9. Subsequent Events

On July 11, 2017, the Company completed the sale of 516,700 shares of common stock, pursuant to the partial exercise of the option to purchase additional shares granted to the underwriter, Sandler O'Neill+Partners, L.P., in connection with the Company's recently completed public offering of 4,583,334 shares at $12.00 per share. The partial exercise of the underwriter's option to purchase additional shares resulted in additional gross proceeds of approximately $6.2 million, bringing the total gross proceeds to approximately $61.2 million and total net proceeds to approximately $57.2 million.

Effective as of July 19, 2017, MidSouth Bank, N.A. (the “Bank”), the banking subsidiary of MidSouth Bancorp, Inc. (the “Company”), and the Office of the Comptroller of the Currency (the “OCC”), the Bank’s primary federal regulator, entered into a formal written agreement (the “Agreement”). The Agreement provides, among other things, that the Bank:


•	create a committee to monitor the Bank’s compliance with the Agreement and make quarterly reports to the Board of Directors and the OCC;


•	adopt and implement a three-year strategic plan for the Bank consistent with regulatory guidance and to be reviewed and updated on at least an annual basis by the Board of Directors;

•

protect its interests in its criticized assets (those assets classified as “doubtful,” “substandard,” or “special mention” by internal or external loan review or examination), and adopt and implement a written program designed to eliminate the basis of criticism of criticized assets equal to or exceeding $250,000, which shall be reviewed and, as necessary, revised, on a quarterly basis;


•	may not extend additional credit to any borrower with an aggregate outstanding loan balance of $250,000 that is a criticized asset unless approved and deemed by the Bank's Board of Directors to be necessary to promote the best interests of the Bank and will not compromise the Bank's written program with respect to such loans;


•	develop and implement a written program to improve the Bank's loan portfolio management and provide the Board of Directors with written reports on the Bank's loan portfolio to enhance problem loan identification;


•	review and, as necessary, revise the Bank's loan review program to ensure the timely identification and categorization of problem credits consistent with regulatory guidance;


•	adopt and implement certain enhancements to its policies and procedures relating to its allowance for loan losses (“ALLL”) and the methodology related thereto; and


•	revise its internal audit program to ensure Bank adherence to an independent and comprehensive internal audit program.

The Agreement does not require the Bank to maintain any specific minimum regulatory capital ratios and, accordingly, does not change the Bank’s “well-capitalized” status as of the date hereof. However, in connection with its most recent examination, the OCC established higher individual minimum capital ratios for the Bank. Specifically, the Bank must maintain a Tier 1 capital to adjusted total assets ratio of at least 8%, and a total risk-based capital to risk-weighted assets ratio of at least 12%.

A consequence of the regulatory issues mentioned above is that the Company no longer meets the requirements to maintain its status as a financial holding company under the Federal Reserve’s guidelines. As such, the Company expects to decertify as a financial holding company and become a bank holding company under the Federal Bank Holding Company Act. The Company has previously engaged in immaterial insurance-related activities through its subsidiary, Peoples General Agency, Inc., that the Company will discontinue.