015, reserves for potential energy-related loan losses approximated 2.4% of energy loans. Included in the 2.4% is 0.4% reserved for potential yet unidentified losses in the energy-related portfolio. During the second quarter of 2015, one energy-related credit relationship totaling $21.4 million was classified as a troubled debt restructuring ("TDR") by conversion of the loans to interest only for a limited amount of time. The TDR defaulted on its restructured terms during the third quarter of 2015 and was subsequently placed on nonaccrual.

Within the $473.3 million commercial real estate portfolio, $440.8 million is secured by commercial property, $16.4 million is secured by multi-family property, and $16.1 million is secured by farmland.  Of the $440.8 million secured by commercial property, $252.3 million, or 57.2%, is owner-occupied.  Of the $151.7 million residential real estate portfolio, 87.7% represented loans secured by first liens.

Off-Balance Sheet Arrangements

In the normal course of operations, the Company engages in a variety of financial transactions that, in accordance with GAAP, are not recorded in the financial statements.  These transactions involve, to varying degrees, elements of credit, interest rate, and liquidity risk.  Such transactions are used primarily to manage customers’ requests for funding and take the form of loan commitments, letters of credit and lines of credit.  For the period ended September 30, 2015, we did not engage in any off-balance sheet transactions reasonably likely to have a material impact on our financial condition, results of operations, or cash flows.

Liquidity and Capital

Bank Liquidity

Liquidity is the availability of funds to meet maturing contractual obligations and to fund operations.  The Bank’s primary liquidity needs involve its ability to accommodate customers’ demands for deposit withdrawals as well as customers’ 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.  Although the Bank historically has not utilized brokered deposits, this is a fourth potential source of liquidity, albeit one that is more costly and volatile.  Our core deposits are our most stable and important source of funding.  Cash deposits at other banks, federal funds sold, and principal payments received on loans and mortgage-backed securities provide additional primary sources of liquidity.  Approximately $17.1 million in projected cash flows from securities repayments for the remainder of 2015 provides an additional source of liquidity.

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The Bank also has significant borrowing capacity with the FRB-Atlanta and with the FHLB–Dallas.  As of September 30, 2015, we had no borrowings with the FRB-Atlanta.  Long-term FHLB-Dallas advances totaled $26.0 million at September 30, 2015 and are fixed rate advances with rates ranging from 1.99% to 5.06% and have a range of maturities from October 2015 to January 2019.  Two short-term FHLB-Dallas advances totaled $70.0 million at September 30, 2015.  The advances mature in October 2015 and January 2016 and bear interest rates ranging from 0.10% to 0.30%.   Under existing agreements with the FHLB-Dallas, our borrowing capacity totaled $289.5 million at September 30, 2015.  The Bank has the ability to post additional collateral of approximately $118.5 million if necessary to meet liquidity needs.  Additionally, $240.2 million in loan collateral is pledged under a Borrower-in-Custody line with the FRB-Atlanta. Unsecured borrowing lines totaling $33.5 million are available through correspondent banks.  We utilize these contingency funding alternatives to meet deposit volatility, which is more likely in the current environment, given unusual competitive offerings within our markets.

Company Liquidity

At the Company level, cash is needed primarily to meet interest payments on the junior subordinated debentures, dividends on our common stock and dividend payments on the Series B and Series C Preferred Stocks.  The dividend rate on the $32. 0 million of Series B Preferred Stock issued to the U.S. Treasury for participation in the Small Business Lending Fund (“SBLF”) was 1.00% for the three month periods ended September 30, 2015 and December 31, 2014.  The dividend rate was set at 1.00% for the fourth quarter of 2013 due to attaining the target 10% growth rate in qualified small business loans during the second quarter of 2013.  Beginning February 2016, the dividend rate will increase to 9% per annum. Management is reviewing options to repay all or a portion on the $32.0 million prior to the rate reset.

On December 28, 2012, the Company issued 756,511 shares of common stock and 99,971 shares of Series C Preferred Stock in connection with the PSB acquisition.  During the first nine months of 2015, 2,424 shares of Series C Preferred Stock were converted into 13,448 shares of the Company’s common stock.  As of September 30, 2015, there were 91,256 shares of Series C Preferred Stock issued and outstanding.  The Series C Preferred Stock is entitled to the payment of noncumulative dividends, if and when declared by the Company’s Board of Directors, at the rate of 4.00% per annum, payable quarterly in arrears on January 15, April 15, July 15 and October 15 of each year.  The Series C Preferred Stock paid dividends totaling $92,000 for the three months ended September 30, 2015.

Dividends from the Bank totaling $6.0 million provided additional liquidity for the Company during the nine months ended September 30, 2015.  As of September 30, 2015, the Bank had the ability to pay dividends to the Company of approximately $12.8 million without prior approval from its primary regulator.  As a publicly traded company, the Company also has the ability, subject to market conditions, to issue additional shares of common stock and other securities to provide funds as needed for operations and future growth of the Company. The Company renewed a $75.0 million Universal Shelf Registration during the third quarter of 2015.

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.  Effective January 1, 2015, The Company and the Bank adopted the Basel III rules which included new minimum risk-based and leverage ratios, and modified capital and asset definitions for purposes of calculating these ratios.  These rules also created a new regulatory capital standard based on Tier 1 common equity and increased the minimum leverage and risk-based capital ratios applicable to all banking organizations.

In addition, the Basel III rules subject banking organizations to certain limitations on capital distributions and discretionary bonus payments to executive officers if the organization does not maintain a capital conservation buffer phased in by 2019 of 2.5% above the new regulatory minimum capital ratios.  The effect of the capital conservation buffer once fully implemented in 2019 will be to increase the minimum common equity Tier 1 capital ratio to 7.0%, the minimum Tier 1 risk-based capital ratio to 8.5% and the minimum total risk-based capital ratio to 10.5%, for banking organizations seeking to avoid the limitations on capital distributions and discretionary bonus payments to executive officers.  The new minimum capital requirements were effective on January 1, 2015 for community banking organizations, such as MidSouth, whereas other requirements of the Basel III rules including the conservation buffer phase in over time.

At September 30, 2015, the Company and the Bank were in compliance with statutory minimum capital requirements and were classified as “well capitalized.”  Minimum capital requirements include a total risk-based capital ratio of 8.0%, with Tier 1 capital not less than 6.0%, a Tier 1 leverage ratio (Tier 1 to total average adjusted assets) of 4.0% based upon the regulators latest composite rating of the institution, and a common equity Tier 1 capital to total risk-weighted assets of 4.5%. As of September 30, 2015, the

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Company’s Tier 1 leverage ratio was 9.98%, Tier 1 capital to risk-weighted assets was 12.86%, total capital to risk-weighted assets was 14.11% and common equity Tier 1 capital to risk-weighted assets was 8.62%.  The Bank had a Tier 1 leverage capital ratio of 9.34% at September 30, 2015.

Asset Quality

Credit Risk Management

We manage credit risk primarily by observing written, board approved policies that govern all credit underwriting and approval activities.  Our Chief Credit Officer (“CCO”) is responsible for credit underwriting and loan operations for the Bank.  The role of the CCO includes on-going review and development of lending policies, commercial credit analysis, centralized consumer underwriting, loan operations documentation and funding, and overall credit risk management procedures.  The current risk management process requires that each individual loan officer review his or her portfolio on a quarterly basis and assign recommended credit ratings on each loan.  These efforts are supplemented by independent reviews performed by the loan review officer 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.  We believe the conservative nature of our underwriting practices has resulted in strong credit quality in our loan portfolio.  Completed loan applications, credit bureau reports, financial statements, and a committee approval process remain a part of credit decisions.  Documentation of the loan decision process is required on each credit application, whether approved or denied, to ensure thorough and consistent procedures.  Additionally, we have historically recognized and disclosed significant problem loans quickly and taken prompt action to address material weaknesses in those credits.

Credit concentrations are monitored and reported quarterly whereby individual customer and aggregate industry leverage, profitability, risk rating distributions, and liquidity are evaluated for each major standard industry classification segment.  At September 30, 2015, one industry segment concentration, the oil and gas industry, aggregated more than 10% of our loan portfolio.  Our exposure in the oil and gas (energy-related) industry, including related service and manufacturing industries, totaled approximately $295.6 million, or 22.7% of total loans.  Of the 442 credit relationships in the energy-related loan portfolio, 18 relationships totaling $41.2 million were classified with $29.1 million on nonaccrual status at September 30, 2015.

Additionally, we monitor our exposure to loans secured by commercial real estate.  At September 30, 2015, loans secured by commercial real estate (including commercial construction, farmland and multifamily loans) totaled approximately $529.0 million.  Of the $529.0 million, $473.3 million represent CRE loans, 53% of which are secured by owner-occupied commercial properties.  Of the $529.0 million in loans secured by commercial real estate, $20.0 million, or 3.8%, were on nonaccrual status at September 30, 2015.  Additional information regarding credit quality by loan classification is provided in Note 3 – Credit Quality of Loans and Allowance for Loan Losses and Note 8 – Fair Value Measurement in the notes to the interim consolidated financial statements.

Nonperforming Assets and Allowance for Loan Loss

Table 6 summarizes the Company's nonperforming assets for the quarters ending September 30, 2015 and 2014, and December 31, 2014.

40

Table 6 Nonperforming Assets and Loans Past Due 90 Days or More and Still Accruing (in thousands)
	September 30, 2015			December 31, 2014			September 30, 2014
Nonaccrual loans	$	51,616		$	10,701		$	7,750
Loans past due 90 days and over and still accruing	82			187			23
Total nonperforming loans	51,698			10,888			7,773
Other real estate	4,661			4,234			4,663
Other foreclosed assets	—			—			19
Total nonperforming assets	$	56,359		$	15,122		$	12,455
Troubled debt restructurings, accruing	$	168		$	176		$	180
Nonperforming assets to total assets	2.85		%	0.78		%	0.66		%
Nonperforming assets to total loans + ORE + other assets repossessed	4.32		%	1.17		%	0.99		%
ALL to nonperforming loans	36.63		%	103.10		%	121.25		%
ALL to total loans	1.46		%	0.87		%	0.75		%
QTD charge-offs	$	1,000		$	985		$	1,253
QTD recoveries	91			86			428
QTD net charge-offs	$	909		$	899		$	825
Annualized net charge-offs to total loans	0.28		%	0.28		%	0.26		%

Nonperforming assets totaled $56.4 million at September 30, 2015, an increase of $41.2 million from the $15.1 million reported at year-end 2014 and an increase of $43.9 million from the $12.5 million reported at September 30, 2014.  The increase in the first nine months of 2015 resulted primarily from the addition of five energy-related credits totaling $28.4 million that were placed on nonaccrual status during the third quarter of 2015. In addition, a $10.1 million commercial real estate (CRE) relationship unrelated to energy was placed on nonaccrual status during the second quarter of 2015. The $21.1 million commercial energy-related relationship was identified as a TDR during the second quarter of 2015 by conversion of the loans to interest only for a limited amount of time. The credit relationship defaulted on the modified terms during the third quarter of 2015 and was subsequently placed on nonaccrual.

Allowance coverage for nonperforming loans was 36.63% at September 30, 2015 compared to 103.10% at December 31, 2014 and 121.25% at September 30, 2014.  The ALL/total loans ratio increased to 1.46% at September 30, 2015, compared to 0.87% at year-end 2014 and 0.75% at September 30, 2014.  The increase in the ALL/total loans ratio resulted from a $10.9 million loan loss provision recorded during the first nine months of 2015, the majority of which resulted from downgrades of energy-related credits in the oil and gas portfolio. Including valuation accounting adjustments on acquired loans, the total adjustments and ALL was 1.76% of loans at September 30, 2015.  The ratio of annualized net charge-offs to total loans was 0.28% for the three months ended September 30, 2015, compared to 0.28% for the three months ended December 31, 2014, and 0.26% for the three months ended September 30, 2014. No energy-related charge-offs were recognized in the third quarter of 2015 and year to date energy-related charge-offs totaled $557,000.

Total nonperforming assets to total loans plus ORE and other assets repossessed increased to 4.32% at September 30, 2015 from 1.17% at December 31, 2014 and 0.99% at September 30, 2014.  Performing troubled debt restructurings (“TDRs”) totaled $168,000 at September 30, 2015 compared to $176,000 at December 31, 2014 and $180,000 at September 30, 2014.  Classified assets, including ORE, increased $10.2 million, or 13.5%, to $85.8 million at September 30, 2015 compared to $75.6 million at June 30, 2015. Additional information regarding impaired loans is included in Note 3 – Credit Quality of Loans and Allowance for Loan Losses and Note 8 – Fair Value Measurement in the notes to the interim consolidated financial statements.

Quarterly evaluations of the allowance for loan losses are performed in accordance with GAAP and regulatory guidelines.  The ALL is comprised of specific reserves assigned to each impaired loan for which a probable loss has been identified as well as general reserves to maintain the allowance at an acceptable level for other loans in the portfolio where historical loss experience is available that indicates certain probable losses may exist.  Factors considered in determining provisions include estimated losses

41

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 we determine the appropriate level of the ALL, 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. We believe the $18.9 million in the ALL as of September 30, 2015 is sufficient to cover probable losses in the loan portfolio.

Impact of Inflation and Changing Prices

The consolidated financial statements and notes thereto, presented herein, have been prepared in accordance with GAAP, 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.

42

Item 3.    Quantitative and Qualitative Disclosures About Market Risk.

There have been no significant changes from the information regarding market risk disclosed under the heading “Funding Sources - Interest Rate Sensitivity” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014.

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 Chief Executive Officer and Chief 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 third quarter of 2015, there was no change in the Company’s internal controls over financial reporting that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

43

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.  However, in the event of unexpected future developments in these matters, if the ultimate resolution of any such matter is unfavorable, the result may be material to the Company’s consolidated financial position, consolidated results of operations or consolidated cash flows.

Item 1A.    Risk Factors.

There have been no material changes from the risk factors previously disclosed in our Form 10-K for the year ended December 31, 2014.

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

The Company did not sell any unregistered equity securities or repurchase any equity securities during the quarter ended September 30, 2015.

Item 3.    Defaults Upon Senior Securities.

None.

Item 4.    Mine Safety Disclosures.

None.

Item 5.    Other Information.

None.

44

Item 6.    Exhibits.

Exhibit Number	Document Description
3.1	Amended and Restated Articles of Incorporation of MidSouth Bancorp, Inc. (restated solely for purposes of Item 601(b)(3) of Regulation S-K) (filed as Exhibit 3.1 to MidSouth's Annual Report on Form 10-K filed on March 18, 2013 and incorporated herein by reference).
3.2	Amended and Restated By-laws of MidSouth Bancorp, Inc. effective as of September 26, 2012 (restated solely for purposes of Item 601(b)(3) of Regulation S-K (filed as Exhibit 3.3 to MidSouth’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2012 and incorporated herein by reference).
10.1	Form of Restricted Stock Award Agreement
31.1	Certification pursuant to Exchange Act Rules 13(a) – 14(a)
31.2	Certification pursuant to Exchange Act Rules 13(a) – 14(a)
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
101	The following financial information from the Registrant’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2015, formatted in Extensible Business Reporting Language (“XBRL”): (i) Consolidated Statements of Operations, (ii) Consolidated Balance Sheets, (iii) Consolidated Statements of Cash Flows and (iv) Notes to Consolidated Financial Statements.*

* Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not to be “filed” or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, or Section 18 of the Securities Act of 1934, as amended, and otherwise are not subject to liability under these sections.

45

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: November 6, 2015
	/s/ C. R. Cloutier
	C. R. Cloutier, President and CEO
	(Principal Executive Officer)
	/s/ James R. McLemore
	James R. McLemore, CFO
	(Principal Financial Officer)
	/s/ Teri S. Stelly
	Teri S. Stelly, Controller (Principal Accounting Officer)

46

EX-10.1

MIDSOUTH BANCORP, INC.

RESTRICTED STOCK GRANT AGREEMENT

Amended and revised August 12, 2015

THIS AGREEMENT, made as of July 15, 2015, between MIDSOUTH BANCORP (the “MidSouth”) and ____________ (the “Optionee”).

WHEREAS, MidSouth has adopted and maintains the 2007 Omnibus Incentive Compensation Plan (as amended and restated effective May 23, 2012) (the “Plan”) to provide certain key persons, on whose initiative and efforts the successful conduct of the business of the Company depends, with incentives to: (a) enter into and remain in the service of the Company, (b) acquire a proprietary interest in the success of the Company, (c) maximize their performance and (d) enhance the long-term performance of the Company;

WHEREAS, the Plan provides that the Board of Directors of MidSouth (the “Board”) shall administer the Plan and determine the key persons to whom awards shall be granted and the amount and type of such awards; and

WHEREAS, the Board has determined that the purposes of the Plan would be furthered by granting the Optionee an award under the Plan as set forth in this Agreement;

NOW, THEREFORE, in consideration of the premises and the mutual covenants hereinafter set forth, the parties hereto hereby agree as follows:

1.Grant of Restricted Stock.  Pursuant to, and subject to, the terms and conditions set forth in this Agreement and in the Plan, the Board hereby grants to the Optionee X,XXX restricted shares (the “Restricted Stock”) of common stock of MidSouth, par value $0.10 per share (“Common Stock”). Until such time as the Restricted Stock vests in accordance with Section 4 of this Agreement, the shares of Restricted Stock shall be nontransferable as set forth in Section 5 hereof and are subject to a substantial risk of forfeiture.

Except as otherwise set forth herein, if the Optionee ceases to be employed by MidSouth or any of its affiliates for any reason, all shares of Restricted Stock that are not then vested shall be forfeited without any payment whatsoever to the Optionee. For purposes of this Agreement, the Optionee will be deemed to have terminated employment as of his or her last day of active work for MidSouth and its affiliates; provided, however that the Optionee shall be deemed to be actively at work during any period the Optionee is on approved paid medical leave or during the protected reemployment period applicable to military leave.

2.Grant Date.  The Grant Date of the Restricted Stock is August 17, 2015.

3.Incorporation of Plan.  All terms, conditions and restrictions of the Plan are incorporated herein and made part hereof as if stated herein.  If there is any conflict between the terms and conditions of the Plan and this Agreement, the terms and conditions of the Plan, as interpreted by the Board, shall govern.  Except as otherwise provided herein, all capitalized terms used herein shall have the meaning given to such terms in the Plan.

4.The Restricted Period.

(a)Except as provided for in Section 4(b) and 4(c) hereof, the Restricted Stock shall become 100% vested on the third annual anniversary of the Grant Date.

(b)In the event of the occurrence of a Change of Control, as defined in Article 12 of the Plan, as in effect on the date of such occurrence, the Restricted Stock shall become vested in full on the date of such Change in Control.

(c)    In the event of the termination of Optionee’s employment by reason of the Optionee’s death, disability or retirement (such retirement to be approved in advance by the Committee), the Restricted Stock shall become vested in full. For purposes of this Agreement, determination of an Optionee’s disability shall be made in the sole and absolute discretion of the Committee.

5.Restrictions on Transferability. Until a share of Restricted Stock vests in accordance with Section 4, the Optionee shall not transfer the Optionee’s rights to such share of Restricted Stock or to any rights related thereto. Any attempt to transfer unvested shares of Restricted Stock or any rights related thereto, whether by transfer, pledge, hypothecation or otherwise and whether voluntary or involuntary, by operation of law or otherwise, shall not vest the transferee with any interest or right in or with respect to such shares of Restricted Stock or such related rights except as specified in Section 11.2 of the Plan.

6.Rights as a Shareholder. While the Restricted Stock remain subject to forfeiture in accordance with this Agreement, the Optionee shall have all rights of a shareholder with respect to the Restricted Stock, including the right to receive dividends and vote the shares; provided, however, that during such period (i) Participant may not sell, transfer, pledge, exchange, hypothecate or otherwise dispose of the shares as set forth above in Section 5 and (ii) MidSouth (or a custodian selected by MidSouth) shall retain custody of any certificates evidencing the shares of Restricted Stock. In lieu of retaining custody of any certificates evidencing the Restricted Stock, the shares of Restricted Stock granted under this Agreement, may, in MidSouth’s discretion, be held in escrow by MidSouth or reflected in MidSouth’s books and records, until Optionee’s interest in such shares becomes vested and nonforfeitable. With respect to any Restricted Stock forfeited under this Agreement, Optionee does hereby irrevocably constitute and appoint the Secretary of MidSouth or any successor Secretary of MidSouth (the “Secretary”) as his or her attorney to transfer the forfeited shares of Restricted Stock on the books of MidSouth with full power of substitution in the premises. The Secretary shall use such authority to cancel any shares of Restricted Stock that are forfeited under this Agreement.

7.    Withholding. The Optionee shall be responsible for satisfying all applicable income and employment tax withholding obligations with respect to the vesting of the Restricted Stock granted pursuant to this Agreement, which obligations may be satisfied in accordance with Section 11.7 of the Plan. If the Optionee does not satisfy his or her withholding obligations as required by applicable law, MidSouth shall withhold the amount from any payments MidSouth makes to the Optionee necessary to satisfy such obligations.

8.Right of Discharge Preserved. Nothing in this Agreement shall confer upon the Optionee the right to continue in the employ or other service of MidSouth, or affect any right which MidSouth may have to terminate such employment or service.

9.Integration.  This Agreement contains the entire understanding of the parties with respect to its subject matter.  There are no restrictions, agreements, promises, representations, warranties, covenants or undertakings with respect to the subject matter hereof other than those expressly set forth herein.  This Agreement, including, without limitation, the Plan, supersedes all prior agreements and understandings between the parties with respect to its subject matter.

10.    Section 409A. Notwithstanding any other provision of this Agreement, it is intended that payments hereunder will not be considered deferred compensation within the meaning of Section 409A of the Code. For purposes of this Agreement, all rights to payments hereunder shall be treated as rights to receive a series of separate payments and benefits to the fullest extent allowed by Section 409A of the Code. Payments hereunder are intended to satisfy the exemption from Section 409A of the Code for restricted stock. For purposes of this Agreement, any action taken hereunder shall be undertaken in a manner that will not negatively affect the status of the Restricted Stock unless such action otherwise complies with Section 409A of the Code to the extent necessary to avoid noncompliance. Notwithstanding the preceding, neither MidSouth nor any affiliate shall be liable to the Optionee or any other person if the IRS or any court or other authority having jurisdiction over such matter determines for any reason that any payments hereunder are subject to taxes, penalties or interest as a result of failing to be exempt from, or comply with, Section 409A of the Code.

11.Counterparts.  This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which shall constitute one and the same instrument.

12.Governing Law.  This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of Louisiana, without regard to the provisions governing conflict of laws.

13.    Limitation on Rights; No Right to Future Grants; Extraordinary Item.  By entering into this Agreement and accepting the Award, Optionee acknowledges that: (i) Optionee's participation in the Plan is voluntary; (ii) the value of the Award is an extraordinary item which is outside the scope of any employment contract with Optionee; (iii) the Award is not part of normal or expected compensation for any purpose, including without limitation for calculating any benefits, severance, resignation, termination, redundancy, end of service payments, bonuses, long-service awards, pension or retirement benefits or similar payments, and Optionee will not be entitled to compensation or damages as a consequence of Optionee's forfeiture of any unvested portion of the Award as a result of Optionee's Termination of Service with MidSouth or any Related Company for any reason; and (iv) in the event that Optionee is not a direct employee of MidSouth, the grant of the Award will not be interpreted to form an employment relationship with MidSouth or any Related Company and the grant of the Award will not be interpreted to form an employment contract with the Optionee's employer, MidSouth or any Related Company. MidSouth shall be under no obligation whatsoever to advise the Optionee of the existence, maturity or termination of any of Optionee's rights hereunder and Optionee shall be responsible for familiarizing himself or herself with all matters contained herein and in the Plan which may affect any of Optionee's rights or privileges hereunder.

14.Optionee Acknowledgment.  The Optionee hereby acknowledges receipt of a copy of the Plan.  The Optionee hereby acknowledges that all decisions, determinations and interpretations of the Board in respect of the Plan, this Agreement and the Restricted Stock shall be final and conclusive.

IN WITNESS WHEREOF, MidSouth has caused this Agreement to be duly executed by its duly authorized officer, and the Optionee has hereunto signed this Agreement on his own behalf, thereby representing that he has carefully read and understands this Agreement and the Plan as of the day and year first written above.

MIDSOUTH BANCORP, INC.

By:___________________________

Chairman of the Compensation Committee of the Board of Directors

ACCEPTED AND AGREED TO:

_______________________________

Optionee

X,XXX Restricted shares

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 and presented 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 based on such evaluations; 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 information; 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: November 6, 2015
	/s/ C. R. Cloutier
	Chief Executive Officer

EX-31.2

Exhibit 31.1

CERTIFICATION

I, James R. McLemore, Senior 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 and presented 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 based on such evaluations; 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 information; 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: November 6, 2015
	/s/ James R. McLemore
	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 September 30, 2015 (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

November 6, 2015

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 September 30, 2015 (the “Report”), I, James R. McLemore, 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/ James R. McLemore

James R. McLemore

Chief Financial Officer

November 6, 2015

XML

Other Comprehensive Income - Reclassifications (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Gain on sale of securities, net	$ 0	$ 0	$ (1,243)	$ (128)
Tax expense	0	0	435	45
Reclassifications Out of Accumulated Other Comprehensive Income
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Gain on sale of securities, net	0	0	(1,243)	(128)
Tax expense	0	0	435	45
Net earnings	$ 0	$ 0	$ (808)	$ (83)

XML

Credit Quality of Loans and Allowance for Loan Losses - Nonaccrual Loans (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Dec. 31, 2014
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans on nonaccrual status	$ 51,616		$ 10,701
Interest lost on nonaccrual loans	1,300	$ 392
Interest received on nonaccrual loans	19	$ 93
Commercial, financial and agricultural
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans on nonaccrual status	29,171		2,642
Commercial real estate - construction
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans on nonaccrual status	39		54
Commercial real estate - other
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans on nonaccrual status	19,952		6,429
Residential - construction
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans on nonaccrual status	172		0
Residential - prime
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans on nonaccrual status	1,896		1,194
Consumer - credit card
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans on nonaccrual status	0		0
Consumer - other
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans on nonaccrual status	386		382
Lease financing receivable
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans on nonaccrual status	0		0
Other
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans on nonaccrual status	$ 0		$ 0

XML

Investment Securities - Portfolio of Held-to-Maturity Securities (Details) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Schedule of Held-to-maturity Securities [Line Items]
Held-to-maturity, Amortized Cost	$ 121,043	$ 141,201
Gross Unrealized Gains	1,815	1,400
Gross Unrealized Losses	370	1,008
Fair Value	122,488	141,593
Obligations of state and political subdivisions
Schedule of Held-to-maturity Securities [Line Items]
Held-to-maturity, Amortized Cost	43,933	45,914
Gross Unrealized Gains	552	267
Gross Unrealized Losses	38	192
Fair Value	44,447	45,989
GSE mortgage-backed securities
Schedule of Held-to-maturity Securities [Line Items]
Held-to-maturity, Amortized Cost	58,420	67,268
Gross Unrealized Gains	1,212	1,080
Gross Unrealized Losses	82	164
Fair Value	59,550	68,184
Collateralized mortgage obligations: residential
Schedule of Held-to-maturity Securities [Line Items]
Held-to-maturity, Amortized Cost	11,284	12,709
Gross Unrealized Gains	0	0
Gross Unrealized Losses	250	479
Fair Value	11,034	12,230
Collateralized mortgage obligations: commercial
Schedule of Held-to-maturity Securities [Line Items]
Held-to-maturity, Amortized Cost	7,406	15,310
Gross Unrealized Gains	51	53
Gross Unrealized Losses	0	173
Fair Value	$ 7,457	$ 15,190

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Fair Value Measurement - Assets Recorded at Fair Value and Narrative (Details) - USD ($) $ in Thousands	3 Months Ended	9 Months Ended
	Sep. 30, 2015	Sep. 30, 2015	Dec. 31, 2014
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Discount for selling costs	10.00%
Fair Value	$ 285,485	$ 285,485	$ 276,984
Recurring | Level 1
Available-for-sale securities:
Obligations of state and political subdivisions	0	0	0
GSE mortgage-backed securities	0	0	0
Collateralized mortgage obligations: residential	0	0	0
Collateralized mortgage obligations: commercial	0	0	0
Mutual funds	2,116	2,116	2,104
U.S. Government sponsored enterprises			0
Other asset-backed securities			0
Collateralized debt obligation			0
Recurring | Level 2
Available-for-sale securities:
Obligations of state and political subdivisions	37,431	37,431	44,605
GSE mortgage-backed securities	91,739	91,739	109,103
Collateralized mortgage obligations: residential	148,582	148,582	60,839
Collateralized mortgage obligations: commercial	5,617	5,617	24,545
Mutual funds	0	0	0
U.S. Government sponsored enterprises			10,227
Other asset-backed securities			24,343
Collateralized debt obligation			1,218
Recurring | Level 3
Available-for-sale securities:
Obligations of state and political subdivisions	0	0	0
GSE mortgage-backed securities	0	0	0
Collateralized mortgage obligations: residential	0	0	0
Collateralized mortgage obligations: commercial	0	0	0
Mutual funds	0	0	0
U.S. Government sponsored enterprises			0
Other asset-backed securities			0
Collateralized debt obligation			0
Nonrecurring
Assets and Liabilities Measured on Nonrecurring Basis
Impaired loans	14,966	14,966	5,051
Other real estate	4,661	4,661	4,234
Nonrecurring | Level 1
Assets and Liabilities Measured on Nonrecurring Basis
Impaired loans	0	0	0
Other real estate	0	0	0
Nonrecurring | Level 2
Assets and Liabilities Measured on Nonrecurring Basis
Impaired loans	14,966	14,966	5,051
Other real estate	4,661	4,661	4,234
Nonrecurring | Level 3
Assets and Liabilities Measured on Nonrecurring Basis
Impaired loans	0	0	0
Other real estate	0	0	0
Obligations of state and political subdivisions
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	37,431	37,431	44,605
Obligations of state and political subdivisions | Recurring
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	37,431	37,431	44,605
GSE mortgage-backed securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	91,739	91,739	109,103
GSE mortgage-backed securities | Recurring
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	91,739	91,739	109,103
Collateralized mortgage obligations: residential
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	148,582	148,582	60,839
Collateralized mortgage obligations: residential | Recurring
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	148,582	148,582	60,839
Collateralized mortgage obligations: commercial
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	5,617	5,617	24,545
Collateralized mortgage obligations: commercial | Recurring
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	5,617	5,617	24,545
Mutual funds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	2,116	2,116	2,104
Mutual funds | Recurring
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	$ 2,116	$ 2,116	2,104
U.S. Government sponsored enterprises
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value			10,227
U.S. Government sponsored enterprises | Recurring
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value			10,227
Other asset-backed securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value			24,343
Other asset-backed securities | Recurring
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value			24,343
Collateralized debt obligation
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value			1,218
Collateralized debt obligation | Recurring
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value			$ 1,218
Minimum
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Period when new appraisals are received		28 days
Maximum
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Period when new appraisals are received		42 days

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Intangibles (Details) - Core Deposit Intangible Assets - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Finite-Lived Intangible Assets [Line Items]
Gross carrying amount	$ 11,674	$ 11,674
Less accumulated amortization	(5,670)	(4,840)
Net carrying amount	$ 6,004	$ 6,834

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Basis of Presentation

9 Months Ended

Sep. 30, 2015

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Presentation

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 (“GAAP”), the financial position of MidSouth Bancorp, Inc. (the “Company”) and its subsidiaries as of September 30, 2015 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 2014 Annual Report on Form 10-K.

The results of operations for the nine-month period ended September 30, 2015 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 GAAP 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 GAAP 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 2014 Annual Report on Form 10-K.

Recent Accounting Pronouncements — ASU 2015-01, Income Statement - Extraordinary and Unusual Items (Subtopic 225-20): Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items was issued as part of the FASB's simplification initiative. ASU 2015-01 eliminates the concept of extraordinary items. The effective date of this Update is for fiscal years beginning on or after December 15, 2015 and interim periods within those annual periods. Adoption of this Update is not expected to have a material effect on the Company’s consolidated financial statements or the interim notes to the consolidated financial statements.

ASU 2015-03, Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs was also issued as part of the FASB's simplification initiative. The amendments in this ASU require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. Currently, debt issuance costs are presented as an asset on the balance sheet. The FASB notes within the ASU, capitalized debt issuance costs do not meet the definition of an asset and are more akin to a debt discount, thereby reducing the carrying amount of the proceeds received. The effective date of this Update is for fiscal years beginning on or after December 15, 2015 and interim periods within those annual periods. Adoption of this Update is not expected to have a material effect on the Company’s consolidated financial statements or the interim notes to the consolidated financial statements.

Louisiana Business Corporation Act — Effective January 1, 2015, companies incorporated under Louisiana law became subject to the Louisiana Business Corporation Act. Provisions of the Louisiana Business Corporation Act eliminate the concept of treasury stock. Rather, shares purchased by the Company constitute authorized but unissued shares. Accounting principles generally accepted in the United States of America state that accounting for treasury stock shall conform to state law. The Company's consolidated financial statements as of September 30, 2015 reflect this change. The cost of shares purchased by the Company has been allocated to common stock and additional paid-in capital balances.

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Fair Value Measurement - Limitations (Details) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Financial assets [Abstract]
Securities available-for-sale	$ 285,485	$ 276,984
Securities held-to-maturity	122,488	141,593
Financial liabilities [Abstract]
Long-term Federal Home Loan Bank advances	25,958	26,277
Carrying Value
Financial assets [Abstract]
Cash and due from banks, interest-bearing deposits in banks and federal funds sold	125,437	86,872
Securities available-for-sale	285,485	276,984
Securities held-to-maturity	121,043	141,201
Other investments	12,063	9,990
Loans, net	1,282,513	1,273,205
Cash surrender value of life insurance policies	13,548	13,659
Financial liabilities [Abstract]
Non-interest-bearing deposits	406,118	390,863
Interest-bearing deposits	1,137,303	1,194,371
Securities sold under agreements to repurchase	92,085	62,098
Short-term Federal Home Loan Bank advances	70,000	25,000
Long-term Federal Home Loan Bank advances	25,958	26,277
Junior subordinated debentures	22,167	22,167
Fair Value | Level 1
Financial assets [Abstract]
Cash and due from banks, interest-bearing deposits in banks and federal funds sold	125,437	86,872
Securities available-for-sale	2,116	2,104
Securities held-to-maturity	0	0
Other investments	12,063	9,990
Loans, net	0	0
Cash surrender value of life insurance policies	0	0
Financial liabilities [Abstract]
Non-interest-bearing deposits	0	0
Interest-bearing deposits	0	0
Securities sold under agreements to repurchase	92,085	62,098
Short-term Federal Home Loan Bank advances	0	0
Long-term Federal Home Loan Bank advances	0	0
Junior subordinated debentures	0	0
Fair Value | Level 2
Financial assets [Abstract]
Cash and due from banks, interest-bearing deposits in banks and federal funds sold	0	0
Securities available-for-sale	283,369	274,880
Securities held-to-maturity	122,488	141,593
Other investments	0	0
Loans, net	14,966	5,051
Cash surrender value of life insurance policies	13,548	13,659
Financial liabilities [Abstract]
Non-interest-bearing deposits	406,118	390,863
Interest-bearing deposits	918,792	943,255
Securities sold under agreements to repurchase	0	0
Short-term Federal Home Loan Bank advances	70,000	25,000
Long-term Federal Home Loan Bank advances	0	0
Junior subordinated debentures	22,167	22,167
Fair Value | Level 3
Financial assets [Abstract]
Cash and due from banks, interest-bearing deposits in banks and federal funds sold	0	0
Securities available-for-sale	0	0
Securities held-to-maturity	0	0
Other investments	0	0
Loans, net	1,282,506	1,277,882
Cash surrender value of life insurance policies	0	0
Financial liabilities [Abstract]
Non-interest-bearing deposits	0	0
Interest-bearing deposits	218,328	251,291
Securities sold under agreements to repurchase	0	0
Short-term Federal Home Loan Bank advances	0	0
Long-term Federal Home Loan Bank advances	26,956	27,193
Junior subordinated debentures	$ 0	$ 0

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Investment Securities - Narrative (Details)	9 Months Ended
	Sep. 30, 2015 USD ($) security	Sep. 30, 2014 USD ($) security	Dec. 31, 2014 USD ($)
Investments, Debt and Equity Securities [Abstract]
Number of private-label collateralized mortgage obligations | security	2
Combined balance of private-label collateralized mortgage obligations	$ 34,000
AFS and HTM securities in unrealized loss positions qualitative disclosure number of positions | security	42
Unrealized losses as a percentage of individual securities amortized cost basis	1.21%
Unrealized losses as percentage of Company's total amortized cost basis	0.36%
Number of securities in an unrealized loss position for over 12 months | security	20
Unamortized cost basis of securities in a continuous loss position	$ 59,400,000
Unrealized loss on securities in a continuous loss position	1,200,000
Impairment related to credit quality	$ 0
Securities sold, classified as available-for-sale | security	21	4
Available-for-sale securities, realized gain (loss)	$ 1,200,000	$ 128,000
Number of available-for-sale securities sold with gains | security	11
Available-for-sale securities, gross realized gains	$ 1,400,000
Number of available-for-sale securities sold with losses | security	10
Available-for-sale securities, gross realized losses	$ 135,000
Securities pledged as collateral for public funding	$ 287,200,000		$ 279,800,000

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Investment Securities - Summary of Unrealized Losses of Held-to-Maturity Securities (Details) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Schedule of Held-to-maturity Securities [Line Items]
Held-to-maturity, Securities with losses under 12 months, Fair Value	$ 6,544	$ 19,360
Held-to-maturity, Securities with losses under 12 months, Gross Unrealized Loss	19	208
Held-to-maturity, Securities with losses over 12 months, Fair Value	19,645	33,635
Held-to-maturity, Securities with losses over 12 months, Gross Unrealized Loss	351	800
Held-to-maturity, Total, Fair Value	26,189	52,995
Held-to-maturity, Total, Gross Unrealized Loss	370	1,008
Obligations of state and political subdivisions
Schedule of Held-to-maturity Securities [Line Items]
Held-to-maturity, Securities with losses under 12 months, Fair Value	6,544	11,761
Held-to-maturity, Securities with losses under 12 months, Gross Unrealized Loss	19	35
Held-to-maturity, Securities with losses over 12 months, Fair Value	1,302	13,263
Held-to-maturity, Securities with losses over 12 months, Gross Unrealized Loss	19	157
Held-to-maturity, Total, Fair Value	7,846	25,024
Held-to-maturity, Total, Gross Unrealized Loss	38	192
GSE mortgage-backed securities
Schedule of Held-to-maturity Securities [Line Items]
Held-to-maturity, Securities with losses under 12 months, Fair Value	0	0
Held-to-maturity, Securities with losses under 12 months, Gross Unrealized Loss	0	0
Held-to-maturity, Securities with losses over 12 months, Fair Value	7,309	8,142
Held-to-maturity, Securities with losses over 12 months, Gross Unrealized Loss	82	164
Held-to-maturity, Total, Fair Value	7,309	8,142
Held-to-maturity, Total, Gross Unrealized Loss	82	164
Collateralized mortgage obligations: residential
Schedule of Held-to-maturity Securities [Line Items]
Held-to-maturity, Securities with losses under 12 months, Fair Value	0	0
Held-to-maturity, Securities with losses under 12 months, Gross Unrealized Loss	0	0
Held-to-maturity, Securities with losses over 12 months, Fair Value	11,034	12,230
Held-to-maturity, Securities with losses over 12 months, Gross Unrealized Loss	250	479
Held-to-maturity, Total, Fair Value	11,034	12,230
Held-to-maturity, Total, Gross Unrealized Loss	$ 250	479
Collateralized mortgage obligations: commercial
Schedule of Held-to-maturity Securities [Line Items]
Held-to-maturity, Securities with losses under 12 months, Fair Value		7,599
Held-to-maturity, Securities with losses under 12 months, Gross Unrealized Loss		173
Held-to-maturity, Securities with losses over 12 months, Fair Value		0
Held-to-maturity, Securities with losses over 12 months, Gross Unrealized Loss		0
Held-to-maturity, Total, Fair Value		7,599
Held-to-maturity, Total, Gross Unrealized Loss		$ 173

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Credit Quality of Loans and Allowance for Loan Losses - Loan Portfolio and Concentrations (Details) $ in Thousands	9 Months Ended
	Sep. 30, 2015 USD ($) industry_concentration	Dec. 31, 2014 USD ($)	Sep. 30, 2014 USD ($)
Loan portfolio [Abstract]
Loans	$ 1,301,452	$ 1,284,431	$ 1,248,373
Less allowance for loan losses	(18,939)	(11,226)
Loans, net	$ 1,282,513	1,273,205
Number of industry segment concentration above threshold limit | industry_concentration	1
Concentration risk, percentage	10.00%
Loans exposure in oil and gas industry	$ 295,600
Exposure in the oil and gas industry specified as percentage of total loans	22.70%
Loans with exposure in commercial real estate	$ 529,000
Loans on nonaccrual status	51,616	10,701
Commercial, financial and agricultural
Loan portfolio [Abstract]
Loans	482,452	467,147	452,065
Loans on nonaccrual status	29,171	2,642
Real estate - construction
Loan portfolio [Abstract]
Loans	74,279	68,577	86,315
Real estate – commercial
Loan portfolio [Abstract]
Loans	$ 473,319	467,172	430,930
Percentage of CRE loans secured by owner-occupied commercial properties	53.00%
Loans on nonaccrual status	$ 20,000
Nonaccrual status of loans specified as percentage of total CRE loans	3.80%
Real estate – residential
Loan portfolio [Abstract]
Loans	$ 151,667	154,602	153,915
Installment loans to individuals
Loan portfolio [Abstract]
Loans	113,199	119,328	116,340
Lease financing receivable
Loan portfolio [Abstract]
Loans	4,790	4,857	5,285
Loans on nonaccrual status	0	0
Other
Loan portfolio [Abstract]
Loans	1,746	2,748	$ 3,523
Loans on nonaccrual status	$ 0	$ 0

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Credit Quality of Loans and Allowance for Loan Losses - Roll Forward of Activity In Allowance for Loan Losses (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Dec. 31, 2014
Allowance for loan losses by portfolio [Roll Forward]
Beginning balance	$ 11,226	$ 8,779
Charge-offs	(3,483)	(2,932)
Recoveries	296	653
Provision	10,900	2,925
Ending balance	18,939	9,425
Ending balance: individually evaluated for impairment	4,697	1,138
Ending balance: collectively evaluated for impairment	14,242	8,287
Loans:
Ending balance	1,301,452	1,248,373	$ 1,284,431
Ending balance: individually evaluated for impairment	51,507	7,579
Ending balance: collectively evaluated for impairment	1,249,229	1,240,018
Ending balance: loans acquired with deteriorated credit quality	716	776
Commercial, financial and agricultural
Allowance for loan losses by portfolio [Roll Forward]
Beginning balance	5,729	3,906
Charge-offs	(2,310)	(2,084)
Recoveries	185	101
Provision	8,016	2,731
Ending balance	11,620	4,654
Ending balance: individually evaluated for impairment	2,569	853
Ending balance: collectively evaluated for impairment	9,051	3,801
Loans:
Ending balance	482,452	452,065	467,147
Ending balance: individually evaluated for impairment	29,185	2,662
Ending balance: collectively evaluated for impairment	453,267	449,403
Ending balance: loans acquired with deteriorated credit quality	0	0
Real estate - construction
Allowance for loan losses by portfolio [Roll Forward]
Beginning balance	954	1,046
Charge-offs	(76)	(1)
Recoveries	1	0
Provision	(62)	103
Ending balance	817	1,148
Ending balance: individually evaluated for impairment	26	3
Ending balance: collectively evaluated for impairment	791	1,145
Loans:
Ending balance	74,279	86,315	68,577
Ending balance: individually evaluated for impairment	212	106
Ending balance: collectively evaluated for impairment	74,067	86,209
Ending balance: loans acquired with deteriorated credit quality	0	0
Real estate – commercial
Allowance for loan losses by portfolio [Roll Forward]
Beginning balance	2,402	1,389
Charge-offs	(169)	(93)
Recoveries	20	398
Provision	2,107	(345)
Ending balance	4,360	1,349
Ending balance: individually evaluated for impairment	1,739	55
Ending balance: collectively evaluated for impairment	2,621	1,294
Loans:
Ending balance	473,319	430,930	467,172
Ending balance: individually evaluated for impairment	19,928	3,312
Ending balance: collectively evaluated for impairment	452,758	426,942
Ending balance: loans acquired with deteriorated credit quality	633	676
Real estate – residential
Allowance for loan losses by portfolio [Roll Forward]
Beginning balance	810	1,141
Charge-offs	(45)	(188)
Recoveries	10	44
Provision	(104)	(8)
Ending balance	671	989
Ending balance: individually evaluated for impairment	147	87
Ending balance: collectively evaluated for impairment	524	902
Loans:
Ending balance	151,667	153,915	154,602
Ending balance: individually evaluated for impairment	1,796	1,073
Ending balance: collectively evaluated for impairment	149,788	152,742
Ending balance: loans acquired with deteriorated credit quality	83	100
Installment loans to individuals
Allowance for loan losses by portfolio [Roll Forward]
Beginning balance	1,311	1,273
Charge-offs	(883)	(566)
Recoveries	80	110
Provision	923	450
Ending balance	1,431	1,267
Ending balance: individually evaluated for impairment	216	140
Ending balance: collectively evaluated for impairment	1,215	1,127
Loans:
Ending balance	113,199	116,340	119,328
Ending balance: individually evaluated for impairment	386	426
Ending balance: collectively evaluated for impairment	112,813	115,914
Ending balance: loans acquired with deteriorated credit quality	0	0
Lease financing receivable
Allowance for loan losses by portfolio [Roll Forward]
Beginning balance	16	21
Charge-offs	0	0
Recoveries	0	0
Provision	13	(6)
Ending balance	29	15
Ending balance: individually evaluated for impairment	0	0
Ending balance: collectively evaluated for impairment	29	15
Loans:
Ending balance	4,790	5,285	4,857
Ending balance: individually evaluated for impairment	0	0
Ending balance: collectively evaluated for impairment	4,790	5,285
Ending balance: loans acquired with deteriorated credit quality	0	0
Other
Allowance for loan losses by portfolio [Roll Forward]
Beginning balance	4	3
Charge-offs	0	0
Recoveries	0	0
Provision	7	0
Ending balance	11	3
Ending balance: individually evaluated for impairment	0	0
Ending balance: collectively evaluated for impairment	11	3
Loans:
Ending balance	1,746	3,523	$ 2,748
Ending balance: individually evaluated for impairment	0	0
Ending balance: collectively evaluated for impairment	1,746	3,523
Ending balance: loans acquired with deteriorated credit quality	$ 0	$ 0

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Consolidated Statements of Cash Flows - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014
Cash flows from operating activities:
Net earnings	$ 9,179	$ 15,446
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation	4,652	4,518
Accretion of purchase accounting adjustments	(1,003)	(1,924)
Provision for loan losses	10,900	2,925
Deferred tax (benefit) expense	(1,633)	2,034
Amortization of premiums on securities, net	2,141	2,432
(Accretion) amortization of other investments	(1)	4
Stock option expense	253	355
Restricted stock expense	6	0
Net gain on sale of investment securities	(1,243)	(128)
Net gain on sale of other real estate owned	(13)	(1,081)
Net write down of other real estate owned	111	31
Net (gain) loss on sale/disposal of premises and equipment	(8)	232
Income recognized from death benefit on bank owned life insurance	(160)	0
Change in accrued interest receivable	(20)	45
Change in accrued interest payable	(48)	(240)
Change in other assets & other liabilities, net	481	(2,006)
Net cash provided by operating activities	23,594	22,643
Cash flows from investing activities:
Proceeds from maturities and calls of securities available-for-sale	55,874	33,466
Proceeds from maturities and calls of securities held-to-maturity	19,299	10,778
Proceeds from sale of securities available-for-sale	40,277	22,153
Purchases of securities available-for-sale	(105,486)	0
Purchases of securities held-to-maturity	0	(1,104)
Proceeds from redemptions of other investments	0	150
Redemption of Capital Securities related to MidSouth Statutory Trust I	0	217
Proceeds from sale of other investments	898	0
Purchases of other investments	(2,970)	(567)
Net change in loans	(20,669)	(111,329)
Proceeds from bank owned life insurance death benefit	498	0
Purchases of premises and equipment	(3,439)	(4,265)
Proceeds from sale of premises and equipment	35	743
Proceeds from sale of other real estate owned	857	3,315
Purchase of other real estate owned	(351)	0
Net cash used in investing activities	(15,177)	(46,443)
Cash flows from financing activities:
Change in deposits	(41,728)	2,244
Change in securities sold under agreements to repurchase	29,987	17,048
Borrowings on Federal Home Loan Bank advances	150,000	10,000
Repayments of Federal Home Loan Bank advances	(105,047)	(45)
Redemption of MidSouth Statutory Trust I	0	(7,217)
Repayments of notes payable	0	(1,000)
Purchase of treasury stock	0	(9)
Proceeds and tax benefit from exercise of stock options	99	611
Tax benefit resulting from distribution from Directors Deferred Compensation Plan	420	0
Payment of dividends on preferred stock	(519)	(530)
Payment of dividends on common stock	(3,064)	(2,818)
Net cash provided by financing activities	30,148	18,284
Net increase (decrease) in cash and cash equivalents	38,565	(5,516)
Cash and cash equivalents, beginning of period	86,872	59,731
Cash and cash equivalents, end of period	125,437	54,215
Supplemental cash flow information:
Interest paid	4,280	4,730
Income taxes paid	5,180	5,815
Noncash investing and financing activities:
Transfer of loans to other real estate	1,031	317
Change in accrued common stock dividends	3	121
Change in accrued preferred stock dividends	(2)	(6)
Financed sales of other real estate	0	84
Net change in loan to ESOP	$ (905)	$ (267)

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Credit Quality of Loans and Allowance for Loan Losses - Age Analysis of Past Due Loans (Details) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Age Analysis of Past Due Loans by Class of Loans [Abstract]
30-59 Days Past Due	$ 14,207	$ 10,267
60-89 Days Past Due	6,405	1,858
Greater than 90 Days Past Due	22,796	5,954
Total Past Due	43,408	18,079
Current	1,258,044	1,266,352
Total Loans	1,301,452	1,284,431
Recorded Investment, 90 days past due and Accruing	82	187
Commercial, financial and agricultural
Age Analysis of Past Due Loans by Class of Loans [Abstract]
30-59 Days Past Due	4,065	2,179
60-89 Days Past Due	3,124	654
Greater than 90 Days Past Due	3,879	2,556
Total Past Due	11,068	5,389
Current	471,384	461,758
Total Loans	482,452	467,147
Recorded Investment, 90 days past due and Accruing	23	26
Commercial real estate - construction
Age Analysis of Past Due Loans by Class of Loans [Abstract]
30-59 Days Past Due	93	15
60-89 Days Past Due	99	0
Greater than 90 Days Past Due	12	105
Total Past Due	204	120
Current	55,484	43,390
Total Loans	55,688	43,510
Recorded Investment, 90 days past due and Accruing	0	97
Commercial real estate - other
Age Analysis of Past Due Loans by Class of Loans [Abstract]
30-59 Days Past Due	7,252	4,989
60-89 Days Past Due	2,745	270
Greater than 90 Days Past Due	16,999	2,464
Total Past Due	26,996	7,723
Current	446,323	459,449
Total Loans	473,319	467,172
Recorded Investment, 90 days past due and Accruing	0	0
Residential - construction
Age Analysis of Past Due Loans by Class of Loans [Abstract]
30-59 Days Past Due	0	431
60-89 Days Past Due	0	0
Greater than 90 Days Past Due	172	0
Total Past Due	172	431
Current	18,419	24,636
Total Loans	18,591	25,067
Recorded Investment, 90 days past due and Accruing	0	0
Residential - prime
Age Analysis of Past Due Loans by Class of Loans [Abstract]
30-59 Days Past Due	1,383	1,843
60-89 Days Past Due	264	523
Greater than 90 Days Past Due	1,378	704
Total Past Due	3,025	3,070
Current	148,642	151,532
Total Loans	151,667	154,602
Recorded Investment, 90 days past due and Accruing	0	0
Consumer - credit card
Age Analysis of Past Due Loans by Class of Loans [Abstract]
30-59 Days Past Due	38	5
60-89 Days Past Due	11	19
Greater than 90 Days Past Due	27	18
Total Past Due	76	42
Current	5,683	5,970
Total Loans	5,759	6,012
Recorded Investment, 90 days past due and Accruing	27	18
Consumer - other
Age Analysis of Past Due Loans by Class of Loans [Abstract]
30-59 Days Past Due	1,228	671
60-89 Days Past Due	162	392
Greater than 90 Days Past Due	329	107
Total Past Due	1,719	1,170
Current	105,721	112,146
Total Loans	107,440	113,316
Recorded Investment, 90 days past due and Accruing	32	46
Lease financing receivable
Age Analysis of Past Due Loans by Class of Loans [Abstract]
30-59 Days Past Due	0	0
60-89 Days Past Due	0	0
Greater than 90 Days Past Due	0	0
Total Past Due	0	0
Current	4,790	4,857
Total Loans	4,790	4,857
Recorded Investment, 90 days past due and Accruing	0	0
Other loans
Age Analysis of Past Due Loans by Class of Loans [Abstract]
30-59 Days Past Due	148	134
60-89 Days Past Due	0	0
Greater than 90 Days Past Due	0	0
Total Past Due	148	134
Current	1,598	2,614
Total Loans	1,746	2,748
Recorded Investment, 90 days past due and Accruing	$ 0	$ 0

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Declaration of Dividends (Details) - $ / shares					3 Months Ended		9 Months Ended
	Oct. 21, 2015	Jul. 15, 2015	Apr. 15, 2015	Jan. 21, 2015	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Dividends Payable [Line Items]
Dividends on common stock (in dollars per share)		$ 0.09	$ 0.09	$ 0.09	$ 0.09	$ 0.09	$ 0.27	$ 0.26
Subsequent Event [Member]
Dividends Payable [Line Items]
Dividends on common stock (in dollars per share)	$ 0.09
Series C Preferred stock
Dividends Payable [Line Items]
Preferred stock dividend rate		1.00%	1.00%	1.00%
Series C Preferred stock | Subsequent Event [Member]
Dividends Payable [Line Items]
Preferred stock dividend rate	1.00%

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Consolidated Balance Sheets - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Assets
Cash and due from banks, including required reserves of $8,782 and $10,019, respectively	$ 38,386	$ 45,142
Interest-bearing deposits in banks	82,538	39,031
Federal funds sold	4,513	2,699
Securities available-for-sale, at fair value (cost of $281,885 at September 30, 2015 and $272,588 at December 31, 2014)	285,485	276,984
Securities held-to-maturity (fair value of $122,488 at September 30, 2015 and $141,593 at December 31, 2014)	121,043	141,201
Other investments	12,063	9,990
Loans	1,301,452	1,284,431
Allowance for loan losses	(18,939)	(11,226)
Loans, net	1,282,513	1,273,205
Bank premises and equipment, net	68,718	69,958
Accrued interest receivable	6,655	6,635
Goodwill	42,171	42,171
Intangibles	6,004	6,834
Cash surrender value of life insurance	13,548	13,659
Other real estate	4,661	4,234
Other assets	6,010	4,997
Total assets	1,974,308	1,936,740
Deposits:
Non-interest-bearing	406,118	390,863
Interest-bearing	1,137,303	1,194,371
Total deposits	1,543,421	1,585,234
Securities sold under agreements to repurchase	92,085	62,098
Short-term Federal Home Loan Bank advances	70,000	25,000
Long-term Federal Home Loan Bank advances	25,958	26,277
Junior subordinated debentures	22,167	22,167
Other liabilities	6,713	6,952
Total liabilities	$ 1,760,344	$ 1,727,728
Commitments and contingencies
Shareholders’ equity:
Common stock, $0.10 par value; 30,000,000 shares authorized, 11,361,839 and 11,340,736 shares issued and outstanding, respectively	$ 1,136	$ 1,149
Additional paid-in capital	110,482	112,744
Unearned ESOP shares	(1,155)	(250)
Accumulated other comprehensive income	2,340	2,857
Treasury stock – 0 and 150,967 shares at September 30, 2015 and December 31, 2014, respectively	0	(3,295)
Retained earnings	60,035	54,439
Total shareholders’ equity	213,964	209,012
Total liabilities and shareholders’ equity	1,974,308	1,936,740
Series B Preferred Stock
Shareholders’ equity:
Preferred stock	32,000	32,000
Series C Preferred stock
Shareholders’ equity:
Preferred stock	$ 9,126	$ 9,368

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Consolidated Statement of Shareholders' Equity - 9 months ended Sep. 30, 2015 - USD ($) $ in Thousands		Total	Preferred Stock	Common Stock	Additional Paid-in Capital	Unearned ESOP Shares	Accumulated Other Comprehensive Income	Treasury Stock	Retained Earnings
Beginning balance at Dec. 31, 2014		$ 209,012	$ 41,368	$ 1,149	$ 112,744	$ (250)	$ 2,857	$ (3,295)	$ 54,439
Beginning balance (in shares) at Dec. 31, 2014			125,680	11,491,703
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net earnings		9,179							9,179
Dividends on Series B and Series C preferred stock		(517)							(517)
Dividends on common stock, $0.27 per share		(3,066)							(3,066)
Conversion of Series C preferred stock to common stock			$ (242)	$ 1	241
Conversion of Series C preferred stock to common stock (in shares)			(2,424)	13,448
Reclassification of treasury stock per the LBCA	[1]			$ (15)	(3,280)			3,295
Reclassification of treasury stock per the LBCA (in shares)	[1]			(150,967)
Increase in ESOP obligation, net of repayments		(905)				(905)
Exercise of stock options		99		$ 1	98
Exercise of stock options (in shares)				7,655
Tax benefit resulting from distribution from Directors Deferred Compensation Plan		420			420
Stock option and restricted stock compensation expense		259			259
Change in accumulated other comprehensive income		(517)					(517)
Ending balance at Sep. 30, 2015		$ 213,964	$ 41,126	$ 1,136	$ 110,482	$ (1,155)	$ 2,340	$ 0	$ 60,035
Ending balance (in shares) at Sep. 30, 2015			123,256	11,361,839

[1] (1) See Note 1 for an explanation of the elimination of treasury stock under the Louisiana Business Corporation Act.

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Credit Quality of Loans and Allowance for Loan Losses - Classes of Loans by Risk Rating (Details) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014	Sep. 30, 2014
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans	$ 1,301,452	$ 1,284,431	$ 1,248,373
Commercial, financial and agricultural
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans	482,452	467,147	452,065
Commercial real estate - construction
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans	55,688	43,510
Commercial real estate - other
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans	473,319	467,172
Commercial, Total
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans	$ 1,011,459	$ 977,829
Percentage of Total Loans	100.00%	100.00%
Residential - construction
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans	$ 18,591	$ 25,067
Residential - prime
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans	151,667	154,602
Residential, Total
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans	$ 170,258	$ 179,669
Percentage of Total Loans	100.00%	100.00%
Consumer - credit card
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans	$ 5,759	$ 6,012
Consumer - other
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans	107,440	113,316
Lease financing receivable
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans	4,790	4,857	5,285
Other
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans	1,746	2,748	$ 3,523
Consumer, Total
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans	$ 119,735	$ 126,933
Percentage of Total Loans	100.00%	100.00%
Pass | Commercial, financial and agricultural
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans	$ 417,600	$ 456,221
Pass | Commercial real estate - construction
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans	55,525	43,320
Pass | Commercial real estate - other
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans	417,095	440,281
Pass | Commercial, Total
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans	$ 890,220	$ 939,822
Percentage of Total Loans	88.02%	96.11%
Pass | Residential - construction
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans	$ 18,419	$ 25,067
Pass | Residential - prime
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans	147,721	150,664
Pass | Residential, Total
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans	$ 166,140	$ 175,731
Percentage of Total Loans	97.58%	97.81%
Special mention | Commercial, financial and agricultural
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans	$ 23,104	$ 4,861
Special mention | Commercial real estate - construction
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans	34	132
Special mention | Commercial real estate - other
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans	20,277	7,120
Special mention | Commercial, Total
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans	$ 43,415	$ 12,113
Percentage of Total Loans	4.29%	1.24%
Special mention | Residential - construction
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans	$ 0	$ 0
Special mention | Residential - prime
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans	1,326	1,184
Special mention | Residential, Total
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans	$ 1,326	$ 1,184
Percentage of Total Loans	0.78%	0.66%
Substandard | Commercial, financial and agricultural
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans	$ 41,521	$ 5,541
Substandard | Commercial real estate - construction
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans	129	58
Substandard | Commercial real estate - other
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans	35,947	19,771
Substandard | Commercial, Total
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans	$ 77,597	$ 25,370
Percentage of Total Loans	7.67%	2.60%
Substandard | Residential - construction
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans	$ 172	$ 0
Substandard | Residential - prime
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans	2,620	2,754
Substandard | Residential, Total
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans	$ 2,792	$ 2,754
Percentage of Total Loans	1.64%	1.53%
Doubtful | Commercial, financial and agricultural
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans	$ 227	$ 524
Doubtful | Commercial real estate - construction
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans	0	0
Doubtful | Commercial real estate - other
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans	0	0
Doubtful | Commercial, Total
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans	$ 227	$ 524
Percentage of Total Loans	0.02%	0.05%
Performing | Consumer - credit card
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans	$ 5,721	$ 5,995
Performing | Consumer - other
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans	107,022	112,893
Performing | Lease financing receivable
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans	4,790	4,857
Performing | Other
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans	1,746	2,748
Performing | Consumer, Total
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans	$ 119,279	$ 126,493
Percentage of Total Loans	99.62%	99.65%
Nonperforming | Consumer - credit card
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans	$ 38	$ 17
Nonperforming | Consumer - other
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans	418	423
Nonperforming | Lease financing receivable
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans	0	0
Nonperforming | Other
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans	0	0
Nonperforming | Consumer, Total
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans	$ 456	$ 440
Percentage of Total Loans	0.38%	0.35%

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Earnings Per Common Share (Tables)

9 Months Ended

Sep. 30, 2015

Earnings Per Share [Abstract]

Components of Earnings per Common Share

Following is a summary of the information used in the computation of earnings per common share (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2015		2014		2015		2014
Net earnings available to common shareholders	$	2,417	$	4,298	$	8,662	$	14,922
Dividends on Series C preferred stock	92		94		277		284
Adjusted net earnings available to common shareholders	$	2,509	$	4,392	$	8,939	$	15,206
Weighted average number of common shares outstanding used in computation of basic earnings per common share	11,312		11,314		11,321		11,283
Effect of dilutive securities:
Stock options	12		92		20		77
Convertible preferred stock and warrants	507		549		507		544
Weighted average number of common shares outstanding plus effect of dilutive securities – used in computation of diluted earnings per share	11,831		11,955		11,848		11,904

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Credit Quality of Loans and Allowance for Loan Losses - Troubled Debt Restructurings (Details)	3 Months Ended		9 Months Ended
	Sep. 30, 2015 USD ($) contract	Sep. 30, 2014 contract	Sep. 30, 2015 USD ($) contract	Sep. 30, 2014 USD ($) contract	Dec. 31, 2014 USD ($)
Financing Receivable, Modifications [Line Items]
Current	$ 18,000		$ 18,000		$ 176,000
Past Due Greater Than 30 Days	150,000		150,000		0
Nonaccrual TDRs	21,324,000		21,324,000		234,000
Total TDRs	$ 21,492,000		$ 21,492,000		410,000
Pre-modified contracts identified as TDRs (contracts) | contract	0	0	1	1
Number of TDR defaulted (contracts) | contract	1	0	1	0
TDRs defaulted, amount	$ 21,100,000		$ 21,100,000
Pre-modification balance identified as TDR			21,400,000	$ 1,200,000
Commitments to lend additional funds	0		0
Commercial, financial and agricultural
Financing Receivable, Modifications [Line Items]
Current	18,000		18,000		21,000
Past Due Greater Than 30 Days	0		0		0
Nonaccrual TDRs	21,324,000		21,324,000		234,000
Total TDRs	21,342,000		21,342,000		255,000
Real estate – commercial
Financing Receivable, Modifications [Line Items]
Current	0		0		155,000
Past Due Greater Than 30 Days	150,000		150,000		0
Nonaccrual TDRs	0		0		0
Total TDRs	$ 150,000		$ 150,000		$ 155,000

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Investment Securities - Portfolio of Available-for-Sale Securities (Details) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale, Amortized Cost	$ 281,885	$ 272,588
Gross Unrealized Gains	4,675	6,471
Gross Unrealized Losses	1,075	2,075
Fair Value	285,485	276,984
Obligations of state and political subdivisions
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale, Amortized Cost	36,500	43,079
Gross Unrealized Gains	979	1,555
Gross Unrealized Losses	48	29
Fair Value	37,431	44,605
GSE mortgage-backed securities
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale, Amortized Cost	88,813	106,208
Gross Unrealized Gains	2,981	3,183
Gross Unrealized Losses	55	288
Fair Value	91,739	109,103
Collateralized mortgage obligations: residential
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale, Amortized Cost	148,819	62,093
Gross Unrealized Gains	690	266
Gross Unrealized Losses	927	1,520
Fair Value	148,582	60,839
Collateralized mortgage obligations: commercial
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale, Amortized Cost	5,653	24,462
Gross Unrealized Gains	9	190
Gross Unrealized Losses	45	107
Fair Value	5,617	24,545
Mutual funds
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale, Amortized Cost	2,100	2,100
Gross Unrealized Gains	16	4
Gross Unrealized Losses	0	0
Fair Value	$ 2,116	2,104
U.S. Government sponsored enterprises
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale, Amortized Cost		10,339
Gross Unrealized Gains		0
Gross Unrealized Losses		112
Fair Value		10,227
Other asset-backed securities
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale, Amortized Cost		24,041
Gross Unrealized Gains		321
Gross Unrealized Losses		19
Fair Value		24,343
Collateralized debt obligation
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale, Amortized Cost		266
Gross Unrealized Gains		952
Gross Unrealized Losses		0
Fair Value		$ 1,218

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Consolidated Statement of Shareholders' Equity (Parenthetical) - $ / shares				3 Months Ended		9 Months Ended
	Jul. 15, 2015	Apr. 15, 2015	Jan. 21, 2015	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Statement of Stockholders' Equity [Abstract]
Dividends on common stock (in dollars per share)	$ 0.09	$ 0.09	$ 0.09	$ 0.09	$ 0.09	$ 0.27	$ 0.26

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Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Assets
Cash and due from banks, reserves	$ 8,782	$ 10,019
Securities available-for-sale, at cost	281,885	272,588
Securities held-to-maturity, at fair value	$ 122,488	$ 141,593
Stockholders' equity:
Common stock, par value (in dollars per share)	$ 0.10	$ 0.10
Common stock, authorized (in shares)	30,000,000	30,000,000
Common stock, issued (in shares)	11,361,839	11,340,736
Common stock, outstanding (in shares)	11,361,839	11,340,736
Treasury stock (in shares)	0	150,967
Series B Preferred Stock
Stockholders' equity:
Preferred stock, par value (in dollars per share)	$ 0	$ 0
Preferred stock, authorized (in shares)	5,000,000	5,000,000
Preferred stock, issued (in shares)	32,000	32,000
Preferred stock, outstanding (in shares)	32,000	32,000
Series C Preferred stock
Stockholders' equity:
Preferred stock, par value (in dollars per share)	$ 0	$ 0
Preferred stock, authorized (in shares)	100,000	100,000
Preferred stock, issued (in shares)	91,256	93,680
Preferred stock, outstanding (in shares)	91,256	93,680

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Basis of Presentation (Policies)

9 Months Ended

Sep. 30, 2015

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Use of Estimates

Use of Estimates — The preparation of financial statements in conformity with GAAP 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

Summary of Significant Accounting Policies — The accounting and reporting policies of the Company conform with GAAP 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 2014 Annual Report on Form 10-K.

Recent Accounting Pronouncements

Recent Accounting Pronouncements — ASU 2015-01, Income Statement - Extraordinary and Unusual Items (Subtopic 225-20): Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items was issued as part of the FASB's simplification initiative. ASU 2015-01 eliminates the concept of extraordinary items. The effective date of this Update is for fiscal years beginning on or after December 15, 2015 and interim periods within those annual periods. Adoption of this Update is not expected to have a material effect on the Company’s consolidated financial statements or the interim notes to the consolidated financial statements.

ASU 2015-03, Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs was also issued as part of the FASB's simplification initiative. The amendments in this ASU require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. Currently, debt issuance costs are presented as an asset on the balance sheet. The FASB notes within the ASU, capitalized debt issuance costs do not meet the definition of an asset and are more akin to a debt discount, thereby reducing the carrying amount of the proceeds received. The effective date of this Update is for fiscal years beginning on or after December 15, 2015 and interim periods within those annual periods. Adoption of this Update is not expected to have a material effect on the Company’s consolidated financial statements or the interim notes to the consolidated financial statements.

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Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2015	Nov. 06, 2015
Document and Entity Information [Abstract]
Entity Registrant Name	MIDSOUTH BANCORP INC
Entity Central Index Key	0000745981
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		11,362,149
Document Fiscal Year Focus	2015
Document Fiscal Period Focus	Q3
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Sep. 30, 2015

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Investment Securities (Tables)

9 Months Ended

Sep. 30, 2015

Investments, Debt and Equity Securities [Abstract]

Schedule of Available-for-Sale Investment Securities

The portfolio of investment securities consisted of the following (in thousands):

	September 30, 2015
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Available-for-sale:
Obligations of state and political subdivisions	$	36,500	$	979	$	48	$	37,431
GSE mortgage-backed securities	88,813		2,981		55		91,739
Collateralized mortgage obligations: residential	148,819		690		927		148,582
Collateralized mortgage obligations: commercial	5,653		9		45		5,617
Mutual funds	2,100		16		—		2,116
	$	281,885	$	4,675	$	1,075	$	285,485
	December 31, 2014
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Available-for-sale:
U.S. Government sponsored enterprises	$	10,339	$	—	$	112	$	10,227
Obligations of state and political subdivisions	43,079		1,555		29		44,605
GSE mortgage-backed securities	106,208		3,183		288		109,103
Collateralized mortgage obligations: residential	62,093		266		1,520		60,839
Collateralized mortgage obligations: commercial	24,462		190		107		24,545
Other asset-backed securities	24,041		321		19		24,343
Collateralized debt obligation	266		952		—		1,218
Mutual funds	2,100		4		—		2,104
	$	272,588	$	6,471	$	2,075	$	276,984

Schedule of Held-to-Maturity Securities

	September 30, 2015
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Held-to-maturity:
Obligations of state and political subdivisions	$	43,933	$	552	$	38	$	44,447
GSE mortgage-backed securities	58,420		1,212		82		59,550
Collateralized mortgage obligations: residential	11,284		—		250		11,034
Collateralized mortgage obligations: commercial	7,406		51		—		7,457
	$	121,043	$	1,815	$	370	$	122,488
	December 31, 2014
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Held-to-maturity:
Obligations of state and political subdivisions	$	45,914	$	267	$	192	$	45,989
GSE mortgage-backed securities	67,268		1,080		164		68,184
Collateralized mortgage obligations: residential	12,709		—		479		12,230
Collateralized mortgage obligations: commercial	15,310		53		173		15,190
	$	141,201	$	1,400	$	1,008	$	141,593

Summary of Amortized Cost and Fair Value of Debt Securities by Contractual Maturity

The amortized cost and fair value of debt securities at September 30, 2015 by contractual maturity are shown in the following table (in thousands) with the exception of other asset-backed securities, mortgage-backed securities, CMOs, and the collateralized debt obligation.   Expected maturities may differ from contractual maturities for mortgage-backed securities and CMOs because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

	Amortized Cost		Fair Value
Available-for-sale:
Due in one year or less	$	5,074	$	5,114
Due after one year through five years	19,498		20,120
Due after five years through ten years	9,540		9,832
Due after ten years	2,388		2,365
Mortgage-backed securities and collateralized mortgage obligations:
Residential	237,632		240,321
Commercial	5,653		5,617
Mutual funds	2,100		2,116
	$	281,885	$	285,485
	Amortized Cost		Fair Value
Held-to-maturity:
Due in one year or less	$	473	$	475
Due after one year through five years	2,923		2,960
Due after five years through ten years	11,105		11,273
Due after ten years	29,432		29,739
Mortgage-backed securities and collateralized mortgage obligations:
Residential	69,704		70,584
Commercial	7,406		7,457
	$	121,043	$	122,488

Schedule of Investment Securities with Unrealized Losses

Details concerning investment securities with unrealized losses are as follows (in thousands):

	September 30, 2015
	Securities with losses under 12 months				Securities with losses over 12 months				Total
	Fair Value		Gross Unrealized  Loss		Fair Value		Gross Unrealized Loss		Fair Value		Gross Unrealized Loss
Available-for-sale:
Obligations of state and  political subdivisions	$	3,190	$	48	$	—	$	—	$	3,190	$	48
GSE mortgage-backed  securities	15,860		45		3,754		10		19,614		55
Collateralized mortgage  obligations: residential	33,689		128		31,772		799		65,461		927
Collateralized mortgage  obligations: commercial	—		—		3,073		45		3,073		45
	$	52,739	$	221	$	38,599	$	854	$	91,338	$	1,075

	December 31, 2014
	Securities with losses under 12 months				Securities with losses over 12 months				Total
	Fair Value		Gross Unrealized Loss		Fair Value		Gross Unrealized Loss		Fair Value		Gross Unrealized Loss
Available-for-sale:
U.S. Government sponsored enterprises	$	4,973	$	32	$	5,254	$	80	$	10,227	$	112
Obligations of state and  political subdivisions	2,029		29		—		—		2,029		29
GSE mortgage-backed  securities	6,668		25		21,538		263		28,206		288
Collateralized mortgage  obligations: residential	9,366		53		37,997		1,467		47,363		1,520
Collateralized mortgage  obligations: commercial	—		—		3,747		107		3,747		107
Other asset-backed securities	6,401		19		—		—		6,401		19
	$	29,437	$	158	$	68,536	$	1,917	$	97,973	$	2,075

	September 30, 2015
	Securities with losses under 12 months				Securities with losses over 12 months				Total
	Fair Value		Gross Unrealized Loss		Fair Value		Gross Unrealized Loss		Fair Value		Gross Unrealized Loss
Held-to-maturity:
Obligations of state and political subdivisions	$	6,544	$	19	$	1,302	$	19	$	7,846	$	38
GSE mortgage-backed securities	—		—		7,309		82		7,309		82
Collateralized mortgage obligations: residential	—		—		11,034		250		11,034		250
	$	6,544	$	19	$	19,645	$	351	$	26,189	$	370
	December 31, 2014
	Securities with losses under 12 months				Securities with losses over 12 months				Total
	Fair Value		Gross Unrealized Loss		Fair Value		Gross Unrealized Loss		Fair Value		Gross Unrealized Loss
Held-to-maturity:
Obligations of state and political subdivisions	$	11,761	$	35	$	13,263	$	157	$	25,024	$	192
GSE mortgage-backed securities	—		—		8,142		164		8,142		164
Collateralized mortgage obligations: residential	—		—		12,230		479		12,230		479
Collateralized mortgage obligations: commercial	7,599		173		—		—		7,599		173
	$	19,360	$	208	$	33,635	$	800	$	52,995	$	1,008

XML

Consolidated Statements of Earnings - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Interest income:
Loans, including fees	$ 17,992	$ 18,273	$ 54,314	$ 53,525
Securities and other investments:
Taxable	1,850	1,965	5,628	6,164
Nontaxable	536	652	1,679	2,007
Federal funds sold	1	2	5	4
Time and interest bearing deposits in other banks	40	15	112	42
Other investments	113	109	273	268
Total interest income	20,532	21,016	62,011	62,010
Interest expense:
Deposits	883	859	2,751	2,588
Securities sold under agreements to repurchase	249	210	721	588
Other borrowings and payables	109	108	309	320
Junior subordinated debentures	150	327	451	994
Total interest expense	1,391	1,504	4,232	4,490
Net interest income	19,141	19,512	57,779	57,520
Provision for loan losses	3,800	1,175	10,900	2,925
Net interest income after provision for loan losses	15,341	18,337	46,879	54,595
Non-interest income:
Service charges on deposits	2,231	2,556	6,488	7,385
Gain on sale of securities, net	0	0	1,243	128
ATM and debit card income	1,823	1,808	5,529	5,375
Income from death benefit on BOLI/executive officer life insurance	0	0	160	3,000
Other charges and fees	786	1,830	2,553	3,484
Total non-interest income	4,840	6,194	15,973	19,372
Non-interest expenses:
Salaries and employee benefits	7,653	8,287	23,792	25,588
Occupancy expense	3,815	3,834	11,365	11,314
FDIC insurance	391	269	1,003	783
Other	4,705	5,467	13,696	14,997
Total non-interest expenses	16,564	17,857	49,856	52,682
Income before income taxes	3,617	6,674	12,996	21,285
Income tax expense	1,028	2,202	3,817	5,839
Net earnings	2,589	4,472	9,179	15,446
Dividends on preferred stock	172	174	517	524
Net earnings available to common shareholders	$ 2,417	$ 4,298	$ 8,662	$ 14,922
Earnings per share:
Basic (in dollars per share)	$ 0.22	$ 0.38	$ 0.77	$ 1.32
Diluted (in dollars per share)	$ 0.21	$ 0.37	$ 0.75	$ 1.28
Weighted average number of shares outstanding:
Basic (in shares)	11,312	11,314	11,321	11,283
Diluted (in shares)	11,831	11,955	11,848	11,904
Dividends declared per common share (in dollars per share)	$ 0.09	$ 0.09	$ 0.27	$ 0.26

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Intangibles

9 Months Ended

Sep. 30, 2015

Goodwill and Intangible Assets Disclosure [Abstract]

Intangibles

Intangibles

A summary of core deposit intangible assets as of September 30, 2015 and December 31, 2014 is as follows (in thousands):

	September 30, 2015			December 31, 2014
Gross carrying amount	$	11,674		$	11,674
Less accumulated amortization	(5,670		)	(4,840		)
Net carrying amount	$	6,004		$	6,834

XML

Credit Quality of Loans and Allowance for Loan Losses

9 Months Ended

Sep. 30, 2015

Receivables [Abstract]

Credit Quality of Loans and Allowance for Loan Losses

Credit Quality of Loans and Allowance for Loan Losses

The loan portfolio consisted of the following (in thousands):

	September 30, 2015			December 31, 2014
Commercial, financial and agricultural	$	482,452		$	467,147
Real estate - construction	74,279			68,577
Real estate – commercial	473,319			467,172
Real estate – residential	151,667			154,602
Installment loans to individuals	113,199			119,328
Lease financing receivable	4,790			4,857
Other	1,746			2,748
	1,301,452			1,284,431
Less allowance for loan losses	(18,939		)	(11,226		)
	$	1,282,513		$	1,273,205

The Company monitors loan concentrations and evaluates individual customer and aggregate industry leverage, profitability, risk rating distributions, and liquidity for each major standard industry classification segment.  At September 30, 2015, one industry segment concentration, the oil and gas industry, constituted more than 10% of the loan portfolio.  The Company’s exposure in the oil and gas industry, including related service and manufacturing industries, totaled approximately $295.6 million, or 22.7% of total loans.  Additionally, the Company’s exposure to loans secured by commercial real estate is monitored.  At September 30, 2015, loans secured by commercial real estate (including commercial construction, farmland and multifamily loans) totaled approximately $529.0 million.  Of the $529.0 million, $473.3 million represent CRE loans, 53% of which are secured by owner-occupied commercial properties.  Of the $529.0 million in loans secured by commercial real estate, $20.0 million, or 3.8%, were on nonaccrual status at September 30, 2015.

Allowance for Loan Losses

The allowance for loan losses is a valuation account available to absorb probable losses on loans. All losses are charged to the allowance for loan losses when the loss actually occurs or when a determination is made that a loss is likely to occur. Recoveries are credited to the allowance for loan losses at the time of recovery.  Quarterly, the probable level of losses in the existing portfolio is estimated through consideration of various factors.  Based on these estimates, the allowance for loan losses is increased by charges to earnings and decreased by charge‑offs (net of recoveries).

The allowance is composed of general reserves and specific reserves.  General reserves are determined by applying loss percentages to segments of the portfolio.  The loss percentages are based on each segment’s historical loss experience, generally over the past twelve to eighteen months, and adjustment factors derived from conditions in the Company’s internal and external environment.  All loans considered to be impaired are evaluated on an individual basis to determine specific reserve allocations in accordance with GAAP.  Loans for which specific reserves are provided are excluded from the calculation of general reserves.

Loans acquired in business combinations are initially recorded at fair value, which includes an estimate of credit losses expected to be realized over the remaining lives of the loans, and therefore no corresponding allowance for loan losses is recorded for these loans at acquisition. Methods utilized to estimate any subsequently required allowance for loan losses for acquired loans not deemed credit-impaired at acquisition are similar to originated loans; however, the estimate of loss is based on the unpaid principal balance and then compared to any remaining unaccreted purchase discount. To the extent that the calculated loss is greater than the remaining unaccreted purchase discount, an allowance is recorded for such difference.

The Company has an internal loan review department that is independent of the lending function to challenge and corroborate the loan grade assigned by the lender and to provide additional analysis in determining the adequacy of the allowance for loan losses.

A rollforward of the activity within the allowance for loan losses by loan type and recorded investment in loans for the nine months ended September 30, 2015 and 2014 is as follows (in thousands):

	September 30, 2015
				Real Estate
	Coml, Fin, and Agric			Constru-ction			Commercial			Residential			Installment loans to individuals			Lease financing receivable		Other		Total
Allowance for loan losses:
Beginning balance	$	5,729		$	954		$	2,402		$	810		$	1,311		$	16	$	4	$	11,226
Charge-offs	(2,310		)	(76		)	(169		)	(45		)	(883		)	—		—		(3,483		)
Recoveries	185			1			20			10			80			—		—		296
Provision	8,016			(62		)	2,107			(104		)	923			13		7		10,900
Ending balance	$	11,620		$	817		$	4,360		$	671		$	1,431		$	29	$	11	$	18,939
Ending balance: individually evaluated for impairment	$	2,569		$	26		$	1,739		$	147		$	216		$	—	$	—	$	4,697
Ending balance: collectively evaluated for impairment	$	9,051		$	791		$	2,621		$	524		$	1,215		$	29	$	11	$	14,242
Loans:
Ending balance	$	482,452		$	74,279		$	473,319		$	151,667		$	113,199		$	4,790	$	1,746	$	1,301,452
Ending balance: individually evaluated for impairment	$	29,185		$	212		$	19,928		$	1,796		$	386		$	—	$	—	$	51,507
Ending balance: collectively evaluated for impairment	$	453,267		$	74,067		$	452,758		$	149,788		$	112,813		$	4,790	$	1,746	$	1,249,229
Ending balance: loans acquired with deteriorated credit quality	$	—		$	—		$	633		$	83		$	—		$	—	$	—	$	716

	September 30, 2014
				Real Estate
	Coml, Fin, and Agric			Constr-uction			Commercial			Residential			Installment loans to individuals			Lease financing receivable			Other		Total
Allowance for loan losses:
Beginning balance	$	3,906		$	1,046		$	1,389		$	1,141		$	1,273		$	21		$	3	$	8,779
Charge-offs	(2,084		)	(1		)	(93		)	(188		)	(566		)	—			—		(2,932		)
Recoveries	101			—			398			44			110			—			—		653
Provision	2,731			103			(345		)	(8		)	450			(6		)	—		2,925
Ending balance	$	4,654		$	1,148		$	1,349		$	989		$	1,267		$	15		$	3	$	9,425
Ending balance: individually evaluated for impairment	$	853		$	3		$	55		$	87		$	140		$	—		$	—	$	1,138
Ending balance: collectively evaluated for impairment	$	3,801		$	1,145		$	1,294		$	902		$	1,127		$	15		$	3	$	8,287
Loans:
Ending balance	$	452,065		$	86,315		$	430,930		$	153,915		$	116,340		$	5,285		$	3,523	$	1,248,373
Ending balance: individually evaluated for impairment	$	2,662		$	106		$	3,312		$	1,073		$	426		$	—		$	—	$	7,579
Ending balance: collectively evaluated for impairment	$	449,403		$	86,209		$	426,942		$	152,742		$	115,914		$	5,285		$	3,523	$	1,240,018
Ending balance: loans acquired with deteriorated credit quality	$	—		$	—		$	676		$	100		$	—		$	—		$	—	$	776

Non-Accrual and Past Due Loans

Loans are considered past due if the required principal and interest payment have not been received as of the date such payments were due.  Loans are placed on non-accrual status when, in management’s opinion, the probability of collection of interest is deemed insufficient to warrant further accrual.  For loans placed on non-accrual status, the accrual of interest is discontinued and subsequent payments received are applied to the principal balance.  Interest income is recorded after principal has been satisfied and as payments are received.  Non-accrual loans may be returned to accrual status if all principal and interest amounts contractually owed are reasonably assured of repayment within a reasonable period and there is a period of at least six months to one year of repayment performance by the borrower depending on the contractual payment terms.

An age analysis of past due loans (including both accruing and non-accruing loans) is as follows (in thousands):

			September 30, 2015
	30-59 Days Past Due		60-89 Days Past Due		Greater than 90 Days Past Due		Total Past Due		Current		Total Loans		Recorded Investment > 90 days  and Accruing
Commercial, financial, and agricultural	$	4,065	$	3,124	$	3,879	$	11,068	$	471,384	$	482,452	$	23
Commercial real estate - construction	93		99		12		204		55,484		55,688		—
Commercial real estate - other	7,252		2,745		16,999		26,996		446,323		473,319		—
Residential - construction	—		—		172		172		18,419		18,591		—
Residential - prime	1,383		264		1,378		3,025		148,642		151,667		—
Consumer - credit card	38		11		27		76		5,683		5,759		27
Consumer - other	1,228		162		329		1,719		105,721		107,440		32
Lease financing receivable	—		—		—		—		4,790		4,790		—
Other loans	148		—		—		148		1,598		1,746		—
	$	14,207	$	6,405	$	22,796	$	43,408	$	1,258,044	$	1,301,452	$	82
	December 31, 2014
	30-59 Days Past Due		60-89 Days Past Due		Greater than 90 Days Past Due		Total Past Due		Current		Total Loans		Recorded Investment > 90 days and Accruing
Commercial, financial, and agricultural	$	2,179	$	654	$	2,556	$	5,389	$	461,758	$	467,147	$	26
Commercial real estate - construction	15		—		105		120		43,390		43,510		97
Commercial real estate - other	4,989		270		2,464		7,723		459,449		467,172		—
Residential - construction	431		—		—		431		24,636		25,067		—
Residential - prime	1,843		523		704		3,070		151,532		154,602		—
Consumer - credit card	5		19		18		42		5,970		6,012		18
Consumer - other	671		392		107		1,170		112,146		113,316		46
Lease financing receivable	—		—		—		—		4,857		4,857		—
Other loans	134		—		—		134		2,614		2,748		—
	$	10,267	$	1,858	$	5,954	$	18,079	$	1,266,352	$	1,284,431	$	187

Non-accrual loans are as follows (in thousands):

	September 30, 2015		December 31, 2014
Commercial, financial, and agricultural	$	29,171	$	2,642
Commercial real estate – construction	39		54
Commercial real estate - other	19,952		6,429
Residential - construction	172		—
Residential - prime	1,896		1,194
Consumer - credit card	—		—
Consumer - other	386		382
Lease financing receivable	—		—
Other	—		—
	$	51,616	$	10,701

The amount of interest that would have been recorded on non-accrual loans, had the loans not been classified as non-accrual, totaled approximately $1.3 million and $392,000 for the nine months ended September 30, 2015 and 2014, respectively.  Interest actually received on non-accrual loans subsequent to their transfer to non-accrual status totaled at September 30, 2015 and 2014 was $19,000 and $93,000, respectively.

Impaired Loans

Loans are considered impaired when, based upon current information, it is probable the Company will be unable to collect all amounts due according to the contractual terms of the loan agreement.  All loans classified as special mention, substandard, or doubtful, based on credit risk rating factors, are reviewed to determine whether impairment testing is appropriate.  An allowance for each impaired loan is calculated based on the present value of expected future cash flows discounted at the loan’s effective interest rate or at the loan’s observable market price or the fair value of the collateral if the loan is collaterally dependent.  All impaired loans are reviewed, at a minimum, on a quarterly basis.  Existing valuations are reviewed to determine if additional discounts or new appraisals are required.  After this review, when comparing the resulting collateral valuation to the outstanding loan balance, if the discounted collateral value exceeds the loan balance no specific allocation is reserved.  Acquired impaired loans are generally not subject to individual evaluation for impairment and are not reported with impaired loans or troubled debt restructurings, even if they would otherwise qualify for such treatment.

 Loans that are individually evaluated for impairment are as follows (in thousands):

	September 30, 2015
	Recorded Investment		Unpaid Principal  Balance		Related Allowance		Average Recorded Investment		Interest  Income Recognized
With no related allowance recorded:
Commercial, financial, and agricultural	$	22,149	$	22,412	$	—	$	21,863	$	703
Commercial real estate – construction	39		39		—		40		—
Commercial real estate – other	5,440		5,440		—		6,244		47
Residential – prime	1,144		1,164		—		1,211		11
Residential – construction	55		55		—		273		1
Consumer – other	30		30		—		33		—
Subtotal:	28,857		29,140		—		29,664		762
With an allowance recorded:
Commercial, financial, and agricultural	7,036		7,036		2,569		4,604		159
Commercial real estate – other	14,488		14,488		1,739		12,932		33
Residential – prime	652		652		147		599		5
Residential – construction	118		118		26		59		—
Consumer – other	356		371		216		322		4
Subtotal:	22,650		22,665		4,697		18,516		201
Totals:
Commercial	49,152		49,415		4,308		45,683		942
Residential	1,969		1,989		173		2,142		17
Consumer	386		401		216		355		4
Grand total:	$	51,507	$	51,805	$	4,697	$	48,180	$	963

	December 31, 2014
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
With no related allowance recorded:
Commercial, financial, and agricultural	$	438	$	521	$	—	$	554	$	—
Commercial real estate – construction	54		54		—		58		—
Commercial real estate – other	1,921		1,921		—		1,885		17
Residential – prime	543		543		—		534		15
Consumer – other	78		78		—		72		—
Subtotal:	3,034		3,117		—		3,103		32
With an allowance recorded:
Commercial, financial, and agricultural	2,218		2,333		1,010		1,394		35
Commercial real estate – construction	—		—		—		19		—
Commercial real estate – other	4,467		4,467		1,484		2,416		220
Residential – prime	529		548		68		452		3
Consumer – other	299		313		179		252		4
Subtotal:	7,513		7,661		2,741		4,533		262
Totals:
Commercial	9,098		9,296		2,494		6,326		272
Residential	1,072		1,091		68		986		18
Consumer	377		391		179		324		4
Grand total:	$	10,547	$	10,778	$	2,741	$	7,636	$	294

Credit Quality

The Company manages credit risk by observing written underwriting standards and lending policy established by the Board of Directors and management to govern all lending activities.  The risk management program requires that each individual loan officer review his or her portfolio on a quarterly basis and assign recommended credit ratings on each loan.  These efforts are supplemented by independent reviews performed by a loan review officer 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.

Loans can be classified into the following three risk rating grades: pass, special mention, and substandard/doubtful.  Factors considered in determining a risk rating grade include debt service capacity, capital structure/liquidity, management, collateral quality, industry risk, company trends/operating performance, repayment source, revenue diversification/customer concentration, quality of financial information, and financing alternatives.  Pass grade signifies the highest quality of loans to loans with reasonable credit risk, which may include borrowers with marginally adequate financial performance, but have the ability to repay the debt.  Special mention loans have potential weaknesses that warrant extra attention from the loan officer and other management personnel, but still have the ability to repay the debt.  Substandard classification includes loans with well-defined weaknesses with risk of potential loss.  Loans classified as doubtful are considered to have little recovery value and are charged off.

The following tables present the classes of loans by risk rating (in thousands):

			September 30, 2015
Commercial Credit Exposure
Credit Risk Profile by Creditworthiness Category
			Commercial, financial, and agricultural		Commercial real estate - construction		Commercial real estate - other		Total		% of Total
Pass			$	417,600	$	55,525	$	417,095	$	890,220	88.02	%
Special mention			23,104		34		20,277		43,415		4.29	%
Substandard			41,521		129		35,947		77,597		7.67	%
Doubtful			227		—		—		227		0.02	%
			$	482,452	$	55,688	$	473,319	$	1,011,459	100.00	%
Residential Credit Exposure
Credit Risk Profile by Creditworthiness Category
					Residential - construction		Residential - prime		Total		% of Total
Pass					$	18,419	$	147,721	$	166,140	97.58	%
Special mention					—		1,326		1,326		0.78	%
Substandard					172		2,620		2,792		1.64	%
					$	18,591	$	151,667	$	170,258	100.00	%
Consumer and Commercial Credit Exposure
Credit Risk Profile Based on Payment Activity
	Consumer - credit card		Consumer - other		Lease financing receivable		Other		Total		% of Total
Performing	$	5,721	$	107,022	$	4,790	$	1,746	$	119,279	99.62	%
Nonperforming	38		418		—		—		456		0.38	%
	$	5,759	$	107,440	$	4,790	$	1,746	$	119,735	100.00	%

	December 31, 2014
Commercial Credit Exposure
Credit Risk Profile by Creditworthiness Category
			Commercial, financial, and agricultural		Commercial real estate - construction		Commercial real estate - other		Total		% of Total
Pass			$	456,221	$	43,320	$	440,281	$	939,822	96.11	%
Special mention			4,861		132		7,120		12,113		1.24	%
Substandard			5,541		58		19,771		25,370		2.60	%
Doubtful			524		—		—		524		0.05	%
			$	467,147	$	43,510	$	467,172	$	977,829	100.00	%
Residential Credit Exposure
Credit Risk Profile by Creditworthiness Category
					Residential - construction		Residential - prime		Total		% of Total
Pass					$	25,067	$	150,664	$	175,731	97.81	%
Special mention					—		1,184		1,184		0.66	%
Substandard					—		2,754		2,754		1.53	%
					$	25,067	$	154,602	$	179,669	100.00	%
Consumer and Commercial Credit Exposure
Credit Risk Profile Based on Payment Activity
	Consumer - credit card		Consumer - other		Lease financing receivable		Other		Total		% of Total
Performing	$	5,995	$	112,893	$	4,857	$	2,748	$	126,493	99.65	%
Nonperforming	17		423		—		—		440		0.35	%
	$	6,012	$	113,316	$	4,857	$	2,748	$	126,933	100.00	%

Troubled Debt Restructurings

A troubled debt restructuring (“TDR”) is a restructuring of a debt made by the Company to a debtor for economic or legal reasons related to the debtor’s financial difficulties that it would not otherwise consider.  The Company grants the concession in an attempt to protect as much of its investment as possible.

Information about the Company’s TDRs is as follows (in thousands):

	September 30, 2015
	Current		Past Due Greater Than 30 Days		Nonaccrual TDRs		Total TDRs
Commercial, financial and agricultural	$	18	$	—	$	21,324	$	21,342
Real estate - commercial	—		150		—		150
	$	18	$	150	$	21,324	$	21,492
	December 31, 2014
	Current		Past Due Greater Than 30 Days		Nonaccrual TDRs		Total TDRs
Commercial, financial and agricultural	$	21	$	—	$	234	$	255
Real estate - commercial	155		—		—		155
	$	176	$	—	$	234	$	410

During the three months ended September 30, 2015, there were no loans identified as a TDR. There was one TDR totaling $21.1 million that defaulted on the modified terms during the three months ended September 31, 2015.  During the three months ended September 30, 2014, there were no loans identified as a TDR, and there were no defaults on any loans that were modified as TDRs during the preceding twelve months.  During the nine months ended September 30, 2015, there was one loan relationship with a pre-modification balance of $21.4 million identified as a TDR after conversion of the loans to interest only for a limited amount of time. There was one TDR totaling $21.1 million that defaulted on the modified terms during the nine months ended September 31, 2015. During the nine months ended September 30, 2014, there was one loan relationship with a pre-modification balance of $1.2 million identified as a TDR through a modification of the original loan terms, and there were no defaults on any loans that were modified as TDRs during the preceding twelve months.  For purposes of the determination of an allowance for loan losses on these TDRs, as an identified TDR, the Company considers a loss probable on the loan and, as a result is reviewed for specific impairment in accordance with the Company’s allowance for loan loss methodology.  If it is determined losses are probable on such TDRs, either because of delinquency or other credit quality indicator, the Company establishes specific reserves for these loans. As of September 30, 2015, there were no commitments to lend additional funds to debtors owing sums to the Company whose terms have been modified in TDRs.

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Fair Value Measurement (Tables)

9 Months Ended

Sep. 30, 2015

Fair Value Disclosures [Abstract]

Schedule of Assets and Liabilities Measured at Fair Value on a Recurring Basis

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

	Assets / Liabilities Measured at Fair Value at		Fair Value Measurements at September 30, 2015
Description	September 30, 2015		Level 1		Level 2		Level 3
Available-for-sale securities:
Obligations of state and political subdivisions	$	37,431	$	—	$	37,431	$	—
GSE mortgage-backed securities	91,739		—		91,739		—
Collateralized mortgage obligations: residential	148,582		—		148,582		—
Collateralized mortgage obligations: commercial	5,617		—		5,617		—
Mutual funds	2,116		2,116		—		—

	Assets / Liabilities Measured at Fair Value at		Fair Value Measurements at December 31, 2014
Description	December 31, 2014		Level 1		Level 2		Level 3
Available-for-sale securities:
U.S. Government sponsored enterprises	$	10,227	$	—	$	10,227	$	—
Obligations of state and political subdivisions	44,605		—		44,605		—
GSE mortgage-backed securities	109,103		—		109,103		—
Collateralized mortgage obligations: residential	60,839		—		60,839		—
Collateralized mortgage obligations: commercial	24,545		—		24,545		—
Other asset-backed securities	24,343		—		24,343		—
Collateralized debt obligation	1,218		—		1,218		—
Mutual funds	2,104		2,104		—		—

Schedule of Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

Certain assets and liabilities are measured at fair value on a nonrecurring basis and are included in the table below (in thousands).  Impaired loans are Level 2 assets measured using appraisals from external parties of the collateral less any prior liens.  Other real estate properties are also Level 2 assets measured using appraisals from external parties.

	Assets / Liabilities Measured at Fair Value at		Fair Value Measurements at September 30, 2015
Description	September 30, 2015		Level 1		Level 2		Level 3
Impaired loans	$	14,966	$	—	$	14,966	$	—
Other real estate	4,661		—		4,661		—
	Assets / Liabilities Measured at Fair Value at		Fair Value Measurements at December 31, 2014
Description	December 31, 2014		Level 1		Level 2		Level 3
Impaired loans	$	5,051	$	—	$	5,051	$	—
Other real estate	4,234		—		4,234		—

Schedule of Carrying Amounts and Estimated Fair Values of Financial Instruments

The carrying amounts and estimated fair values of the Company’s financial instruments are as follows at September 30, 2015 and December 31, 2014 (in thousands):

			Fair Value Measurements at September 30, 2015 Using:
	Carrying Value		Level 1		Level 2		Level 3
Financial assets:
Cash and due from banks, interest-bearing deposits in banks and federal funds sold	$	125,437	$	125,437	$	—	$	—
Securities available-for-sale	285,485		2,116		283,369		—
Securities held-to-maturity	121,043		—		122,488		—
Other investments	12,063		12,063		—		—
Loans, net	1,282,513		—		14,966		1,282,506
Cash surrender value of life insurance policies	13,548		—		13,548		—
Financial liabilities:
Non-interest-bearing deposits	406,118		—		406,118		—
Interest-bearing deposits	1,137,303		—		918,792		218,328
Securities sold under agreements to repurchase	92,085		92,085		—		—
Short-term Federal Home Loan Bank advances	70,000		—		70,000		—
Long-term Federal Home Loan Bank advances	25,958		—		—		26,956
Junior subordinated debentures	22,167		—		22,167		—

			Fair Value Measurements at December 31, 2014 Using:
	Carrying Value		Level 1		Level 2		Level 3
Financial assets:
Cash and due from banks, interest-bearing deposits in banks and federal funds sold	$	86,872	$	86,872	$	—	$	—
Securities available-for-sale	276,984		2,104		274,880		—
Securities held-to-maturity	141,201		—		141,593		—
Other investments	9,990		9,990		—		—
Loans, net	1,273,205		—		5,051		1,277,882
Cash surrender value of life insurance policies	13,659		—		13,659		—
Financial liabilities:
Non-interest-bearing deposits	390,863		—		390,863		—
Interest-bearing deposits	1,194,371		—		943,255		251,291
Securities sold under agreements to repurchase	62,098		62,098		—		—
Short-term Federal Home Loan Bank advances	25,000		—		25,000		—
Long-term Federal Home Loan Bank advances	26,277		—		—		27,193
Junior subordinated debentures	22,167		—		22,167		—

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Credit Quality of Loans and Allowance for Loan Losses (Tables)

9 Months Ended

Sep. 30, 2015

Receivables [Abstract]

Components of Loans Receivable

The loan portfolio consisted of the following (in thousands):

	September 30, 2015			December 31, 2014
Commercial, financial and agricultural	$	482,452		$	467,147
Real estate - construction	74,279			68,577
Real estate – commercial	473,319			467,172
Real estate – residential	151,667			154,602
Installment loans to individuals	113,199			119,328
Lease financing receivable	4,790			4,857
Other	1,746			2,748
	1,301,452			1,284,431
Less allowance for loan losses	(18,939		)	(11,226		)
	$	1,282,513		$	1,273,205

Roll Forward of Activity in Allowance for Loan Losses

A rollforward of the activity within the allowance for loan losses by loan type and recorded investment in loans for the nine months ended September 30, 2015 and 2014 is as follows (in thousands):

	September 30, 2015
				Real Estate
	Coml, Fin, and Agric			Constru-ction			Commercial			Residential			Installment loans to individuals			Lease financing receivable		Other		Total
Allowance for loan losses:
Beginning balance	$	5,729		$	954		$	2,402		$	810		$	1,311		$	16	$	4	$	11,226
Charge-offs	(2,310		)	(76		)	(169		)	(45		)	(883		)	—		—		(3,483		)
Recoveries	185			1			20			10			80			—		—		296
Provision	8,016			(62		)	2,107			(104		)	923			13		7		10,900
Ending balance	$	11,620		$	817		$	4,360		$	671		$	1,431		$	29	$	11	$	18,939
Ending balance: individually evaluated for impairment	$	2,569		$	26		$	1,739		$	147		$	216		$	—	$	—	$	4,697
Ending balance: collectively evaluated for impairment	$	9,051		$	791		$	2,621		$	524		$	1,215		$	29	$	11	$	14,242
Loans:
Ending balance	$	482,452		$	74,279		$	473,319		$	151,667		$	113,199		$	4,790	$	1,746	$	1,301,452
Ending balance: individually evaluated for impairment	$	29,185		$	212		$	19,928		$	1,796		$	386		$	—	$	—	$	51,507
Ending balance: collectively evaluated for impairment	$	453,267		$	74,067		$	452,758		$	149,788		$	112,813		$	4,790	$	1,746	$	1,249,229
Ending balance: loans acquired with deteriorated credit quality	$	—		$	—		$	633		$	83		$	—		$	—	$	—	$	716

	September 30, 2014
				Real Estate
	Coml, Fin, and Agric			Constr-uction			Commercial			Residential			Installment loans to individuals			Lease financing receivable			Other		Total
Allowance for loan losses:
Beginning balance	$	3,906		$	1,046		$	1,389		$	1,141		$	1,273		$	21		$	3	$	8,779
Charge-offs	(2,084		)	(1		)	(93		)	(188		)	(566		)	—			—		(2,932		)
Recoveries	101			—			398			44			110			—			—		653
Provision	2,731			103			(345		)	(8		)	450			(6		)	—		2,925
Ending balance	$	4,654		$	1,148		$	1,349		$	989		$	1,267		$	15		$	3	$	9,425
Ending balance: individually evaluated for impairment	$	853		$	3		$	55		$	87		$	140		$	—		$	—	$	1,138
Ending balance: collectively evaluated for impairment	$	3,801		$	1,145		$	1,294		$	902		$	1,127		$	15		$	3	$	8,287
Loans:
Ending balance	$	452,065		$	86,315		$	430,930		$	153,915		$	116,340		$	5,285		$	3,523	$	1,248,373
Ending balance: individually evaluated for impairment	$	2,662		$	106		$	3,312		$	1,073		$	426		$	—		$	—	$	7,579
Ending balance: collectively evaluated for impairment	$	449,403		$	86,209		$	426,942		$	152,742		$	115,914		$	5,285		$	3,523	$	1,240,018
Ending balance: loans acquired with deteriorated credit quality	$	—		$	—		$	676		$	100		$	—		$	—		$	—	$	776

Age Analysis of Past Due Loans by Class of Loans

An age analysis of past due loans (including both accruing and non-accruing loans) is as follows (in thousands):

			September 30, 2015
	30-59 Days Past Due		60-89 Days Past Due		Greater than 90 Days Past Due		Total Past Due		Current		Total Loans		Recorded Investment > 90 days  and Accruing
Commercial, financial, and agricultural	$	4,065	$	3,124	$	3,879	$	11,068	$	471,384	$	482,452	$	23
Commercial real estate - construction	93		99		12		204		55,484		55,688		—
Commercial real estate - other	7,252		2,745		16,999		26,996		446,323		473,319		—
Residential - construction	—		—		172		172		18,419		18,591		—
Residential - prime	1,383		264		1,378		3,025		148,642		151,667		—
Consumer - credit card	38		11		27		76		5,683		5,759		27
Consumer - other	1,228		162		329		1,719		105,721		107,440		32
Lease financing receivable	—		—		—		—		4,790		4,790		—
Other loans	148		—		—		148		1,598		1,746		—
	$	14,207	$	6,405	$	22,796	$	43,408	$	1,258,044	$	1,301,452	$	82
	December 31, 2014
	30-59 Days Past Due		60-89 Days Past Due		Greater than 90 Days Past Due		Total Past Due		Current		Total Loans		Recorded Investment > 90 days and Accruing
Commercial, financial, and agricultural	$	2,179	$	654	$	2,556	$	5,389	$	461,758	$	467,147	$	26
Commercial real estate - construction	15		—		105		120		43,390		43,510		97
Commercial real estate - other	4,989		270		2,464		7,723		459,449		467,172		—
Residential - construction	431		—		—		431		24,636		25,067		—
Residential - prime	1,843		523		704		3,070		151,532		154,602		—
Consumer - credit card	5		19		18		42		5,970		6,012		18
Consumer - other	671		392		107		1,170		112,146		113,316		46
Lease financing receivable	—		—		—		—		4,857		4,857		—
Other loans	134		—		—		134		2,614		2,748		—
	$	10,267	$	1,858	$	5,954	$	18,079	$	1,266,352	$	1,284,431	$	187

Schedule of Loans on Nonaccrual Status

Non-accrual loans are as follows (in thousands):

	September 30, 2015		December 31, 2014
Commercial, financial, and agricultural	$	29,171	$	2,642
Commercial real estate – construction	39		54
Commercial real estate - other	19,952		6,429
Residential - construction	172		—
Residential - prime	1,896		1,194
Consumer - credit card	—		—
Consumer - other	386		382
Lease financing receivable	—		—
Other	—		—
	$	51,616	$	10,701

Schedule of Loans Evaluated for Impairment

Loans that are individually evaluated for impairment are as follows (in thousands):

	September 30, 2015
	Recorded Investment		Unpaid Principal  Balance		Related Allowance		Average Recorded Investment		Interest  Income Recognized
With no related allowance recorded:
Commercial, financial, and agricultural	$	22,149	$	22,412	$	—	$	21,863	$	703
Commercial real estate – construction	39		39		—		40		—
Commercial real estate – other	5,440		5,440		—		6,244		47
Residential – prime	1,144		1,164		—		1,211		11
Residential – construction	55		55		—		273		1
Consumer – other	30		30		—		33		—
Subtotal:	28,857		29,140		—		29,664		762
With an allowance recorded:
Commercial, financial, and agricultural	7,036		7,036		2,569		4,604		159
Commercial real estate – other	14,488		14,488		1,739		12,932		33
Residential – prime	652		652		147		599		5
Residential – construction	118		118		26		59		—
Consumer – other	356		371		216		322		4
Subtotal:	22,650		22,665		4,697		18,516		201
Totals:
Commercial	49,152		49,415		4,308		45,683		942
Residential	1,969		1,989		173		2,142		17
Consumer	386		401		216		355		4
Grand total:	$	51,507	$	51,805	$	4,697	$	48,180	$	963

	December 31, 2014
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
With no related allowance recorded:
Commercial, financial, and agricultural	$	438	$	521	$	—	$	554	$	—
Commercial real estate – construction	54		54		—		58		—
Commercial real estate – other	1,921		1,921		—		1,885		17
Residential – prime	543		543		—		534		15
Consumer – other	78		78		—		72		—
Subtotal:	3,034		3,117		—		3,103		32
With an allowance recorded:
Commercial, financial, and agricultural	2,218		2,333		1,010		1,394		35
Commercial real estate – construction	—		—		—		19		—
Commercial real estate – other	4,467		4,467		1,484		2,416		220
Residential – prime	529		548		68		452		3
Consumer – other	299		313		179		252		4
Subtotal:	7,513		7,661		2,741		4,533		262
Totals:
Commercial	9,098		9,296		2,494		6,326		272
Residential	1,072		1,091		68		986		18
Consumer	377		391		179		324		4
Grand total:	$	10,547	$	10,778	$	2,741	$	7,636	$	294

Credit Quality Indicators by Class of Loans

The following tables present the classes of loans by risk rating (in thousands):

			September 30, 2015
Commercial Credit Exposure
Credit Risk Profile by Creditworthiness Category
			Commercial, financial, and agricultural		Commercial real estate - construction		Commercial real estate - other		Total		% of Total
Pass			$	417,600	$	55,525	$	417,095	$	890,220	88.02	%
Special mention			23,104		34		20,277		43,415		4.29	%
Substandard			41,521		129		35,947		77,597		7.67	%
Doubtful			227		—		—		227		0.02	%
			$	482,452	$	55,688	$	473,319	$	1,011,459	100.00	%
Residential Credit Exposure
Credit Risk Profile by Creditworthiness Category
					Residential - construction		Residential - prime		Total		% of Total
Pass					$	18,419	$	147,721	$	166,140	97.58	%
Special mention					—		1,326		1,326		0.78	%
Substandard					172		2,620		2,792		1.64	%
					$	18,591	$	151,667	$	170,258	100.00	%
Consumer and Commercial Credit Exposure
Credit Risk Profile Based on Payment Activity
	Consumer - credit card		Consumer - other		Lease financing receivable		Other		Total		% of Total
Performing	$	5,721	$	107,022	$	4,790	$	1,746	$	119,279	99.62	%
Nonperforming	38		418		—		—		456		0.38	%
	$	5,759	$	107,440	$	4,790	$	1,746	$	119,735	100.00	%

	December 31, 2014
Commercial Credit Exposure
Credit Risk Profile by Creditworthiness Category
			Commercial, financial, and agricultural		Commercial real estate - construction		Commercial real estate - other		Total		% of Total
Pass			$	456,221	$	43,320	$	440,281	$	939,822	96.11	%
Special mention			4,861		132		7,120		12,113		1.24	%
Substandard			5,541		58		19,771		25,370		2.60	%
Doubtful			524		—		—		524		0.05	%
			$	467,147	$	43,510	$	467,172	$	977,829	100.00	%
Residential Credit Exposure
Credit Risk Profile by Creditworthiness Category
					Residential - construction		Residential - prime		Total		% of Total
Pass					$	25,067	$	150,664	$	175,731	97.81	%
Special mention					—		1,184		1,184		0.66	%
Substandard					—		2,754		2,754		1.53	%
					$	25,067	$	154,602	$	179,669	100.00	%
Consumer and Commercial Credit Exposure
Credit Risk Profile Based on Payment Activity
	Consumer - credit card		Consumer - other		Lease financing receivable		Other		Total		% of Total
Performing	$	5,995	$	112,893	$	4,857	$	2,748	$	126,493	99.65	%
Nonperforming	17		423		—		—		440		0.35	%
	$	6,012	$	113,316	$	4,857	$	2,748	$	126,933	100.00	%

Summary of Troubled Debt Restructurings

Information about the Company’s TDRs is as follows (in thousands):

	September 30, 2015
	Current		Past Due Greater Than 30 Days		Nonaccrual TDRs		Total TDRs
Commercial, financial and agricultural	$	18	$	—	$	21,324	$	21,342
Real estate - commercial	—		150		—		150
	$	18	$	150	$	21,324	$	21,492
	December 31, 2014
	Current		Past Due Greater Than 30 Days		Nonaccrual TDRs		Total TDRs
Commercial, financial and agricultural	$	21	$	—	$	234	$	255
Real estate - commercial	155		—		—		155
	$	176	$	—	$	234	$	410

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Earnings Per Common Share

9 Months Ended

Sep. 30, 2015

Earnings Per Share [Abstract]

Earnings Per Common Share

Earnings Per Common Share

Following is a summary of the information used in the computation of earnings per common share (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2015		2014		2015		2014
Net earnings available to common shareholders	$	2,417	$	4,298	$	8,662	$	14,922
Dividends on Series C preferred stock	92		94		277		284
Adjusted net earnings available to common shareholders	$	2,509	$	4,392	$	8,939	$	15,206
Weighted average number of common shares outstanding used in computation of basic earnings per common share	11,312		11,314		11,321		11,283
Effect of dilutive securities:
Stock options	12		92		20		77
Convertible preferred stock and warrants	507		549		507		544
Weighted average number of common shares outstanding plus effect of dilutive securities – used in computation of diluted earnings per share	11,831		11,955		11,848		11,904

Options and warrants on 234,206 shares of common stock and 11,250 shares of restricted stock were not included in computing diluted earnings per share for the quarter and nine months ended September 30, 2015 because the effects of these shares were anti-dilutive as a result of the exercise price of such options.  Options to acquire 7,355 and 24,855 shares of common stock were not included in computing diluted earnings per share for the quarter and nine months ended September 30, 2014, respectively, because the effects of these shares were anti-dilutive as a result of the exercise price of such options.

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Other Comprehensive Income

9 Months Ended

Sep. 30, 2015

Equity [Abstract]

Other Comprehensive Income

Other Comprehensive Income

The following is a summary of the tax effects allocated to each component of other comprehensive income (loss) (in thousands):

	Three Months Ended September 30,
	2015							2014
	Before Tax Amount		Tax Effect			Net of Tax Amount		Before Tax Amount			Tax Effect		Net of Tax Amount
Other comprehensive income (loss):
Securities available-for-sale:
Change in unrealized gains (losses) during period	$	1,717	$	(601	)	$	1,116	$	(405	)	$	142	$	(263	)
Reclassification adjustment for gains included in net income	—		—			—		—			—		—
Total other comprehensive income (loss)	$	1,717	$	(601	)	$	1,116	$	(405	)	$	142	$	(263	)

	Nine Months Ended September 30,
	2015									2014
	Before Tax Amount			Tax Effect			Net of Tax Amount			Before Tax Amount			Tax Effect			Net of Tax Amount
Other comprehensive (loss) income:
Securities available-for-sale:
Change in unrealized gains during period	$	447		$	(156	)	$	291		$	4,116		$	(1,441	)	$	2,675
Reclassification adjustment for gains included in net income	(1,243		)	435			(808		)	(128		)	45			(83		)
Total other comprehensive (loss) income	$	(796	)	$	279		$	(517	)	$	3,988		$	(1,396	)	$	2,592

The reclassifications out of accumulated other comprehensive income into net income are presented below (in thousands):

	Three Months Ended September 30,
	2015			2014
Details about Accumulated Other Comprehensive Income Components	Reclassifications Out of Accumulated Other Comprehensive Income		Income Statement Line Item	Reclassifications Out of Accumulated Other Comprehensive Income		Income Statement  Line Item
Unrealized gains and losses on securities available-for-sale:
	$	—	Gain on sale of securities, net	$	—	Gain on sale of securities, net
	—		Tax expense	—		Tax expense
	$	—	Net of tax	$	—	Net of tax

	Nine Months Ended September 30,
	2015				2014
Details about Accumulated Other Comprehensive Income Components	Reclassifications Out of Accumulated Other Comprehensive Income			Income Statement Line Item	Reclassifications Out of Accumulated Other Comprehensive Income			Income Statement  Line Item
Unrealized gains and losses on securities available-for-sale:
	$	(1,243	)	Gain on sale of securities, net	$	(128	)	Gain on sale of securities, net
	435			Tax expense	45			Tax expense
	$	(808	)	Net of tax	$	(83	)	Net of tax

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Declaration of Dividends

9 Months Ended

Sep. 30, 2015

Equity [Abstract]

Declaration of Dividends

Declaration of Dividends

A first quarter dividend of $0.09 per share for holders of common stock of record on March 13, 2015 was declared on January 21, 2015, and was paid on April 1, 2015.  On January 21, 2015, the Company also declared a 1.00% dividend for holders of its Series C preferred stock of record on April 1, 2015, which was paid on April 15, 2015. On April 15, 2015, the Company declared a second quarter dividend of $0.09 per share for holders of common stock of record on June 15, 2015, and was paid on July 1, 2015. On April 15, 2015, the Company also declared a 1.00% dividend for holders of its Series C preferred stock of record on July 1, 2015, which was paid on July 15, 2015. On July 15, 2015, the Company declared a third quarter dividend of $0.09 per share for holders of common stock of record on September 15, 2015 to be paid on October 1, 2015. On July 15, 2015, the Company also declared a 1.00% dividend for holders of its Series C preferred stock of record on October 1, 2015 to be paid on October 15, 2015. On October 21, 2015, the Company declared a fourth quarter dividend of $0.09 per share for holders of common stock of record on December 15, 2015 to be paid on January 4, 2016. On October 21, 2015, the Company also declared a 1.00% dividend for holders of its Series C preferred stock of record on January 4, 2016 to be paid on January 15, 2016.

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Fair Value Measurement

9 Months Ended

Sep. 30, 2015

Fair Value Disclosures [Abstract]

Fair Value Measurement

Fair Value Measurement

The Company groups assets and liabilities 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 – Valuation is based upon quoted prices for identical instruments traded in active markets.

Level 2 – Valuation is based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market.

Level 3 – Valuation is generated from model-based techniques that use at least one significant assumption not observable in the market.  These unobservable assumptions reflect estimates of assumptions that market participants would use in pricing the asset or liability.  Valuation techniques include use of option pricing models, discounted cash flow models and similar techniques.

Following is a description of valuation methodologies used for assets and liabilities which are either recorded or disclosed at fair value.

Cash and Due From Banks, Interest-Bearing Deposits in Banks and Federal Funds Sold—The carrying value of these short-term instruments is a reasonable estimate of fair value.

Securities Available-for-Sale—Securities available-for-sale are recorded at fair value on a recurring basis.  Fair value measurement is based upon quoted prices, if available.  If quoted prices are not available, fair values are measured using independent pricing models or other model-based valuation techniques such as the present value of future cash flows, adjusted for the security’s credit rating, prepayment assumptions and other factors such as credit loss assumptions.  Level 1 securities include those traded on an active exchange, such as the New York Stock Exchange and U.S. Treasury securities that are traded by dealers or brokers in active over-the-counter market funds.  Securities are classified as Level 2 within the valuation hierarchy when the Company obtains fair value measurements from an independent pricing service.  The fair value measurements consider observable data that may include dealer quotes, market spreads, cash flows, the U.S. Treasury yield curve, live trading levels, trade execution data, market consensus prepayment speeds, credit information, and the bond’s terms and conditions, among other things. Level 2 inputs are used to value U.S. Agency securities, mortgage-backed securities, asset-backed securities, municipal securities, single issue trust preferred securities, certain pooled trust preferred securities, collateralized debt obligations and certain equity securities that are not actively traded.

Securities Held-to-Maturity—The fair value of securities held-to-maturity is estimated using the same measurement techniques as securities available-for-sale.

Other Investments—The carrying value of other investments is a reasonable estimate of fair value.

Loans—For disclosure purposes, the fair value of fixed rate loans is estimated by discounting the future cash flows using the current rates at which similar loans would be made to borrowers with similar credit ratings.  For variable rate loans, the carrying amount is a reasonable estimate of fair value.  The Company does not record loans at fair value on a recurring basis.  No adjustment to fair value is taken related to illiquidity discounts.  However, from time to time, a loan is considered impaired and an allowance for loan losses is established.  Loans for which it is probable that payment of interest and principal will not be made in accordance with the contractual terms of the loan agreement are considered impaired.  Once a loan is identified as individually impaired, management uses one of three methods to measure impairment, which, include collateral value, market value of similar debt, and discounted cash flows.  Those impaired loans not requiring an allowance represent loans for which the fair value of the expected repayments or collateral exceed the recorded investments in such loans.  Impaired loans where an allowance is established based on the fair value of collateral or where the loan balance has been charged down to fair value require classification in the fair value hierarchy.  When the fair value of the collateral is based on an observable market price or a current appraised value, the Company records the impaired loan as nonrecurring Level 2.  When an appraised value is not available or management determines the fair value of the collateral is further impaired below the appraised value and adjusts the appraisal value by taking an additional discount for market conditions and there is no observable market price, the Company records the impaired loan as nonrecurring Level 3.

For non-performing loans, collateral valuations currently in file are reviewed for acceptability in terms of timeliness and applicability.  Although each determination is made based on the facts and circumstances of each credit, generally valuations are no longer considered acceptable when there has been physical deterioration of the property from when it was last appraised, or there has been a significant change in the underlying assumptions of the appraisal.  If the valuation is deemed to be unacceptable, a new appraisal is ordered.  New appraisals are typically received within 4-6 weeks.  While awaiting new appraisals, the valuation in the file is utilized, net of discounts.  Discounts are derived from available relevant market data, selling costs, taxes, and insurance.  Any perceived collateral deficiency utilizing the discounted value is specifically reserved (as required by ASC Topic 310) until the new appraisal is received or charged off.  Thus, provisions or charge-offs are recognized in the period the credit is identified as non-performing.

The following sources are utilized to set appropriate discounts: in-market real estate agents, current local sales data, bank history for devaluation of similar property, Sheriff’s valuations and buy/sell contracts.  If a real estate agent is used to market and sell the property, values are discounted 10% for selling costs.  Additional discounts may be applied if research from the above sources indicates a discount is appropriate given devaluation of similar property from the time of the initial valuation.

Other Real Estate—Other real estate (“ORE”) properties are adjusted to fair value upon transfer of the loans to other real estate, and annually thereafter to insure other real estate assets are carried at the lower of carrying value or fair value.  Exceptions to obtaining initial appraisals are properties where a buy/sell agreement exists for the loan value or greater, or where a Sheriff’s valuation has been received for properties liquidated through a Sheriff sale.  Fair value is based upon independent market prices, appraised values of the collateral or management’s estimation of the value of the collateral.  When the fair value of the collateral is based on an observable market price or a current appraised value, the Company records the ORE as nonrecurring Level 2.  When an appraised value is not available or management determines the fair value of the collateral is further impaired below the appraised value and adjusts the appraisal value by taking an additional discount for market conditions and there is no observable market prices, the Company records the ORE asset as nonrecurring Level 3.

Cash Surrender Value of Life Insurance Policies—Fair value for life insurance cash surrender value is based on cash surrender values indicated by the insurance companies.

Deposits—The fair value of demand deposits, savings accounts, NOW accounts, and money market deposits is the amount payable on demand at the reporting date.  The fair value of fixed maturity certificates of deposit is estimated by discounting the future cash flows using the rates currently offered for deposits of similar remaining maturities.  The estimated fair value does not include customer related intangibles.

Securities Sold Under Agreements to Repurchase—The fair value approximates the carrying value of securities sold under agreements to repurchase due to their short-term nature.

Short-term Federal Home Loan Bank Advances—The fair value approximates the carrying value of short-term FHLB advances due to their short-term nature.

Long-term Federal Home Loan Bank Advances—The fair value of long-term FHLB advances is estimated using a discounted cash flow analysis that applies interest rates currently being offered on similar types of borrowings with similar terms.

Junior Subordinated Debentures—For junior subordinated debentures that bear interest on a floating basis, the carrying amount approximates fair value.  For junior subordinated debentures that bear interest on a fixed rate basis, the fair value is estimated using a discounted cash flow analysis that applies interest rates currently being offered on similar types of borrowings.

Commitments to Extend Credit, Standby Letters of Credit and Credit Card Guarantees—Because commitments to extend credit and standby letters of credit are generally short-term and made using variable rates, the carrying value and estimated fair value associated with these instruments are immaterial.

Assets Recorded at Fair Value

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

	Assets / Liabilities Measured at Fair Value at		Fair Value Measurements at September 30, 2015
Description	September 30, 2015		Level 1		Level 2		Level 3
Available-for-sale securities:
Obligations of state and political subdivisions	$	37,431	$	—	$	37,431	$	—
GSE mortgage-backed securities	91,739		—		91,739		—
Collateralized mortgage obligations: residential	148,582		—		148,582		—
Collateralized mortgage obligations: commercial	5,617		—		5,617		—
Mutual funds	2,116		2,116		—		—

	Assets / Liabilities Measured at Fair Value at		Fair Value Measurements at December 31, 2014
Description	December 31, 2014		Level 1		Level 2		Level 3
Available-for-sale securities:
U.S. Government sponsored enterprises	$	10,227	$	—	$	10,227	$	—
Obligations of state and political subdivisions	44,605		—		44,605		—
GSE mortgage-backed securities	109,103		—		109,103		—
Collateralized mortgage obligations: residential	60,839		—		60,839		—
Collateralized mortgage obligations: commercial	24,545		—		24,545		—
Other asset-backed securities	24,343		—		24,343		—
Collateralized debt obligation	1,218		—		1,218		—
Mutual funds	2,104		2,104		—		—

Certain assets and liabilities are measured at fair value on a nonrecurring basis and are included in the table below (in thousands).  Impaired loans are Level 2 assets measured using appraisals from external parties of the collateral less any prior liens.  Other real estate properties are also Level 2 assets measured using appraisals from external parties.

	Assets / Liabilities Measured at Fair Value at		Fair Value Measurements at September 30, 2015
Description	September 30, 2015		Level 1		Level 2		Level 3
Impaired loans	$	14,966	$	—	$	14,966	$	—
Other real estate	4,661		—		4,661		—
	Assets / Liabilities Measured at Fair Value at		Fair Value Measurements at December 31, 2014
Description	December 31, 2014		Level 1		Level 2		Level 3
Impaired loans	$	5,051	$	—	$	5,051	$	—
Other real estate	4,234		—		4,234		—

Limitations

Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial instrument.  These estimates do not reflect any premium or discount that could result from offering for sale at one time the Company’s holdings of a particular financial instrument.  Because no market exists for a significant portion of the Company’s financial instruments, fair value estimates are based on many judgments.  These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision.  Changes in assumptions could significantly affect the estimates.

Fair value estimates are based on existing on and off-balance sheet financial instruments without attempting to estimate the value of anticipated future business and the value of assets and liabilities that are not considered financial instruments.  Significant assets and liabilities that are not considered financial instruments include deferred income taxes and premises and equipment.  In addition, the tax ramifications related to the realization of the unrealized gains and losses can have a significant effect on fair value estimates and have not been considered in the estimates.

The carrying amounts and estimated fair values of the Company’s financial instruments are as follows at September 30, 2015 and December 31, 2014 (in thousands):

			Fair Value Measurements at September 30, 2015 Using:
	Carrying Value		Level 1		Level 2		Level 3
Financial assets:
Cash and due from banks, interest-bearing deposits in banks and federal funds sold	$	125,437	$	125,437	$	—	$	—
Securities available-for-sale	285,485		2,116		283,369		—
Securities held-to-maturity	121,043		—		122,488		—
Other investments	12,063		12,063		—		—
Loans, net	1,282,513		—		14,966		1,282,506
Cash surrender value of life insurance policies	13,548		—		13,548		—
Financial liabilities:
Non-interest-bearing deposits	406,118		—		406,118		—
Interest-bearing deposits	1,137,303		—		918,792		218,328
Securities sold under agreements to repurchase	92,085		92,085		—		—
Short-term Federal Home Loan Bank advances	70,000		—		70,000		—
Long-term Federal Home Loan Bank advances	25,958		—		—		26,956
Junior subordinated debentures	22,167		—		22,167		—

			Fair Value Measurements at December 31, 2014 Using:
	Carrying Value		Level 1		Level 2		Level 3
Financial assets:
Cash and due from banks, interest-bearing deposits in banks and federal funds sold	$	86,872	$	86,872	$	—	$	—
Securities available-for-sale	276,984		2,104		274,880		—
Securities held-to-maturity	141,201		—		141,593		—
Other investments	9,990		9,990		—		—
Loans, net	1,273,205		—		5,051		1,277,882
Cash surrender value of life insurance policies	13,659		—		13,659		—
Financial liabilities:
Non-interest-bearing deposits	390,863		—		390,863		—
Interest-bearing deposits	1,194,371		—		943,255		251,291
Securities sold under agreements to repurchase	62,098		62,098		—		—
Short-term Federal Home Loan Bank advances	25,000		—		25,000		—
Long-term Federal Home Loan Bank advances	26,277		—		—		27,193
Junior subordinated debentures	22,167		—		22,167		—

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Credit Quality of Loans and Allowance for Loan Losses - Loans Individually Evaluated for Impairment (Details) - USD ($) $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2015	Dec. 31, 2014
With no related allowance recorded [Abstract]
Recorded Investment	$ 28,857	$ 3,034
Unpaid Principal Balance	29,140	3,117
Average Recorded Investment	29,664	3,103
Interest Income Recognized	762	32
With an allowance recorded [Abstract]
Recorded Investment	22,650	7,513
Unpaid Principal Balance	22,665	7,661
Related Allowance	4,697	2,741
Average Recorded Investment	18,516	4,533
Interest Income Recognized	201	262
Totals [Abstract]
Recorded Investment	51,507	10,547
Unpaid Principal Balance	51,805	10,778
Related Allowance	4,697	2,741
Average Recorded Investment	48,180	7,636
Interest Income Recognized	963	294
Commercial, financial and agricultural
With no related allowance recorded [Abstract]
Recorded Investment	22,149	438
Unpaid Principal Balance	22,412	521
Average Recorded Investment	21,863	554
Interest Income Recognized	703	0
With an allowance recorded [Abstract]
Recorded Investment	7,036	2,218
Unpaid Principal Balance	7,036	2,333
Related Allowance	2,569	1,010
Average Recorded Investment	4,604	1,394
Interest Income Recognized	159	35
Totals [Abstract]
Related Allowance	2,569	1,010
Commercial real estate - construction
With no related allowance recorded [Abstract]
Recorded Investment	39	54
Unpaid Principal Balance	39	54
Average Recorded Investment	40	58
Interest Income Recognized	0	0
With an allowance recorded [Abstract]
Recorded Investment		0
Unpaid Principal Balance		0
Related Allowance		0
Average Recorded Investment		19
Interest Income Recognized		0
Totals [Abstract]
Related Allowance		0
Commercial real estate - other
With no related allowance recorded [Abstract]
Recorded Investment	5,440	1,921
Unpaid Principal Balance	5,440	1,921
Average Recorded Investment	6,244	1,885
Interest Income Recognized	47	17
With an allowance recorded [Abstract]
Recorded Investment	14,488	4,467
Unpaid Principal Balance	14,488	4,467
Related Allowance	1,739	1,484
Average Recorded Investment	12,932	2,416
Interest Income Recognized	33	220
Totals [Abstract]
Related Allowance	1,739	1,484
Residential - prime
With no related allowance recorded [Abstract]
Recorded Investment	1,144	543
Unpaid Principal Balance	1,164	543
Average Recorded Investment	1,211	534
Interest Income Recognized	11	15
With an allowance recorded [Abstract]
Recorded Investment	652	529
Unpaid Principal Balance	652	548
Related Allowance	147	68
Average Recorded Investment	599	452
Interest Income Recognized	5	3
Totals [Abstract]
Related Allowance	147	68
Residential - construction
With no related allowance recorded [Abstract]
Recorded Investment	55
Unpaid Principal Balance	55
Average Recorded Investment	273
Interest Income Recognized	1
With an allowance recorded [Abstract]
Recorded Investment	118
Unpaid Principal Balance	118
Related Allowance	26
Average Recorded Investment	59
Interest Income Recognized	0
Totals [Abstract]
Related Allowance	26
Consumer - other
With no related allowance recorded [Abstract]
Recorded Investment	30	78
Unpaid Principal Balance	30	78
Average Recorded Investment	33	72
Interest Income Recognized	0	0
With an allowance recorded [Abstract]
Recorded Investment	356	299
Unpaid Principal Balance	371	313
Related Allowance	216	179
Average Recorded Investment	322	252
Interest Income Recognized	4	4
Totals [Abstract]
Related Allowance	216	179
Total: Commercial
With an allowance recorded [Abstract]
Related Allowance	4,308	2,494
Totals [Abstract]
Recorded Investment	49,152	9,098
Unpaid Principal Balance	49,415	9,296
Related Allowance	4,308	2,494
Average Recorded Investment	45,683	6,326
Interest Income Recognized	942	272
Total: Residential
With an allowance recorded [Abstract]
Related Allowance	173	68
Totals [Abstract]
Recorded Investment	1,969	1,072
Unpaid Principal Balance	1,989	1,091
Related Allowance	173	68
Average Recorded Investment	2,142	986
Interest Income Recognized	17	18
Total: Consumer
With an allowance recorded [Abstract]
Related Allowance	216	179
Totals [Abstract]
Recorded Investment	386	377
Unpaid Principal Balance	401	391
Related Allowance	216	179
Average Recorded Investment	355	324
Interest Income Recognized	$ 4	$ 4

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Other Comprehensive Income (Tables)

9 Months Ended

Sep. 30, 2015

Equity [Abstract]

Summary of Tax Effects

The following is a summary of the tax effects allocated to each component of other comprehensive income (loss) (in thousands):

	Three Months Ended September 30,
	2015							2014
	Before Tax Amount		Tax Effect			Net of Tax Amount		Before Tax Amount			Tax Effect		Net of Tax Amount
Other comprehensive income (loss):
Securities available-for-sale:
Change in unrealized gains (losses) during period	$	1,717	$	(601	)	$	1,116	$	(405	)	$	142	$	(263	)
Reclassification adjustment for gains included in net income	—		—			—		—			—		—
Total other comprehensive income (loss)	$	1,717	$	(601	)	$	1,116	$	(405	)	$	142	$	(263	)

	Nine Months Ended September 30,
	2015									2014
	Before Tax Amount			Tax Effect			Net of Tax Amount			Before Tax Amount			Tax Effect			Net of Tax Amount
Other comprehensive (loss) income:
Securities available-for-sale:
Change in unrealized gains during period	$	447		$	(156	)	$	291		$	4,116		$	(1,441	)	$	2,675
Reclassification adjustment for gains included in net income	(1,243		)	435			(808		)	(128		)	45			(83		)
Total other comprehensive (loss) income	$	(796	)	$	279		$	(517	)	$	3,988		$	(1,396	)	$	2,592

Reclassification Out of Accumulated Other Comprehensive Income

The reclassifications out of accumulated other comprehensive income into net income are presented below (in thousands):

	Three Months Ended September 30,
	2015			2014
Details about Accumulated Other Comprehensive Income Components	Reclassifications Out of Accumulated Other Comprehensive Income		Income Statement Line Item	Reclassifications Out of Accumulated Other Comprehensive Income		Income Statement  Line Item
Unrealized gains and losses on securities available-for-sale:
	$	—	Gain on sale of securities, net	$	—	Gain on sale of securities, net
	—		Tax expense	—		Tax expense
	$	—	Net of tax	$	—	Net of tax

	Nine Months Ended September 30,
	2015				2014
Details about Accumulated Other Comprehensive Income Components	Reclassifications Out of Accumulated Other Comprehensive Income			Income Statement Line Item	Reclassifications Out of Accumulated Other Comprehensive Income			Income Statement  Line Item
Unrealized gains and losses on securities available-for-sale:
	$	(1,243	)	Gain on sale of securities, net	$	(128	)	Gain on sale of securities, net
	435			Tax expense	45			Tax expense
	$	(808	)	Net of tax	$	(83	)	Net of tax

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Investment Securities - Summary of Amortized Cost and Fair Value by Contractual Maturity (Details) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Amortized Cost
Available-for-sale: Due in one year or less	$ 5,074
Available-for-sale: Due after one year through five years	19,498
Available-for-sale: Due after five years through ten years	9,540
Available-for-sale: Due after ten years	2,388
Mortgage-backed securities and collateralized mortgage obligations: Residential	237,632
Mortgage-backed securities and collateralized mortgage obligations: Commercial	5,653
Mutual funds	2,100
Available-for-sale, Amortized Cost	281,885	$ 272,588
Fair Value
Available-for-sale: Due in one year or less	5,114
Available-for-sale: Due after one year through five years	20,120
Available-for-sale: Due after five years through ten years	9,832
Available-for-sale: Due after ten years	2,365
Mortgage-backed securities and collateralized mortgage obligations: Residential	240,321
Mortgage-backed securities and collateralized mortgage obligations: Commercial	5,617
Mutual funds	2,116
Available-for-sale, Fair Value	285,485	276,984
Amortized Cost
Held-to-maturity: Due in one year or less	473
Held-to-maturity: Due after one year through five years	2,923
Held-to-maturity: Due after five years through ten years	11,105
Held-to-maturity: Due after ten years	29,432
Mortgage-backed securities and collateralized mortgage obligations: Residential	69,704
Mortgage-backed securities and collateralized mortgage obligations: Commercial	7,406
Held-to-maturity, Amortized Cost	121,043	141,201
Fair Value
Held-to-maturity: Due in one year or less	475
Held-to-maturity: Due after one year through five years	2,960
Held-to-maturity: Due after five years through ten years	11,273
Held-to-maturity: Due after ten years	29,739
Mortgage-backed securities and collateralized mortgage obligations: Residential	70,584
Mortgage-backed securities and collateralized mortgage obligations: Commercial	7,457
Held-to-maturity, Fair Value	$ 122,488	$ 141,593

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Earnings Per Common Share (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Earnings Per Share [Abstract]
Net earnings available to common shareholders	$ 2,417	$ 4,298	$ 8,662	$ 14,922
Dividends on Series C preferred stock	92	94	277	284
Adjusted net earnings available to common shareholders	$ 2,509	$ 4,392	$ 8,939	$ 15,206
Weighted average number of common shares outstanding used in computation of basic earnings per common share	11,312,000	11,314,000	11,321,000	11,283,000
Effect of dilutive securities:
Stock options (in shares)	12,000	92,000	20,000	77,000
Convertible preferred stock and warrants (in shares)	507,000	549,000	507,000	544,000
Weighted average number of common shares outstanding plus effect of dilutive securities - used in computation of diluted earnings per common share (in shares)	11,831,000	11,955,000	11,848,000	11,904,000
Stock Options
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive shares excluded from computing diluted earnings per share (in shares)	234,206	7,355	11,250	24,855

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Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Statement of Comprehensive Income [Abstract]
Net earnings	$ 2,589	$ 4,472	$ 9,179	$ 15,446
Unrealized gains (losses) on securities available-for-sale:
Unrealized holding gains (losses) arising during the year	1,717	(405)	447	4,116
Less: reclassification adjustment for gains on sales of securities available-for-sale	0	0	(1,243)	(128)
Total other comprehensive income (loss), before tax	1,717	(405)	(796)	3,988
Income tax effect related to items of other comprehensive income (loss)	(601)	142	279	(1,396)
Total other comprehensive income (loss), net of tax	1,116	(263)	(517)	2,592
Total comprehensive income	$ 3,705	$ 4,209	$ 8,662	$ 18,038

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Investment Securities

9 Months Ended

Sep. 30, 2015

Investments, Debt and Equity Securities [Abstract]

Investment Securities

Investment Securities

The portfolio of investment securities consisted of the following (in thousands):

	September 30, 2015
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Available-for-sale:
Obligations of state and political subdivisions	$	36,500	$	979	$	48	$	37,431
GSE mortgage-backed securities	88,813		2,981		55		91,739
Collateralized mortgage obligations: residential	148,819		690		927		148,582
Collateralized mortgage obligations: commercial	5,653		9		45		5,617
Mutual funds	2,100		16		—		2,116
	$	281,885	$	4,675	$	1,075	$	285,485
	December 31, 2014
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Available-for-sale:
U.S. Government sponsored enterprises	$	10,339	$	—	$	112	$	10,227
Obligations of state and political subdivisions	43,079		1,555		29		44,605
GSE mortgage-backed securities	106,208		3,183		288		109,103
Collateralized mortgage obligations: residential	62,093		266		1,520		60,839
Collateralized mortgage obligations: commercial	24,462		190		107		24,545
Other asset-backed securities	24,041		321		19		24,343
Collateralized debt obligation	266		952		—		1,218
Mutual funds	2,100		4		—		2,104
	$	272,588	$	6,471	$	2,075	$	276,984

	September 30, 2015
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Held-to-maturity:
Obligations of state and political subdivisions	$	43,933	$	552	$	38	$	44,447
GSE mortgage-backed securities	58,420		1,212		82		59,550
Collateralized mortgage obligations: residential	11,284		—		250		11,034
Collateralized mortgage obligations: commercial	7,406		51		—		7,457
	$	121,043	$	1,815	$	370	$	122,488
	December 31, 2014
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Held-to-maturity:
Obligations of state and political subdivisions	$	45,914	$	267	$	192	$	45,989
GSE mortgage-backed securities	67,268		1,080		164		68,184
Collateralized mortgage obligations: residential	12,709		—		479		12,230
Collateralized mortgage obligations: commercial	15,310		53		173		15,190
	$	141,201	$	1,400	$	1,008	$	141,593

With the exception of two private-label collateralized mortgage obligations (“CMOs”) with a combined balance remaining of $34,000 at September 30, 2015, all of the Company’s CMOs are government-sponsored enterprise (“GSE”) securities.

The amortized cost and fair value of debt securities at September 30, 2015 by contractual maturity are shown in the following table (in thousands) with the exception of other asset-backed securities, mortgage-backed securities, CMOs, and the collateralized debt obligation.   Expected maturities may differ from contractual maturities for mortgage-backed securities and CMOs because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

	Amortized Cost		Fair Value
Available-for-sale:
Due in one year or less	$	5,074	$	5,114
Due after one year through five years	19,498		20,120
Due after five years through ten years	9,540		9,832
Due after ten years	2,388		2,365
Mortgage-backed securities and collateralized mortgage obligations:
Residential	237,632		240,321
Commercial	5,653		5,617
Mutual funds	2,100		2,116
	$	281,885	$	285,485
	Amortized Cost		Fair Value
Held-to-maturity:
Due in one year or less	$	473	$	475
Due after one year through five years	2,923		2,960
Due after five years through ten years	11,105		11,273
Due after ten years	29,432		29,739
Mortgage-backed securities and collateralized mortgage obligations:
Residential	69,704		70,584
Commercial	7,406		7,457
	$	121,043	$	122,488

Details concerning investment securities with unrealized losses are as follows (in thousands):

	September 30, 2015
	Securities with losses under 12 months				Securities with losses over 12 months				Total
	Fair Value		Gross Unrealized  Loss		Fair Value		Gross Unrealized Loss		Fair Value		Gross Unrealized Loss
Available-for-sale:
Obligations of state and  political subdivisions	$	3,190	$	48	$	—	$	—	$	3,190	$	48
GSE mortgage-backed  securities	15,860		45		3,754		10		19,614		55
Collateralized mortgage  obligations: residential	33,689		128		31,772		799		65,461		927
Collateralized mortgage  obligations: commercial	—		—		3,073		45		3,073		45
	$	52,739	$	221	$	38,599	$	854	$	91,338	$	1,075

	December 31, 2014
	Securities with losses under 12 months				Securities with losses over 12 months				Total
	Fair Value		Gross Unrealized Loss		Fair Value		Gross Unrealized Loss		Fair Value		Gross Unrealized Loss
Available-for-sale:
U.S. Government sponsored enterprises	$	4,973	$	32	$	5,254	$	80	$	10,227	$	112
Obligations of state and  political subdivisions	2,029		29		—		—		2,029		29
GSE mortgage-backed  securities	6,668		25		21,538		263		28,206		288
Collateralized mortgage  obligations: residential	9,366		53		37,997		1,467		47,363		1,520
Collateralized mortgage  obligations: commercial	—		—		3,747		107		3,747		107
Other asset-backed securities	6,401		19		—		—		6,401		19
	$	29,437	$	158	$	68,536	$	1,917	$	97,973	$	2,075

	September 30, 2015
	Securities with losses under 12 months				Securities with losses over 12 months				Total
	Fair Value		Gross Unrealized Loss		Fair Value		Gross Unrealized Loss		Fair Value		Gross Unrealized Loss
Held-to-maturity:
Obligations of state and political subdivisions	$	6,544	$	19	$	1,302	$	19	$	7,846	$	38
GSE mortgage-backed securities	—		—		7,309		82		7,309		82
Collateralized mortgage obligations: residential	—		—		11,034		250		11,034		250
	$	6,544	$	19	$	19,645	$	351	$	26,189	$	370
	December 31, 2014
	Securities with losses under 12 months				Securities with losses over 12 months				Total
	Fair Value		Gross Unrealized Loss		Fair Value		Gross Unrealized Loss		Fair Value		Gross Unrealized Loss
Held-to-maturity:
Obligations of state and political subdivisions	$	11,761	$	35	$	13,263	$	157	$	25,024	$	192
GSE mortgage-backed securities	—		—		8,142		164		8,142		164
Collateralized mortgage obligations: residential	—		—		12,230		479		12,230		479
Collateralized mortgage obligations: commercial	7,599		173		—		—		7,599		173
	$	19,360	$	208	$	33,635	$	800	$	52,995	$	1,008

Management evaluates each quarter whether unrealized losses on securities represent impairment that is other than temporary. For debt securities, the Company considers its intent to sell the securities or if it is more likely than not the Company will be required to sell the securities.  If such impairment is identified, based upon the intent to sell or the more likely than not threshold, the carrying amount of the security is reduced to fair value with a charge to earnings. Upon the result of the aforementioned review, management then reviews for potential other than temporary impairment based upon other qualitative factors.  In making this evaluation, management considers changes in market rates relative to those available when the security was acquired, changes in market expectations about the timing of cash flows from securities that can be prepaid, performance of the debt security, and changes in the market’s perception of the issuer’s financial health and the security’s credit quality.  If determined that a debt security has incurred other than temporary impairment, then the amount of the credit related impairment is determined.  If a credit loss is evident, the amount of the credit loss is charged to earnings and the non-credit related impairment is recognized through other comprehensive income.

As of September 30, 2015, 42 securities had unrealized losses totaling 1.21% of the individual securities’ amortized cost basis and 0.36% of the Company’s total amortized cost basis.  Of the 42 securities, 20 had been in an unrealized loss position for over twelve months at September 30, 2015.  These 20 securities had an amortized cost basis and unrealized loss of $59.4 million and $1.2 million, respectively.  The unrealized losses on debt securities at September 30, 2015 resulted from changing market interest rates over the yields available at the time the underlying securities were purchased.  Management identified no impairment related to credit quality.  At September 30, 2015, management had the intent and ability to hold impaired securities and no impairment was evaluated as other than temporary.  As a result, no other than temporary impairment losses were recognized during the three months ended September 30, 2015.

During the nine months ended September 30, 2015, the Company sold 21 securities classified as available-for-sale at a net gain of $1.2 million.  Of the 21 securities sold, 11 were sold with gains totaling $1.4 million and 10 securities were sold at a loss of $135,000.  During the nine months ended September 30, 2014, the Company sold 4 securities classified as available-for-sale at a net gain of $128,000. All of the securities were sold at a gain.

Securities with an aggregate carrying value of approximately $287.2 million and $279.8 million at September 30, 2015 and December 31, 2014, respectively, were pledged to secure public funds on deposit and for other purposes required or permitted by law.

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Investment Securities - Summary of Unrealized Losses of Available-for-Sale Securities (Details) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale, Securities with losses under 12 months, Fair Value	$ 52,739	$ 29,437
Available-for-sale, Securities with losses under 12 months, Gross Unrealized Loss	221	158
Available-for-sale, Securities with losses over 12 months, Fair Value	38,599	68,536
Available-for-sale, Securities with losses over 12 months, Gross Unrealized Loss	854	1,917
Available-for-sale, Total, Fair Value	91,338	97,973
Available-for-sale, Total, Gross Unrealized Loss	1,075	2,075
Obligations of state and political subdivisions
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale, Securities with losses under 12 months, Fair Value	3,190	2,029
Available-for-sale, Securities with losses under 12 months, Gross Unrealized Loss	48	29
Available-for-sale, Securities with losses over 12 months, Fair Value	0	0
Available-for-sale, Securities with losses over 12 months, Gross Unrealized Loss	0	0
Available-for-sale, Total, Fair Value	3,190	2,029
Available-for-sale, Total, Gross Unrealized Loss	48	29
GSE mortgage-backed securities
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale, Securities with losses under 12 months, Fair Value	15,860	6,668
Available-for-sale, Securities with losses under 12 months, Gross Unrealized Loss	45	25
Available-for-sale, Securities with losses over 12 months, Fair Value	3,754	21,538
Available-for-sale, Securities with losses over 12 months, Gross Unrealized Loss	10	263
Available-for-sale, Total, Fair Value	19,614	28,206
Available-for-sale, Total, Gross Unrealized Loss	55	288
Collateralized mortgage obligations: residential
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale, Securities with losses under 12 months, Fair Value	33,689	9,366
Available-for-sale, Securities with losses under 12 months, Gross Unrealized Loss	128	53
Available-for-sale, Securities with losses over 12 months, Fair Value	31,772	37,997
Available-for-sale, Securities with losses over 12 months, Gross Unrealized Loss	799	1,467
Available-for-sale, Total, Fair Value	65,461	47,363
Available-for-sale, Total, Gross Unrealized Loss	927	1,520
Collateralized mortgage obligations: commercial
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale, Securities with losses under 12 months, Fair Value	0	0
Available-for-sale, Securities with losses under 12 months, Gross Unrealized Loss	0	0
Available-for-sale, Securities with losses over 12 months, Fair Value	3,073	3,747
Available-for-sale, Securities with losses over 12 months, Gross Unrealized Loss	45	107
Available-for-sale, Total, Fair Value	3,073	3,747
Available-for-sale, Total, Gross Unrealized Loss	$ 45	107
U.S. Government sponsored enterprises
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale, Securities with losses under 12 months, Fair Value		4,973
Available-for-sale, Securities with losses under 12 months, Gross Unrealized Loss		32
Available-for-sale, Securities with losses over 12 months, Fair Value		5,254
Available-for-sale, Securities with losses over 12 months, Gross Unrealized Loss		80
Available-for-sale, Total, Fair Value		10,227
Available-for-sale, Total, Gross Unrealized Loss		112
Other asset-backed securities
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale, Securities with losses under 12 months, Fair Value		6,401
Available-for-sale, Securities with losses under 12 months, Gross Unrealized Loss		19
Available-for-sale, Securities with losses over 12 months, Fair Value		0
Available-for-sale, Securities with losses over 12 months, Gross Unrealized Loss		0
Available-for-sale, Total, Fair Value		6,401
Available-for-sale, Total, Gross Unrealized Loss		$ 19

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Other Comprehensive Income - Summary of the Tax Effects (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Other comprehensive income (loss): Securities available-for-sale: Before Tax Amount
Change in unrealized gains (losses) during period	$ 1,717	$ (405)	$ 447	$ 4,116
Reclassification adjustment for gains included in net income	0	0	(1,243)	(128)
Total other comprehensive income (loss), before tax	1,717	(405)	(796)	3,988
Other comprehensive income (loss): Securities available-for-sale: Tax Effect
Change in unrealized gains (losses) during period	(601)	142	(156)	(1,441)
Reclassification adjustment for gains included in net income	0	0	435	45
Total other comprehensive income (loss)	(601)	142	279	(1,396)
Other comprehensive income (loss): Securities available-for-sale: Net of Tax Amount
Change in unrealized gains (losses) during period	1,116	(263)	291	2,675
Reclassification adjustment for gains included in net income	0	0	(808)	(83)
Total other comprehensive income (loss), net of tax	$ 1,116	$ (263)	$ (517)	$ 2,592

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Intangibles (Tables)

9 Months Ended

Sep. 30, 2015

Goodwill and Intangible Assets Disclosure [Abstract]

Summary of Core Deposit Intangible Assets

A summary of core deposit intangible assets as of September 30, 2015 and December 31, 2014 is as follows (in thousands):

	September 30, 2015			December 31, 2014
Gross carrying amount	$	11,674		$	11,674
Less accumulated amortization	(5,670		)	(4,840		)
Net carrying amount	$	6,004		$	6,834