10QSB 1 0001.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10QSB __X__ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended....... September 30, 2000 _____ 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 2-91-000FW MIDSOUTH BANCORP, INC. Louisiana 72 -1020809 102 Versailles Boulevard, Lafayette, Louisiana 70501 (337) 237-8343 Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES __X__ NO _____ State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date. Outstanding as of October 31, 2000 Common stock, $.10 par value 2,515,166 Transitional Small Business Disclosure Format: Yes _______ No ____ X _____ Page 1 Page 2 PART 1 - FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) Page Financial Highlights 3 Statements of Condition - September 30, 2000 and December 31, 1999 4 Statements of Income - Three and Nine Months Ended September 30, 2000 and 1999 5 Statement of Stockholders' Equity - Nine Months Ended September 30, 2000 6 Statements of Cash Flows - Nine Months Ended September 30, 2000 and 1999 7 Notes to Financial Statements 8 Item 2. Management's Discussion and Analysis or Plan of Operation 9 PART II - OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K 15 Signatures 16
MIDSOUTH BANCORP, INC. AND SUBSIDIARIES FINANCIAL HIGHLIGHTS (UNAUDITED) Three Months Ended Nine Months Ended September 30, September 30, EARNINGS DATA 2000 1999 2000 1999 _________________________________________________ Net interest income $3,710,140 $3,490,818 $10,814,484 $9,859,688 Provision for loan losses 200,727 173,100 595,080 678,050 Non-interest income 1,144,698 1,048,458 3,339,762 2,936,793 Non-interest expense 3,582,430 3,390,025 10,682,132 9,468,136 Provision for income tax 276,150 263,175 741,676 672,612 Net income 795,531 712,976 2,135,358 1,977,683 Preferred dividend requirement 139,905 32,648 213,369 98,934 Income available to common shareholders $655,626 $680,328 $1,921,989 $1,878,749 ========================================================================================= PER COMMON SHARE DATA Basic earnings per share $0.26 $0.28 $0.77 $0.77 Diluted earnings per share $0.24 $0.24 $0.70 $0.67 Book value at end of period $6.67 $5.94 $6.67 $5.94 Market price at end of period $8.25 $9.69 $8.25 $9.69 Market price of preferred stock at end of period $24.00 $32.25 $24.00 $32.25 Weighted average shares outstanding Basic 2,489,829 2,448,731 2,484,202 2,435,075 Diluted 2,901,198 2,957,899 2,916,018 2,953,762 ========================================================================================= AVERAGE BALANCE SHEET DATA Total assets $294,150,115 $272,931,156 $286,946,682 $270,967,649 Earning assets 267,852,903 247,978,295 260,948,866 246,082,219 Loans and leases 188,899,108 164,582,595 179,316,245 159,434,500 Interest-bearing deposits 200,080,042 183,787,961 197,278,349 187,751,988 Total deposits 263,390,523 243,919,986 259,816,194 247,546,397 Common stockholders' equity 15,708,534 14,690,259 15,123,417 14,109,208 Total stockholders' equity 17,687,432 16,870,940 17,189,188 16,317,784 ========================================================================================= SELECTED RATIOS Return on average assets (annualized) 1.07% 1.04% 0.99% 0.98% Return on average common equity (annualized) 19.27% 18.37% 17.87% 17.80% Return on average total equity (annualized) 17.84% 16.77% 16.55% 16.20% Leverage capital ratio 6.31% 6.10% 6.31% 6.10% Tier 1 risk-based capital ratio 8.97% 9.18% 8.97% 9.18% Total risk-based capital ratio 10.02% 10.25% 10.02% 10.25% Allowance for loan losses as a % of total loans 1.13% 1.14% 1.13% 1.14% ========================================================================================== PERIOD ENDING BALANCE SHEET DATA 9/30/00 9/30/99 Net Change % Change Total assets $303,226,581 $275,777,727 $27,448,854 9.95% Earning assets 275,127,836 250,673,950 $24,453,886 9.76% Loans and leases, net 191,634,652 168,186,278 $23,448,374 13.94% Interest-bearing deposits 208,887,685 180,445,483 $28,442,202 15.76% Total deposits 274,543,111 240,213,936 $34,329,175 14.29% Common stockholders' equity 16,773,407 14,662,603 $2,110,804 14.40% Total stockholders' equity 18,634,742 16,839,091 $1,795,651 10.66% ========================================================================================== - A $107,250 charge resulting from the retirement of 11,000 shares of MidSouth Bancorp, Inc. Series A Preferred Stock is included in the amount recorded as preferred dividends for the three and nine month periods ended 9/30/00. - Return on average common equity is calculated before the effect of the $107,250 charge related to the retirement of 11,000 shares of preferred stock for the three and nine month periods ended 9/30/00.
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MIDSOUTH BANCORP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CONDITION ================================================================================= September 30, December 31, 2000 1999 * ASSETS (unaudited) ___________ ___________ Cash and due from banks $13,054,019 $13,587,690 Federal funds sold 5,700,000 900,000 ___________ ___________ Total cash and cash equivalents 18,754,019 14,487,690 Interest bearing deposits in banks 103,022 356,124 Securities available-for-sale, at fair value (cost of $52,964,558 in September 2000 and $57,106,793 in December 1999) 52,192,858 55,689,863 Securities held-to-maturity (estimated market value of $23,557,063 in September 2000 and $20,776,767 in December 1999) 23,316,587 21,287,597 Loans, net of allowance for loan losses of $2,180,717 in September 2000 and $1,967,326 in December 1999 191,634,652 168,501,407 Bank premises and equipment, net 11,951,432 11,367,815 Other real estate owned, net 456,774 569,963 Accrued interest receivable 2,445,520 1,919,182 Goodwill, net 508,341 554,153 Other assets 1,863,376 1,990,047 ___________ ___________ Total assets $303,226,581 $276,723,841 =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY Deposits: Non-interest bearing $65,655,426 $63,668,676 Interest bearing 208,887,685 188,021,530 ___________ ___________ Total deposits 274,543,111 251,690,206 Securities sold under repurchase agreements 1,290,455 606,601 FHLB advances 3,000,000 3,000,000 Accrued interest payable 784,621 715,171 Long-term notes payable 4,478,317 3,459,097 Other liabilities 495,335 327,605 ___________ ___________ Total liabilities 284,591,839 259,798,680 ___________ ___________ Commitments and contingencies - - Stockholders' Equity: Preferred Stock, no par value, $14.25 stated value - 5,000,000 shares authorized, 130,620 and 152,736 issued and outstanding on September 30, 2000 and December 31, 1999, respectively 1,861,335 2,176,488 Common stock, $.10 par value- 5,000,000 shares authorized, 2,515,166 and 2,481,843 issued and outstanding on September 30, 2000 and December 31, 1999, respectively 251,517 248,184 Surplus 11,138,784 10,983,714 Unearned ESOP shares (193,498) (89,044) Unrealized losses on securities available- for-sale, net of deferred taxes of ($247,750) in September 2000 and ($468,500) in December 1999 (523,950) (948,430) Retained earnings 6,100,554 4,554,249 ___________ ___________ Total stockholders' equity 18,634,742 16,925,161 ___________ ___________ Total liabilities and stockholders' equity $303,226,581 $276,723,841 =========== =========== * The consolidated statement of condition at December 31, 1999 is taken from the audited balance sheet on that date. See notes to consolidated financial statements.
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MIDSOUTH BANCORP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME ======================================================================================== Three Months Ended Nine Months Ended September 30, September 30, 2000 1999 2000 1999 _________________________ __________________________ INTEREST INCOME: Loans, including fees $5,044,852 $4,246,928 $14,091,971 $12,030,667 Securities Taxable 864,189 916,359 2,633,047 2,457,620 Nontaxable 310,482 283,383 904,580 821,172 Federal funds sold 18,795 10,633 86,081 382,932 _________ _________ __________ __________ TOTAL 6,238,318 5,457,303 17,715,679 15,692,391 _________ _________ __________ __________ INTEREST EXPENSE: Deposits 2,310,882 1,797,777 6,421,514 5,535,132 Securities sold under repurchase agreements, federal funds purchased and advances 129,218 99,320 237,209 102,359 Long term debt 88,078 69,388 242,472 195,212 _________ _________ __________ __________ TOTAL 2,528,178 1,966,485 6,901,195 5,832,703 _________ _________ __________ __________ NET INTEREST INCOME 3,710,140 3,490,818 10,814,484 9,859,688 PROVISION FOR LOAN LOSSES 200,727 173,100 595,080 678,050 _________ _________ __________ __________ NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 3,509,413 3,317,718 10,219,404 9,181,638 _________ _________ __________ __________ OTHER OPERATING INCOME: Service charges on deposits 826,335 759,445 2,399,830 2,189,811 Gains on securities, net 14,356 - 16,126 - Credit life insurance 61,294 66,271 187,023 107,611 Other charges and fees 242,713 222,742 736,783 639,371 _________ _________ __________ __________ TOTAL OTHER INCOME 1,144,698 1,048,458 3,339,762 2,936,793 _________ _________ __________ __________ OTHER EXPENSES: Salaries and employee benefits 1,716,730 1,635,085 5,041,045 4,496,013 Occupancy expense 828,804 691,414 2,399,469 2,016,803 Other 1,036,896 1,063,526 3,241,618 2,955,320 _________ _________ __________ __________ TOTAL OTHER EXPENSES 3,582,430 3,390,025 10,682,132 9,468,136 _________ _________ __________ __________ INCOME BEFORE INCOME TAXES 1,071,681 976,151 2,877,034 2,650,295 PROVISION FOR INCOME TAXES 276,150 263,175 741,676 672,612 _________ _________ __________ __________ NET INCOME 795,531 712,976 2,135,358 1,977,683 PREFERRED DIVIDEND REQUIREMENT 139,905 32,648 213,369 98,934 _________ _________ __________ __________ INCOME AVAILABLE TO COMMON SHAREHOLDERS $655,626 $680,328 $1,921,989 $1,878,749 ========= ========= ========== ========== BASIC EARNINGS PER COMMON SHARE $0.26 $0.28 $0.77 $0.77 ========= ========= ========== ========== DILUTED EARNINGS PER COMMON SHARE $0.24 $0.24 $0.70 $0.67 ========= ========= ========== ==========
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MIDSOUTH BANCORP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000 (UNAUDITED) UNREALIZED (GAINS)LOSSES ON SECURITIES PREFERRED STOCK COMMON STOCK ESOP AVAILABLE RETAINED SHARES AMOUNT SHARES AMOUNT SURPLUS OBLIGATION FOR-SALE EARNINGS TOTAL ___________________ ___________________ ___________ ___________________________________ ___________ BALANCE, DECEMBER 31, 1999 152,736 $2,176,488 2,481,843 $248,184 $10,983,714 ($89,044) ($948,430) $4,554,249 $16,925,161 Dividends on common stock (375,684) (375,684) Dividends on preferred stock (106,119) (106,119) Preferred stock conversion (11,116) (158,403) 33,323 3,333 155,070 Retirement of preferred stock (11,000) (156,750) (107,250) (264,000) Net income 2,135,358 2,135,358 Increase in ESOP obligation, net of repayments (104,454) (104,454) Net change in unrealized gain/loss on securities available-for-sale, net of tax 424,480 424,480 ________ __________ _________ ________ ___________ _________ _________ __________ ___________ BALANCE, SEPTEMBER 30, 2000 130,620 $1,861,335 2,515,166 $251,517 $11,138,784 ($193,498) ($523,950) $6,100,554 $18,634,742 ======== ========== ========= ======== =========== ========= ========= ========== =========== See notes to consolidated financial statements.
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MIDSOUTH BANCORP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000 and 1999 September 30, 2000 September 30, 1999 __________________ __________________ CASH FLOWS FROM OPERATING ACTIVITIES: Net Income $2,135,358 $1,977,683 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 1,021,680 878,710 Provision for loan losses 595,080 678,050 Provision for deferred income taxes 4,548 12,228 Discount accretion, net 64,031 39,887 Gains on sale of securities, net (16,126) - Gain on sale of premises and equipment (3,720) (2,926) Loss on sale of other real estate owned 1,639 - Write-down of other real estate owned 93,000 - Change in accrued interest receivable (526,338) (275,781) Change in accrued interest payable 69,450 103,440 Change in other liabilities 167,730 258,972 Change in other assets (98,627) (119,595) _____________ ____________ NET CASH PROVIDED BY OPERATING ACTIVITIES 3,507,705 3,550,668 _____________ ____________ CASH FLOWS FROM INVESTING ACTIVITIES: Net decrease in interest-bearing deposits in banks 253,102 2,787 Proceeds from sales of securities available-for-sale 2,064,519 Proceeds from maturities and calls of securities held-to-maturity - 25,000 Proceeds from maturities and calls of securities available-for-sale 9,715,737 10,704,344 Purchases of securities available-for-sale (7,683,611) (27,037,460) Purchases of securities held-to-maturity (2,031,305) (2,092,845) Loan originations, net of repayments (23,945,440) (12,516,626) Purchases of premises and equipment (1,566,015) (2,524,357) Proceeds from sales of premises and equipment 10,250 25,000 Proceeds from sales of other real estate owned 131,211 58,724 Purchase of insurance premium financing company - (3,503,497) _____________ ____________ NET CASH USED IN INVESTING ACTIVITIES (23,051,552) (36,858,930) _____________ ____________ CASH FLOWS FROM FINANCING ACTIVITIES: Net increase in deposits 22,852,905 10,289,634 Net (decrease) increase in securities sold under repurchase agreements and federal funds purchased 683,854 2,302,514 Increase in other borrowings - 12,000,000 Issuance of notes payable 1,340,000 75,000 Repayments of notes payable (320,780) (223,071) Proceeds from issuance of common stock - 279,480 Payment of dividends (481,803) (467,333) Returned of preferred stock (264,000) 17,500 _____________ ____________ NET CASH PROVIDED BY FINANCING ACTIVITIES 23,810,176 24,273,724 NET DECREASE IN CASH & CASH EQUIVALENTS 4,266,329 (9,034,538) CASH & CASH EQUIVALENTS AT BEGINNING OF PERIOD 14,487,690 20,603,536 _____________ ____________ CASH & CASH EQUIVALENTS AT END OF PERIOD $18,754,019 $11,568,998 ============= ============
7 MIDSOUTH BANCORP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. STATEMENT BY MANAGEMENT CONCERNING THE REVIEW OF UNAUDITED FINANCIAL INFORMATION The accompanying unaudited consolidated financial statements and notes thereto contain all adjustments, consisting only of normal recurring adjustments, necessary to present fairly the financial position of MidSouth Bancorp, Inc. ("MidSouth") and its subsidiaries as of September 30, 2000 and the results of their operations and their cash flows for the periods presented. The consolidated financial statements should be read in conjunction with the annual consolidated financial statements and the notes thereto included in MidSouth's 1999 annual consolidated report and Form 10-KSB. The results of operations for the three and nine month periods ended September 30, 2000 are not necessarily indicative of the results to be expected for the entire year. 2. ALLOWANCE FOR LOAN AND LEASE LOSSES An analysis of the activity in the allowance for loan losses is as follows: Nine Months Ended September 30, 2000 1999 __________ __________ Balance at beginning of period $1,967,327 $1,860,490 Provision for loan losses 595,080 678,050 Recoveries 99,788 109,387 Loans charged off (481,478) (700,542) __________ __________ Balance at end of period $2,180,717 $1,947,385 ========== ========== 3. COMPREHENSIVE INCOME MidSouth adopted Statement of Financial Accounting Standards No. 130 "Reporting Comprehensive Income" ("SFAS 130") effective January 1, 1998. SFAS 130 establishes standards for reporting and display of comprehensive income and its components. Comprehensive income includes net income and other comprehensive income (losses) which, in the case of MidSouth, only includes unrealized gains and losses on securities available-for-sale. Following is a summary of MidSouth's comprehensive income for the nine months ended September 30, 2000 and 1999. 2000 1999 __________ __________ Net income $2,135,358 $1,977,683 Other comprehensive income (losses), net of tax 424,480 (675,350) __________ __________ Total comprehensive income $2,559,838 $1,302,333 ========== ========== 8 4. IMPACT OF NEW ACCOUNTING STANDARD In June 1998, the Financial Accounting Standards Board issued SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities" which establishes accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts and for hedging activites. Under this Statement, a company that elects to apply hedge accounting is required to establish at the inception of the hedge the method it will use for assessing the effectiveness of the hedging derivative and the measurement approach for determining the ineffective aspect of the hedge. At the date of initial application, a company may transfer any held-to-maturity security into the available-for-sale category or the trading category. A company will then be able in the future to designate a security transferred into the available- for-sale category as the hedged item. The unrealized holding gain or loss on a held-to-maturity security transferred to another category at the date of the initial application will be reported in net income or accumulated other comprehensive income consistent with the re- quirements of SFAS 115. Such transfers from the held-to-maturity category at the date of initial adoption will not call into question a company's intent to hold other debt securities to maturity in the future. SFAS No. 133 applies to all entities and is effective for all fiscal quarters of fiscal years beginning after June 15, 2000. Earlier adoption of the Statement is permitted. MidSouth expects to adopt this accounting standard on January 1, 2001 and does not expect the adoption of SFAS 133 will have a material impact upon its financial condition, results of operations or cash flows. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION This review should be read in conjunction with MidSouth Bancorp Inc.'s ("MidSouth") consolidated financial statements and accompanying notes contained herein, as well as with MidSouth's 1999 annual consolidated financial statements, the notes thereto and the related Management's Discussion and Analysis. MidSouth's third quarter 2000 net income increased 12% over the third quarter of 1999. Net income totaled $795,531 for the third quarter of 2000, compared to $712,976 for the third quarter of 1999. Income available to common shareholders for the third quarter of 2000 before a reduction of $107,250 resulting from the repurchase of 11,000 shares of preferred stock, was $762,878 as compared to $680,328 for the third quarter of 1999. The $107,250 reduction reflected the excess over book value of the purchase price of the preferred stock. Before the effect of the $107,250 charge, basic and diluted earnings per common share for the quarter ended September 30, 2000 were $.31 and $.27 per common share, respectively, and for the nine months ended September 30, 2000, basic earnings per common share were $.82 and diluted earnings per common share were $.72. Net income for the nine months ended September 30, 2000 was $2,135,358, compared to $1,977,683 reported for the nine months ended September 30, 1999. In both quarterly and year-to date comparisons, net interest income increased due to a higher volume of earning assets. Non-interest income increased 9% in quarterly comparison and 14% in year-to-date comparison, primarily due to service charges on deposit accounts and mortgage loan processing fees. The increased net interest and non-interest income was substantially offset by increases in non-interest expense for the three and nine month periods ended September 30, 2000 as compared to the same periods ended September 30, 1999. Increases were recorded primarily in salaries and benefits, occupancy, and data processing expenses. These increases reflect the addition of three banking offices to MidSouth's extensive branch network in the past twelve months, and the addition of the NetBanking product in the second quarter of 2000. NetBanking offers MidSouth's customers online access to their accounts and bill paying services 7 days a week, 24 hours a day. MidSouth ended the third quarter of 2000 with total consolidated assets of $303.2 million, a $27.4 million or 10% increase over assets of $275.8 million at the end of the third quarter of 1999. Total deposits increased $34.3 million or 14%, and totaled $274.5 million at September 30, 2000 compared to $240.2 million at September 30, 1999. Loans, net of Allowance for Loan Loss ("ALL"), increased $23.4 million or 14%, from $168.2 million at September 30, 1999 to $191.6 million at September 30, 2000. Provisions for loan losses increased $27,627 in quarterly comparison, but year-to-date comparison reflected a decrease of $82,970. Nonperforming loans as a percentage of total loans decreased from .15% as of September 30, 1999 to .08% as of September 30, 2000. Total nonperforming assets decreased $48,641, from $662,521 at September 30, 1999 to $613,880 at September 30, 2000. 9 The ALL represented 315.71% of nonperforming assets at September 30, 1999, compared to 355.24% at September 30, 2000. MidSouth's leverage ratio was 6.31% for the quarter ended September 30, 2000, compared to 6.10% for the quarter ended September 30, 1999. Return on average common equity, before the effect of the $107,250 charge, was 19.27% for the third quarter of 2000 compared to 18.37% for the third quarter of 1999. Earnings Analysis Net Interest Income Average earning assets increased 8%, or $19.9 million, from $248.0 million for the three months ended September 30, 1999 to $267.9 million for the three months ended September 30, 2000. The mix of earning assets shifted from 66% of average earning assets in loans for the third quarter of 1999 up to 71% in the third quarter of 2000. The average yield on loans increased 48 basis points, from 10.12% to 10.60% at September 30, 2000. Yields increased due to changes in the prime lending rate over the past twelve months. New York Prime increased 125 basis points from 8.25% at September 30, 1999 to 9.50% at September 30, 2000. Market competition for quality credits held commercial loan yields to a 30 basis point increase, while consumer loan yields increased 134 basis points in quarterly comparison. Average investment volume declined $4.8 million, from $82.5 million at September 30, 1999 to $77.7 million at September 30, 2000 as a greater portion of available funds were used to fund increased loan demand. The average taxable-equivalent yield on investments increased 40 basis points from at 6.29% at September 30, 1999 to 6.69% at September 30, 2000. The increase in average loan volume as a percentage of average earning assets combined with improved yields increased the taxable-equivalent yield on quarterly average earning assets 61 basis points, from 8.83% for the third quarter of 1999 to 9.44% for the third quarter of 2000. An average volume increase of $17.0 million in interest- bearing liabilities resulted in increased interest expense for the quarter ended September 30, 2000 compared to the quarter ended September 30, 1999. In addition, the average rate paid on interest-bearing liabilities increased 73 basis points, from 4.01% at September 30, 1999 to 4.74% at September 30, 2000. The percentage of average interest- bearing deposits to average total deposits remained stable at 76% at September 30, 2000, up 1% from 75% at September 30, 1999. The net effect of changes in rate, volume and mix of average earning assets and interest-bearing liabilities increased net interest income $219,322 in quarterly comparison. The net taxable-equivalent yield on average earning assets remained stable with a 2 basis points increase, from 5.68% for the quarter ended September 30, 1999 to 5.70% for the quarter ended September 30, 2000. 10 Review of the changes in the volume and yields of average earning assets and interest-bearing liabilities between the two nine month periods ended September 30, 2000 and 1999 reflected results similar to the quarterly comparison. The net taxable-equivalent yield on average earning assets for the nine months ended September 30, 2000 increased 23 basis points from 5.49% at September 30, 1999 to 5.72% at September 30, 2000. The improvement in net yield on earning assets resulted in increased net interest income of $954,796 between the two nine month periods reviewed. Non-interest Income MidSouth's primary source of non-interest income, service charges on deposit accounts, increased $66,890 for the three months and $210,019 for the nine months ended September 30, 2000 as compared to the same periods for 1999. The increases resulted primarily from additional service charge income due to a higher volume of accounts serviced. Other non-interest income, excluding gains on sales of securities and credit life insurance, increased $19,971 in quarterly comparison and $97,412 in year-to-date comparison. A mortgage origination program with a third party processor contributed $17,384 to the increase for the quarter and $31,750 for the nine months ended September 30, 2000. VISA merchant and debit card income increased significantly in 2000, however, expenses associated with these programs also increased, offsetting the income. Income from the sale of credit life insurance decreased $4,977 for the quarter and increased $79,412 for the nine months period ended September 30, 2000 as compared to the same periods ended September 30, 1999. Non-interest Expense Non-interest expense increased $192,405 for the three months and $1,213,996 for the nine months ended September 30, 2000 compared to the three and nine months ended September 30, 1999. Increases were recorded primarily in the categories of salaries and employee benefits, occupancy, and data processing expenses due to the addition of three new offices over the past twelve months. These increases reflect MidSouth's long term investment in staff development, system upgrades and market penetration. Balance Sheet Analysis MidSouth ended the third quarter of 2000 with consolidated assets of $303,226,581, an increase of $26.5 million or 9.60% from the $276,723,841 reported for December 31, 1999. Deposits increased over the nine months ended September 30, 2000 by $22.9 million to $274,543,111. Most of the growth in deposits was in interest-bearing deposits, primarily money market indexed accounts. 11 MidSouth's loan portfolio grew $23.3 million in the nine months ended September 30, 2000, with the majority of the increase in commercial and real estate loans. Securities available-for-sale decreased $3.5 million, from $55.7 million at December 31, 1999 to $52.2 million at September 30, 2000. The decrease reflects sales of $2.1 million, purchases of $ 7.7 million and maturities and principal paydowns of $9.7 million, partially offset by an improvement in market valuation. Purchases of securities held-to-maturity totaled $2.0 million for the same period. Unrealized losses in the securities available-for-sale portfolio, net of deferred taxes, were $523,950 at September 30, 2000, compared to net unrealized losses of $948,430 at December 31, 1999. These amounts result from interest rate fluctuations and do not represent permanent adjustment of value. Moreover, classification of securities as available-for-sale does not necessarily indicate that the securities will be sold prior to maturity. Capital As of September 30, 2000, MidSouth's leverage ratio was 6.31% as compared to 6.23% at December 31, 1999. Tier 1 capital to risk-weighted assets was 8.97% and total capital to risk-weighted assets was 10.02% at the end of the third quarter of 2000. At year-end 1999, Tier 1 capital to risk- weighted assets was 9.47% and total capital to risk- weighted assets was 10.55%. 12 Nonperforming Assets and Past Due Loans Table 1 summarizes MidSouth's nonaccrual, past due and restructured loans and nonperforming assets.
TABLE 1 Nonperforming Assets and Loans Past Due 90 Days ======================================================================= September December September 30, 31, 30, 2000 1999 1999 ======================================================================== Nonperforming loans Nonaccrual loans $ 157,106 $ 234,962 $ 247,777 Other real estate owned, net 456,774 569,963 369,049 Other assets repossessed - 31,755 45,695 ___________________________________________ Total nonperforming assets $ 613,880 $ 836,680 $ 662,521 =========================================== Loans past due 90 days Or more and still accruing $ 606,671 $ 793,823 $ 605,510 Nonperforming loans as a % of total loans .08% 0.14% 0.15% Nonperforming assets as a % of total loans, other real Estate owned and other assets Repossessed 0.32% 0.49% 0.39% ALL as a % of non- performing loans and other real estate owned 355.24% 235.13% 315.71%
13 Nonperforming assets were $613,880 as of September 30, 2000, a decrease of $222,800 from the $836,680 reported for December 31, 1999 and a decrease of $48,641 from the $662,521 reported for September 30, 1999. Loans past due 90 days or more increased from $605,510 in September 1999 to $793,823 in December 1999 and then declined again $606,671 as of September 30, 2000. Of the $606,671 in loans past due 90 days or more, $115,388 were funded by the Finance Company. Specific reserves have been established in the ALL to cover potential losses on nonperforming assets. The ALL is analyzed quarterly and additional reserves, if needed, are allocated at that time. Management believes the $2,180,717 in the reserve as of September 30, 2000 is sufficient to cover potential losses in nonperforming assets and in the loan portfolio. Loans classified for regulatory purposes but not included in Table 1 do not represent material credits about which management has serious doubts as to the ability of the borrower to comply with loan repayment terms. 14 Item 6. Exhibits and Reports on Form 8-K Page 15 (a) Exhibits Exihibit Number Document Description 3.1 Amended and Restated Articles of Incorporation of MidSouth Bancorp, Inc. is included as Exhibit 3.1 to the MidSouth's Report on Form 10-K for the year ended December 31, 1993, and is incorporated herein by reference. 3.2 Articles of Amendment to Amended and Restated Articles of Incorporation dated July 19, 1995 are included as Exhibit 4.2 to MidSouth's Registration Statement on Form S-8 filed September 20, 1995 and is incorporated herein by reference. 3.3 Amended and Restated By-laws adopted by the Board of Directors on April 12, 1995 are included as Exhibit 3.2 to Amendment No. 1 to MidSouth's Registration Statement on Form S-4 (Reg. No. 33-58499) filed on June 1, 1995. 10.1 MidSouth National Bank Lease Agreement with Southwest Bank Building Limited Partnership is included as Exhibit 10.7 to the Company's annual report on Form 10-K for the Year Ended December 31, 1992, and is incorporated herein by reference. 10.2 First Amendment to Lease between MBL Life Assurance Corporation, successor in interest to Southwest Bank Building Limited Partnership in Commendam, and MidSouth National Bank is included as Exhibit 10.1 to Report on the Company's annual report on Form 10-KSB for the year ended December 31, 1994, and is incorporated herein by reference. 10.3 Amended and Restated Deferred Compensation Plan and Trust is included as Exhibit 10.3 to the Company's annual report on Form 10-K for the year ended December 31, 1992 and is incorporated herein by reference. 10.4 Employment Agreements with C. R. Cloutier and Karen L. Hail are included as Exhibit 5(c) to MidSouth's Form 1-A and are incorporated herein by reference. 10.6 MidSouth Bancorp, Inc.'s 1997 Stock Incentive Plan is included as Exhibit 4.5 to MidSouth's definitive Proxy Statement filed April 11, 1997, and is incorporated herein by reference. Page 16 10.7 The MidSouth Bancorp, Inc. Dividend Reinvestment and Stock Purchase Plan is included as Exhibit 4.6 to MidSouth Bancorp, Inc.'s Form S-3D filed on July 25, 1997 and is incorporated herein by reference. 10.8 Loan Agreements and Master Notes for lines of credit established for MidSouth Bancorp, Inc. and Financial Services of the South, Inc. are included as Exhibit 10.7 of MidSouth's Form 10-QSB filed on August 14, 1997 and is incorporated herein by reference. 10.9 Modification Agreement to the Loan Agreement and Master Note for the Line of Credit established for MidSouth Bancorp, Inc. is included as Exhibit 10.9 of MidSouth's Form 10-QSB filed on August 13, 1999 and is incorporated herein by reference. 11 Computation of earnings per share 27 Financial Data Schedule (b) Reports Filed on Form 8-K (none) 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 14, 2000 /s/ C. R. Cloutier ___________________________ C. R. Cloutier, President & CEO /s/ Karen L. Hail ___________________________ Karen L. Hail, Executive Vice President & CFO /s/ Teri S. Stelly ___________________________ Teri S. Stelly, Senior Vice President & Controller