-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, EELw+Hxuk6FHstFD7sW3rfDtwk4gtAs8Op+RucknAL2w8mI0VSVorqi7j7fXfX9S fUpinPwKqfMiEbiDlP5ogg== 0000948688-01-000001.txt : 20010409 0000948688-01-000001.hdr.sgml : 20010409 ACCESSION NUMBER: 0000948688-01-000001 CONFORMED SUBMISSION TYPE: 10KSB PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20001231 FILED AS OF DATE: 20010402 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MIDSOUTH BANCORP INC CENTRAL INDEX KEY: 0000745981 STANDARD INDUSTRIAL CLASSIFICATION: NATIONAL COMMERCIAL BANKS [6021] IRS NUMBER: 721020809 STATE OF INCORPORATION: LA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10KSB SEC ACT: SEC FILE NUMBER: 001-11826 FILM NUMBER: 1590122 BUSINESS ADDRESS: STREET 1: 102 VERSAILLES BLVD STREET 2: VERSAILLES CENTRE CITY: LAFAYETTE STATE: LA ZIP: 70501 BUSINESS PHONE: 3182378343 MAIL ADDRESS: STREET 1: 102 VERSAILLES BLVD CITY: LAFAYETTE STATE: LA ZIP: 70501 10KSB 1 0001.txt SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-KSB X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2000 OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission file number 2-91000-FW MIDSOUTH BANCORP, INC. (Exact name of registrant as specified in its charter) Louisiana 72-1020809 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 102 Versailles Blvd., Lafayette, LA 70501 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (337) 237-8343 Securities registered pursuant to Section 12(b) of the Act: Title of each class Name of each exchange on which registered Common Stock, $.10 par value American Stock Exchange, Inc. Preferred Stock, no par value, $14.25 American Stock Exchange, Inc. stated value Securities registered pursuant to Section 12(g) of the Act: none Indicate by check mark 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 X No Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-KSB or any amendment to this Form 10-KSB __X__ Total revenues for the year ended December 31, 2000 were $ 19,244,945. As of February 28, 2001, the aggregate market value of the voting stock held by non-affiliates of the Registrant, calculated by reference to the closing sale price of MidSouth's common stock on the AMEX was $13,144,755. As of February 28, 2001 there were outstanding 2,515,166 shares of MidSouth Bancorp, Inc. common stock, $.10 par value, which stock is the only class of the Registrant's common stock. DOCUMENTS INCORPORATED BY REFERENCE Proxy Statement for Annual Meeting of Shareholders to be held May 8, 2001 - (Part III) PART I ITEM 1 - Business. The Company MidSouth Bancorp, Inc. ("MidSouth") is a Louisiana corporation registered as a bank holding company under the Bank Holding Company Act of 1956. Its operations are conducted through, and its primary asset is, MidSouth Bank, N.A. (the "Bank"), a wholly-owned subsidiary. In the third quarter of 1996, MidSouth formed Financial Services of the South, Inc. (the "Finance Company") to provide quality consumer finance throughout its market area. MidSouth, the Bank and the Finance Company are referred to collectively herein as "the Company." The Bank The Bank is a national banking association domiciled in Lafayette, Louisiana. The Bank provides a complete range of commercial and retail banking services primarily to professional, commercial and industrial customers in its market area. These services include, but are not limited to, interest bearing and non-interest bearing checking accounts, investment accounts, credit card services and issuance of cashier's checks, United States Savings Bonds and travelers checks. The Bank is an U.S. government depository. The Bank is also a member of the Electronic Data Services ("EDS") network through Comerica Bank, Dallas, Texas which provides its customers with automatic teller machine services through the GulfNet, Cirrus and Plus networks. Membership in the Community Cash Network provides MidSouth's customers with additional access throughout the Greater New Orleans area with no surcharge. The Bank serves most types of lending demands including short-term business loans, other commercial, industrial and agricultural loans, real estate construction and mortgage loans and installment loans. The Bank operates at the seventeen locations described below under "Item 2 - Properties." Employees As of December 31, 2000, the Bank employed 181 full-time equivalent employees and the Finance Company employed 6 full-time equivalent employees. MidSouth has no employees who are not also employees of the Bank. Through the Bank and the Finance Company, employees receive employee benefits which include an employee stock ownership plan, a 401-K plan and life, health and disability insurance plans. MidSouth considers the relationships of the Bank and the Finance Company with their employees to be very good. Competition The Bank faces keen competition in its market area not only with other commercial banks, but also with savings and loan associations, credit unions, finance companies, mortgage companies, leasing companies, insurance companies, money market mutual funds and brokerage houses. In the Lafayette Parish area there are fifteen state chartered or national banks and three savings banks. Several of the banks in Lafayette are subsidiaries of holding companies or branches of banks having far greater resources than the Company. In addition, the Company expects increased competition as a result of the Gramm- Leach-Bliley Act signed into law on November 12, 1999. As discussed below, under "Recent Legislation - Gramm- Leach-Bliley Act," banks will be able to offer their customers a wider range of financial products and services. The legislation provides the ability to banks, securities firms, insurance companies, and financial technology companies to more readily combine. Louisiana state banks may establish branch offices statewide, and national banks domiciled in Louisiana have the power to establish branches to the full extent that Louisiana banks may establish branches. Since 1989, Louisiana has allowed bank holding companies domiciled in any state of the United States to acquire Louisiana banks and bank holding companies, if the state in which the bank holding company is domiciled allows Louisiana banks and bank holding companies the same opportunities. In 1994, the Interstate Banking and Branching Efficiency Act of 1994 (the "Interstate Act") was enacted. Among other things, the Interstate Act (i) allows bank holding companies to acquire a bank located in any state, subject to certain limitations that may be imposed by the state, (ii) allows banks to merge across state lines, and (iii) permits banks to establish branches outside their state of domicile if expressly permitted by the law of the state in which the branch is to be located. In 1995, the Louisiana legislature enacted legislation permitting out of state bank holding companies after June 1, 1997 to convert any banks owned in Louisiana into branches of out of state banks owned by such holding companies, subject to certain limitations. Supervision and Regulation - Bank Holding Companies General. As a bank holding company, MidSouth is subject to the Bank Holding Company Act of 1956 (the "Act") and is supervised by the Board of Governors of the Federal Reserve System (the "Federal Reserve Board"). The Act requires MidSouth to file periodic reports with the Federal Reserve Board and subjects MidSouth to examination by the Federal Reserve Board. The Act also requires MidSouth to obtain the prior approval of the Federal Reserve Board for acquisitions of substantially all of the assets of any bank or bank holding company or more than 5% of the voting shares of any bank or bank holding company. The Act prohibits MidSouth from engaging in any business other than banking or bank-related activities specifically allowed by the Federal Reserve Board and from engaging in certain tie-in arrangements in connection with any extension of credit or provision of any property or services. Recent Legislation - Gramm-Leach-Bliley Act. This financial services reform legislation proves for three basic changes: 1) repeal of certain provisions of the Glass Steagall Act to permit commercial banks to affiliate with investment banks, 2) modification of the Bank Holding Company Act of 1956 to permit companies that own commercial banks to engage in any type of financial activity, and 3) allows subsidiaries of banks to engage in a broad range of financial activities beyond those permitted for banks themselves. As a result, banks, securities firms, and insurance companies will be able to combine much more readily. The legislation also includes important provisions regarding privacy of customer information; increased access to the Federal Home Loan Bank System by community banks; and significant changes to the requirements of the Community Reinvestment Act. Under provisions of the legislation, two new types of regulated entities are authorized to engage in a broad range of financial activities much more extensive that those of standard holding companies. A "financial holding company" can engage in all newly-authorized activities and is simply a bank holding company whose depository institutions are well-capitalized, well-managed, and has a CRA rating of "satisfactory" or better. A "financial subsidiary" is a direct subsidiary of a bank that satisfies the same conditions as a `financial holding company"plus several more. The "financial subsidiary" can engage in most of the newly-authorized activities, which are defined as securities, insurance, merchant banking/equity investment, "financial in nature," and "complementary" activities. The legislation also defines the concept of "functional supervision", meaning similar activities should be regulated by the same regulator, with the Federal Reserve Board serving as an "umbrella" supervisory authority over bank and financial holding companies. This legislation creates new opportunities for the Company to offer expanded services to its customer base in the future, however the Company has not yet determined the nature of the expanded services or when the services will be offered. Capital Adequacy Requirements. The Federal Reserve Board monitors the capital adequacy of bank holding companies through the use of a combination of risk-based capital guidelines and leverage ratios. Risk-based capital requirements are intended to make regulatory capital more sensitive to the risk profile of a company's assets. Certain off-balance sheet items, such as letters of credit and unused lines of credit, are also assigned risk-weights and included in the risk-based capital calculations. The guidelines require a minimum ratio of total qualifying capital to total risk-weighted assets of 8.0%, of which 4.0% must be in the form of Tier 1 capital. At December 31, 2000, the Company's ratios of Tier 1 and total capital to risk- weighted assets were 8.54% and 9.55%, respectively. MidSouth's leverage ratio (Tier 1 capital to total average adjusted assets) was 6.05% at December 31, 2000. All three regulatory capital ratios for the Company exceeded regulatory minimums at December 31, 2000. Supervision and Regulation - National Banks General. As a national banking association, the Bank is supervised and regulated by the U. S. Comptroller of the Currency (its primary regulatory authority), the Federal Reserve Board and the Federal Insurance Deposit Corporation. Under Section 23A of the Federal Reserve Act, the Bank is restricted in extending credit to or making investments in MidSouth and other affiliates defined in that act. National banks are required by the National Bank Act to adhere to branch banking laws applicable to state banks in the states in which they are located and are limited as to powers, locations and other matters of applicable federal law. Capital Adequacy Requirements. A national bank is subject to regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory, and possibly discretionary, actions by regulators that, if undertaken, could have a direct material effect on a bank's financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, a bank must meet specific capital guidelines that involve quantitative measures of the bank's assets, liabilities, and certain off-balance-sheet items as calculated under regulatory accounting practices. As of December 31, 2000, the most recent notification from the FDIC categorized the Bank as "well capitalized" under the regulatory framework for prompt corrective action. To be categorized as "well capitalized," the Bank must maintain a minimum of total risk-based capital and Tier 1 capital to risk-weighted assets of 10% and 6%, respectively, and a minimum leverage ratio of 5%. All three regulatory capital ratios for the Bank exceeded these minimums at December 31, 2000. Governmental Policies The operations of financial institutions may be affected by legislative changes and by the policies of various regulatory authorities. In particular, bank holding companies and their subsidiaries are affected by the credit policies of the Federal Reserve Board. An important function of the Federal Reserve Board is to regulate the national supply of bank credit. Among the instruments of monetary policy used by the Federal Reserve Board to implement its objectives are open market operations in United States Government securities, changes in the discount rate on bank borrowings and changes in reserve requirements on bank deposits. These policies have significant effects on the overall growth and profitability of the loan, investment and deposit portfolios. The general effects of such policies upon future operations cannot be accurately predicted. ITEM 2 - Properties. The Bank leases its principal executive and administrative offices and principal banking facility in Lafayette, Louisiana under a ten year lease expiring November 30, 2004. The Bank has six other banking offices in Lafayette, Louisiana, three in New Iberia and one banking office in each of Breaux Bridge, Cecilia, Jeanerette, Opelousas, Morgan City, Jennings, Lake Charles, and Sulphur Louisiana. Thirteen of these offices are owned and five are leased. MidSouth also leases space for a loan production office opened in Thibodaux, Louisiana during the fourth quarter of 1999. ITEM 3 - 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 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 operation, or cash flows. ITEM 4 - Submission of Matters to a Vote of Security Holders. No matters were submitted to a vote of MidSouth's security holders in the fourth quarter of 2000. Executive Officers of the Registrant C. R. Cloutier, 53 - President, Chief Executive Officer and Director of MidSouth and the Bank Karen L. Hail, 47 - Executive Vice President of the Bank and Chief Financial Officer, and Secretary and Treasurer of MidSouth and the Bank Donald R. Landry, 44 - Senior Vice President and Senior Loan Officer of the Bank Jennifer S. Fontenot, 46 - Senior Vice President of the Bank William R. Snyder, 60 - Senior Vice President of the Bank since 1996; prior to his employment at the Bank, Mr. Snyder was Senior Vice President for First National Bank of Ohio for 1 year and Senior Vice President for Banc One, Cleveland, Ohio for 5 years. Teri S. Stelly, 41 - Senior Vice President and Controller of MidSouth and the Bank since 1997; Vice President and Controller of MidSouth and the Bank since 1992. David L. Majkowski, 51 - Vice President and Loan review officer of the Bank since 1997; Loan review officer of the Bank since 1995; prior to his employment at the Bank, Mr. Majkowski was Compliance Officer for St. Martin Bank and Trust, St. Martinville, Louisiana for 15 years. All executive officers of the Company are appointed for one year terms expiring at the first meeting of the Board of Directors after the annual shareholders meeting next succeeding his or her election and until his or her successor is elected and qualified. PART II ITEM 5 - Market for Registrant's Common Stock and Related Stockholder Matters. On April 19, 1993 MidSouth's common stock was accepted for listing on the American Stock Exchange, Inc./Emerging Company Marketplace. Effective August 1, 1995, the Company's common stock and its preferred stock has been listed on the regular American Stock Exchange, Inc. ("AMEX") under the symbols MSL and MSL.pr, respectively. As of March 2, 2001, there were 499 common shareholders of record and 165 preferred shareholders of record. The high and low sales prices for the past eight quarters are provided in the Selected Quarterly Financial Data tables included with this filing under Item 7 and is incorporated herein by reference. MidSouth's first common stock dividend was paid at a rate of $.06 per share on October 2, 1995 to shareholders of record on September 18, 1995, and quarterly cash dividends of $.06 per common share were paid through the second quarter of 1998. Following a three for two stock split paid on August 31, 1998, MidSouth began paying quarterly cash dividends of $.05 per common share. It is the intention of the Board of Directors of MidSouth to continue paying quarterly dividends on the common stock at a rate of $.05 per share. Cash dividends on the common stock are subject to payment of dividends on the preferred stock. The Company's ability to pay dividends is described in Item 7 below under the heading "Liquidity - Dividends" and in Note 12 of notes to the Company's consolidated financial statements. On August 31, 1998, MidSouth effected a three for two stock split by way of a stock dividend to its common shareholders of record on July 31, 1998. The stock split increased the common shares outstanding at the time from 1,611,377 to 2,417,195. The conversion rate of the preferred stock was adjusted to 2.998 due to the stock split. On August 6, 1997, MidSouth declared a 12 1/2% stock dividend payable to shareholders of record on August 27, 1997. The conversion rate on the Preferred Stock was adjusted to 1.999 shares of MidSouth Common Stock for each share of Preferred Stock converted. On August 19, 1996, MidSouth effected a four for three stock split by way of a stock dividend to its common shareholders of record on July 31, 1996. Accordingly, the conversion rate on the preferred stock was adjusted to 1.777 shares of MidSouth Common Stock for each share of MidSouth Preferred Stock converted.
FIVE-YEAR SUMMARY OF SELECTED CONSOLIDATED FINANCIAL DATA Year Ended December 31, _________________________________________________________________________ 2000 1999 1998 1997 1996 ____________ ____________ ____________ ____________ ____________ Gross interest income $24,449,115 $21,072,733 $18,755,764 $15,776,416 $12,572,417 Interest expense (9,787,165) (7,888,351) (6,931,556) (5,894,193) (4,541,727) ____________ ____________ ____________ ____________ ____________ Net interest income 14,661,950 13,184,382 11,824,208 9,882,223 8,030,690 Provision for loan losses (897,038) (906,950) (999,950) (854,400) (674,500) Other operating income 4,582,995 3,980,496 3,486,937 2,899,461 2,138,285 Other expenses (14,501,566) (12,740,307) (11,023,245) (9,585,788) (7,840,691) ____________ ____________ ____________ ____________ ____________ Net income 3,846,341 3,517,621 3,287,950 2,341,496 1,653,784 Provision for income taxes (951,204) (867,417) (842,167) (586,804) (417,286) ____________ ____________ ____________ ____________ ____________ Net Income 2,895,137 2,650,204 2,445,783 1,754,692 1,236,498 Preferred stock dividend requirement (246,024) (131,582) (148,971) (154,475) (155,421) ____________ ____________ ____________ ____________ ____________ Net income available to common stockholders $2,649,113 $2,518,622 $2,296,812 $1,600,217 $1,081,077 ============ ============ ============ ============ ============ Basic earnings per share $1.07 $1.03 $0.95 $0.69 $0.48 Diluted earnings per share $0.95 $0.90 $0.83 $0.61 $0.40 Total loans $204,584,860 $170,468,733 $155,477,263 $130,888,144 $93,740,719 Total assets 346,373,433 276,723,841 249,818,268 217,112,415 185,228,252 Total deposits 319,547,205 251,690,206 229,924,302 200,067,751 171,616,508 Cash dividends on common stock 501,443 492,415 434,334 354,336 280,461 Long-term obligations 4,650,968 3,459,097 3,503,668 3,198,794 1,521,435 Selected ratios: Loans to assets 59.06% 61.60% 62.24% 60.29% 50.61% Loans to deposits 64.02% 67.73% 67.62% 65.42% 54.62% Deposits to assets 92.26% 90.95% 92.04% 92.15% 92.65% Return on average assets 0.98% 0.97% 1.04% 0.78% 0.65% Return on average common equity 17.70% 17.45% 19.16% 16.44% 13.09%
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 year ended December 31, 2000. Earnings per share have been adjusted to reflect a four for three stock split paid on August 19, 1996 to shareholders of record on July 31, 1996, a 12 1/2% common stock dividend paid on August 27, 1997 to shareholders of record on August 6, 1997, and a three for two stock split paid on August 31, 1998 to shareholders of record on July 31, 1998. 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 year ended December 31, 2000. ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS MidSouth Bancorp, Inc. ("MidSouth") is a one-bank holding company that conducts substantially all of its business through its wholly-owned subsidiaries, MidSouth Bank, N.A. (the "Bank") and Financial Services of the South, Inc. (the "Finance Company"). Following is management's discussion of factors that management believes are among those necessary for an understanding of MidSouth's financial statements. The discussion should be read in conjunction with MidSouth's consolidated financial statements and the notes thereto presented herein. OVERVIEW Net income for the year ended December 31, 2000 totaled $2,895,137 compared to $2,650,204 for the year ended December 31, 1999. Basic earnings per common share were $1.07 and $.1.03 for the two twelve-month periods, respectively. Annual diluted earnings per share were $.95 for December 31, 2000 and $.90 for December 31, 1999. Earnings improved primarily due to increased net interest income and non-interest income. Three new banking offices opened in the past eighteen months increased operating expenses, but contributed to asset growth for the year 2000. Consolidated assets totaled $346.4 million at December 31, 2000, up $69.7 million over the $276.7 million at December 31, 1999. Net interest income improved in annual comparison due to a higher volume of earning assets. Non-interest income increased 15% primarily due to increases in service charges on deposit accounts and insufficient funds fees, income from the sale of credit life insurance and fee income from third party mortgage loan processing. The increased net interest income and non- interest income was partially offset by increases in non-interest expense for the year ended December 31, 2000 as compared to December 31, 1999. Increased expenses were recorded primarily in salaries and benefits, and occupancy expenses. The increased expenses reflect the addition of three banking offices to MidSouth's extensive branch network over the past eighteen months and the addition of an internet banking product in the second quarter of 2000. These additions reflect MidSouth's commitment to meeting our existing customers needs and to expand and attract new customer relationships. MidSouth recorded a 27% increase in deposits during the past twelve months. Deposits were $319.6 million at December 31, 2000, up $67.9 million from $251.7 million at December 31, 1999. Included in total deposits at year-end 2000 was a significant short-term deposit of approximately $24.6 million, most of which was withdrawn within the month of January 2001. Excluding this short-term deposit, MidSouth realized a 17% increase in deposits over the past year. Loans, net of Allowance for Loan Losses ("ALL"), increased $33.8 million or 20%, from $168.5 million at December 31, 1999 to $202.3 million at December 31, 2000. The majority of the loan growth occurred in the commercial and real estate portfolios. Provisions for loan losses totaled $897,038 for the year ended December 31, 2000 compared to $906,950 for the year ended December 31, 1999. Nonperforming loans as a percentage of total loans decreased from .14% in December of 1999 to .08% in December of 2000 primarily due to the transfer of commercial real estate credits to other real estate owned. Subsequent disposals of some of the property related to these commercial real estate credits resulted in a decrease in other real estate owned, from $569,963 at December 31, 1999 to $446,046 at December 31, 2000. Total nonperforming assets decreased in annual comparison, from $836,680 at December 31, 1999 to $605,772 at December 31, 2000. MidSouth's leverage ratio was 6.05% for the year ended December 31, 2000, compared to 6.23% for the year ended December 31, 1999. Return on average common equity was 17.70% compared to 17.45% for the same periods, respectively. Annualized return on average assets was .98% for 2000 compared to .97% for 1999. EARNINGS ANALYSIS Net Interest Income The primary source of earnings for MidSouth is net interest income, which is the difference between interest earned on loans and investments and interest paid on deposits and other 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. Tables 1 and 2 analyze the changes in net interest income for each of the three years in the period ended December 31, 2000. Net interest income increased $1,477,568 for 2000 over 1999 and $1,360,174 for 1999 over 1998. The increase in net interest income for 2000 resulted primarily from growth in MidSouth's loan portfolio. In 1999, the growth was divided between the loan and investment portfolios. Average loans as a percentage of average earnings assets decreased from 67% in 1998 to 65% in 1999 and increased significantly to 69% in 2000. Interest income from loans, including loan fees, increased $3,158,068 from 1999 to 2000 and $1,479,858 from 1998 to 1999. The increased interest income resulted from increases in average loan volume of $22.4 million or 14% in 2000 and $17.4 million or 12% in 1999. Average yield on total loans increased 49 basis points, from 10.06% in 1999 to 10.55% in 2000. A decrease of 19 basis points was recorded in 1999, from 10.25% in 1998 to 10.06%. For the higher volume commercial loan portfolio, average yields fell from 9.92% in 1998 to 9.58% in 1999, and then increased to 9.97% in 2000. Changes in the New York prime lending rate combined with market competition for quality credits impacted MidSouth's loan yields over the past two years. After falling 50 basis points in the fourth quarter of 1998, the New York prime increased 75 basis points in 1999. However, MidSouth increased its prime only 50 basis points late in the fourth quarter of 1999. During 2000, the New York prime rose one full percentage point and MidSouth adjusted its prime by the same amount. Average yields in the installment loan portfolio rose from 11.18% in 1998 to 11.60% in 1999 and to 12.45% in 2000. The installment portfolio yield benefited from the Finance Company's loans, which averaged $2.0 million and yielded an average rate of 25% in 2000. Credit card loans averaging $1.4 million with an average yield of 20% within the installment portfolio also contributed to the increased average yield. In addition, insurance premium financing loans acquired with the purchase of TMC Financial Services, Inc. ("TMC") in May 1999, boosted the installment loan portfolio yield for the year ended December 31, 2000 with an average rate of 25% earned on an average portfolio of $3.3 million. Strong loan growth in 2000 resulted in decreased activity in the investment securities portfolio. The average volume of investment securities increased $2.0 million to $78.8 million in 2000 compared to $76.8 million in 1999. Average yields on investment securities increased 27 basis points, from 6.34% in 1999 to 6.61% in 2000. The increases in both volume and rate during 2000 resulted in increased interest income from investment securities of $293,729 for the year. During 1999, excess funds from a deposit promotion were invested in the securities portfolio, increasing the average volume by $17.6 million, from $59.2 million in 1998 to $76.8 million in 1999. The increased volume was primarily responsible for the $998,004 increase in interest income from securities in 1999. During 2000, MidSouth's deposit mix remained stable, with non-interest bearing deposits representing 24% of average total deposits as in 1999, compared to 25% in 1998. As of December 31, 2000, average total interest-bearing deposits were split evenly with 38% in NOW, money market and savings deposits and 38% in certificates of deposit (CD's). For year-ended December 31, 1999, NOW, money market and savings deposits represented 37% of average total deposits, while 39% consisted of CD's. For the year ended December 31, 1998, 39% of average total deposits represented NOW, money market and savings deposits and certificates of deposit amounted to 36%. Volume and rate increases in interest-bearing deposits for the years ended December 31, 2000 and 1999 resulted in increased interest expense of $1,809,805 in 2000 and $707,822 in 1999. Average interest-bearing deposits increased $17.5 million in 2000 and $24.2 million in 1999. The average rate paid on these deposits rose 55 basis points to 4.50% in 2000 from 3.95% in 1999, after decreasing 15 basis points from 4.10% in 1998. The rate increase in 2000 resulted from the Federal Reserve Bank's decisions to raise rates throughout the year and from very competitive market rates in MidSouth's markets. The average rate paid on interest-bearing deposits decreased in 1999 primarily due to the loss of approximately $18.2 million in higher cost public funds during the third quarter. FHLB advances averaged $2.9 million at an average rate of 6.72% during 2000, compared to $4.0 million at an average rate of 5.45% in 1999. An increase in borrowings on lines of credit at the parent company and the Finance Company during 2000 resulted in an increase in the average volume of notes payable. With rates on both lines of credit tied to the New York prime, the average rate paid increased from 7.75% in 1999 to 8.90% in 2000. In 1999, the average volume of notes payable increased slightly, however a decrease in rates resulted in a minimal decrease in interest expense on long-term debt for that year. The volume changes in MidSouth's earning assets and interest- bearing liabilities combined with changes in interest rates resulted in net taxable-equivalent net yields on average earning assets of 5.66% in 2000 as compared to 5.52% for 1999 and 5.70% for 1998.
Table 1 Consolidated Average Balances, Interest and Rates Taxable-equivalent basis (2) (in thousands) 2000 1999 1998 ________________________________________________________________________________________ Average Average Average Average Average Average Volume Interest Yield/Rate Volume Interest Yield/Rate Volume Interest Yield/Rate ASSETS ________________________________________________________________________________________ Interest Bearing Deposits $258 $20 7.75% $104 $1 0.96% $37 $2 5.41% Investment Securities Taxable 54,295 3,426 6.31% 54,894 3,277 5.97% 41,455 2,458 5.93% Tax Exempt 24,295 1,766 7.27% 21,850 1,593 7.29% 17,740 1,334 7.52% ________________ ________________ ________________ Total Investments 78,848 5,212 6.61% 76,848 4,871 6.34% 59,232 3,794 6.41% Federal Funds Sold and Securities Purchased Under Agreements to Resell 5,352 331 6.18% 8,797 406 4.62% 10,885 568 5.22% Loans Commercial and Real Estate(FN3) 141,340 14,092 9.97% 123,836 11,868 9.58% 106,584 10,570 9.92% Installment 42,961 5,349 12.45% 38,058 4,415 11.60% 37,872 4,233 11.18% ________________ ________________ ________________ Total Loans 184,301 19,441 10.55% 161,894 16,283 10.06% 144,456 14,803 10.25% Total Earning Assets 268,501 24,984 9.30% 247,539 21,560 8.71% 214,573 19,165 8.93% Allowance for Loan Losses (2,022) (1,857) (1,572) Nonearning Assets 28,315 27,035 22,766 _______ _______ _______ Total Assets $294,794 $272,717 $235,767 ======= ======= ======= LIABILITIES AND STOCKHOLDERS' EQUITY NOW, Money Market, and Savings $102,709 $3,510 3.42% $91,559 $2,632 2.87% $83,598 $2,555 3.06% Certificates of Deposits 101,446 5,671 5.59% 95,109 4,739 4.98% 78,907 4,108 5.21% ________________ ________________ ________________ Total Interest Bearing Deposits 204,155 9,181 4.50% 186,668 7,371 3.95% 162,505 6,663 4.10% Federal Funds Purchased and Securities Sold Under Agreements to Repurchase 1,155 63 5.45% 683 35 5.12% 64 3 4.69% FHLB Advances 2,915 196 6.72% 4,021 219 5.45% - - Notes Payable 3,898 347 8.90% 3,393 263 7.75% 3,381 265 7.84% ________________ ________________ ________________ Total Interest Bearing Liabilities 212,123 9,787 4.61% 194,765 7,888 4.05% 165,950 6,931 4.18% Demand Deposits 63,713 60,192 54,601 Other Liabilities 1,369 1,127 969 Stockholders' Equity 17,589 16,633 14,247 _______ _______ _______ Total Liabilites and Stockholders' Equity $294,794 $272,717 $235,767 ======= ======= ======= NET INTEREST INCOME AND NET INTEREST SPREAD $15,197 4.69% $13,672 4.66% $12,234 4.75% ======= ======= ======= NET YIELD ON EARNING ASSETS 5.66% 5.52% 5.70%
Securities classified as available-for-sale are included in average balances and interest income figures reflect interest earned on such securities. Interest income of $535,000 for 2000, $488,000 for 1999, and $410,000 for 1998 is added to interest earned on tax-exempt obligations to reflect tax equivalent yields using a 34% tax rate. Interest income includes loan fees of $1,276,000 for 2000, $1,144,000 for 1999, and $1,062,000 for 1998. Nonaccrual loans are included in average balances and income on such loans is recognized on a cash basis. Table 2 Changes in Taxable-Equivalent Net Interest Income (in thousands) 2000 Compared to 1999 1999 Compared to 1998 _______________________________________ _______________________________________ Total Total Increase Change Attributable To Increase Change Attributable To (Decrease) Volume Rates (Decrease) Volume Rates ________________________________________ _______________________________________ Taxable-equivalent interest earned on: Interest Bearing Deposits $19 $3 $16 ($1) $1 ($2) Investment Securities Taxable 149 (35) 184 819 802 17 Tax Exempt 173 178 (5) 259 298 (39) Federal Funds Sold and Securities Purchased Under Agreement to Resell (75) (158) 83 (162) (101) (61) Loans, including fees 3,158 2,335 823 1,480 1,748 (268) _______ _______________ ______ ________________ TOTAL 3,424 2,323 1,101 2,395 2,748 (353) _______ _______________ ______ ________________ Interest Paid On: Interest Bearing Deposits 1,810 729 1,081 708 942 (234) Federal Funds Purchased and Securities Sold Under Agreement to Repurchase 28 26 2 32 32 - FHLB Advances (23) (53) 30 219 219 - Notes Payable 84 42 42 (2) 1 (3) _______ _______________ ______ ________________ TOTAL 1,899 744 1,155 957 1,194 (237) _______ _______________ ______ ________________ Taxable-equivalent net interest income $1,525 $1,579 ($54) $1,438 $1,554 ($116) ======= =============== ====== ================
NOTE: Changes due to both volume and rate has 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 Excluding Securities Transactions. Service charges and fees on deposit accounts represent the primary source of non- interest income for MidSouth. Income from service charges and fees on deposit accounts and insufficient funds fees increased $262,930 in 2000 and $365,121 in 1999 primarily due to an increase in the number of transaction accounts and the volume of insufficient funds checks processed by MidSouth. The total number of transaction accounts (excluding savings accounts) increased from 22,640 in1998 to 24,655 in 1999 and to 26,085 in 2000. Fees earned through the sale of credit life insurance increased $112,861 in 2000 due to internal training, tracking, and incentives on the product. This increase is a significant improvement over the increase of $25,797 in 1999. Non-interest income resulting from other charges and fees increased $210,582 in 2000 as compared to $102,641 in 1999. An increase of $76,315 and $48,485 in income from a third party mortgage program contributed to the increase in other non-interest income for 2000 and 1999, respectively. An increase in income on Visa debit cards and merchant programs is included in the increase in other charges and fees, however, increased expenses on these programs offset the benefit. Securities Transactions. Net gains on the sales of two securities totaled $16,126 in 2000. No income was realized through the sale of securities in 1999 and 1998. Non-interest Expense Total non-interest expense increased 14% from 1999 to 2000 and 16% from 1998 to 1999. MidSouth's expansion over the past three years resulted in significant increases in salaries and employee benefits, occupancy expenses, marketing expenses, data processing expenses, and the cost of printing and supplies. These increases reflect MidSouth's long term investment in staff development, system upgrades, and market penetration. In May 1998, the new Lake Charles office was opened to provide full service banking in Calcasieu Parish. A new Ambassador Caffery office building was completed and opened in September of 1998. In the third quarter of 1999, a seventh Lafayette office was opened on Ambassador Caffery at Dulles, providing banking convenience to the Scott community. Late in the fourth quarter of 1999, renovations were completed on an office in Sulphur, Louisiana, expanding MidSouth's presence in Calcasieu Parish. The Finance Company also added to MidSouth's coverage of the Calcasieu Parish market by opening its third location in Lake Charles during the fourth quarter of 1999. In the second quarter of 2000, a third banking office was opened in the New Iberia market and a loan production office opened in Thibodaux, Louisiana. In addition, MidSouth introduced an internet banking product in the second quarter of 2000. Accordingly, salaries and employee benefits increased 13% from 1999 to 2000 and 14% from 1998 to 1999. The number of full-time equivalent ("FTE") employees increased from 176 in 1999 to 187 in 2000. New hires in 2000 included five employees for the third New Iberia banking office, an internet banking associate and two call center operators. MidSouth increased its FTE employees by 24 in 1999 from 152 in 1998 to 176. New hires in 1999 included twelve employees to staff the Dulles and Sulphur offices, a card services coordinator, a retail manager for the Lafayette market, a marketing analyst, and two Finance Company employees. In addition, five employees manage the insurance premium financing portfolio acquired with TMC in May of 1999. Occupancy expenses increased $410,592 or 14% from 1999 to 2000 and $489,763 or 21% from 1998 to 1999 as a result of increases in lease expense, depreciation, utilities and maintenance expenses. Premises and equipment totaling $1,681,950 were added during 2000 and included the Admiral Doyle office in New Iberia, renovation of additional leased space at the main office in Lafayette, and additional drive through lanes at the Opelousas location. During 1999, purchases totaled $3,488,024 and included the new Lafayette Dulles office and Sulphur office properties, buildings, and furniture and equipment, and an office building in New Iberia. The Sulphur office opened in January 2000 to expand MidSouth's presence in Calcasieu Parish. Total other non-interest expenses increased $558,540 or 15%, from 1999 to 2000 and $464,356 or 14% from 1998 to 1999. Included in the increase for 2000 is $175,214 in increased expenses on Other Real Estate Owned that resulted primarily from the loss on valuation of one piece of commercial property. Other increases were recorded in professional fees, agent commissions expense associated with the insurance premium financing loan program, and credit reporting expenses. Increases recorded in 1999 included marketing expenses, data processing expenses, postage costs and telephone services. Of these increases, marketing expense was the most significant with additional costs of $116,770 due to deposit incentives paid during a deposit campaign held during the first six months of 1999. Income Taxes MidSouth's tax expense increased in 2000 by $83,787 and approximated 25% of income before income taxes. Interest income on non-taxable municipal securities reduced the 2000 taxes from the expected statutory rate of 34%. Interest income on non-taxable municipal securities also lowered the effective tax rate for 1999 to approximately 25%. Notes 1 and 9 to MidSouth's Consolidated Financial Statements provide additional information regarding MidSouth's income tax considerations. BALANCE SHEET ANALYSIS Securities Total investment securities increased $.6 million, from $77.0 million in 1999 to $77.6 million in 2000. Cash flows from maturities and paydowns within the portfolio were reinvested primarily in government agency securities and municipal securities. A favorable change in the market value of securities available-for-sale is included in the net change in 2000. Unrealized net gains in the securities available-for-sale portfolio, were $148,100 at December 31, 2000, compared to unrealized net losses of $1,416,930 at December 31, 1999. These amounts result from interest rate fluctuations and do not represent permanent adjustments of value. Moreover, classification of securities as available-for-sale does not necessarily indicate that the securities will be sold prior to maturity. At December 31, 2000, approximately 41% of MidSouth's securities available-for-sale portfolio represented mortgage- backed securities and 13% represented collateralized mortgage obligations ("CMO's"). MidSouth monitors the risks due to changes in interest rates on mortgage-backed pools by monthly reviews of prepayment speeds, duration, and purchase yields as compared to current market yields on each security. The majority of the CMO's represent FNMA and FHLMC REMIC pools which each had a book value of less than 10% of stockholders' equity at December 31, 2000. All CMO's held by MidSouth are Aaa rated and not considered "high-risk" securities under the Federal Financial Institutions Examination Council ("FFIEC") tests. MidSouth does not own any "high- risk" securities as defined by the FFIEC. An additional 27% of the available-for-sale portfolio consisted of U. S. Treasury and agency securities, while municipal and other securities represented 19% of the portfolio. The held-to-maturity portfolio consists of $22.4 million in non- taxable and $1.2 million in taxable municipal securities. MidSouth purchased $2.4 million in non-taxable municipal securities for this portfolio in 2000 and $2.0 million in 1999. A detailed credit analysis was performed on each municipal offering by an investment advisory firm prior to purchase. In addition, MidSouth limits the amount of securities of any one municipality purchased and the amount purchased within specific geographic regions to reduce the risk of loss within the non-taxable municipal securities portfolio. Loan Portfolio MidSouth's loan portfolio grew $34.1 million during 2000, from $170.5 million at December 31, 1999 to $204.6 million at December 31, 2000. MidSouth lenders met budget projections by growing commercial loans $12.8 million and the real estate portfolio by $16.3 million during 2000. Installment loans to individuals increased $3.2 million or 12% during the twelve months ended December 31, 2000. The real estate loan growth consisted of both commercial and consumer credits that call for ten to fifteen year amortization terms with rates fixed for three to five years. The short term structure of these credits allows management greater flexibility in controlling interest rate risk. During 1999, the loan portfolio grew $15.0 million, from $155.5 million at December 31, 1998 to $170.5 million at December 31, 1999. The majority of the loan growth occurred in the second and third quarters of 1999. The commercial loan and real estate portfolios each added approximately $7.0 million in loans during 1999. In addition, the Bank purchased an insurance premium financing company in May 1999, which added approximately $3.0 million to the loan portfolio. Decreases were noted in lease financing, construction, and installment loans. MidSouth has maintained its credit policy and underwriting procedures and has not relaxed these procedures to stimulate loan growth. 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 insure thorough and consistent procedures. Asset Quality Credit Risk Management. MidSouth manages its credit risk by diversifying its loan portfolio, determining that borrowers have adequate cash flows for loan repayment, obtaining and monitoring collateral and continuously reviewing outstanding loans. The risk management program requires that each individual loan officer review his or her portfolio on a quarterly basis and recommend credit gradings on each loan. The senior loan officer and loan review officer review the gradings. In addition, the loan review officer performs an independent evaluation annually of each commercial loan officer's portfolio and a random sampling of credits in MidSouth's installment loan portfolio. Nonperforming Assets. Table 3 contains information about MidSouth's nonperforming assets and loans past due 90 days or more and still accruing.
TABLE 3 Nonperforming Assets and Loans Past Due 90 Days ========================================================================== December 31, ____________________________________________ 2000 1999 1998 ========================================================================== Nonperforming loans $159,726 $234,962 $533,107 Other real estate owned, net 446,046 569,963 48,100 Other assets repossessed - 31,755 26,533 _________ _________ _________ Total nonperforming assets $605,772 $836,680 $607,740 ========= ========= ========= Loans past due 90 days or more and still accruing $967,721 $793,823 $329,116 Nonperforming loans as a % of total loans 0.08% 0.14% 0.34% Nonperforming assets as a % of total loans, other real estate owned and other assets repossessed 0.30% 0.49% 0.39% Allowance for loan losses as a % of nonperforming asse 375.75% 235.13% 306.13% ==========================================================================
Nonperforming assets totaled $605,772 at December 31, 2000, $836,680 at December 31, 1999 compared to $607,740 at December 31, 1998. The increase in nonperforming assets in 1999 resulted from the addition of two commercial credits and one consumer credit that were transferred to Other Real Estate Owned. During 2000, MidSouth recorded a loss on valuation and subsequent disposal of one of the commercial properties. Nonaccrual loans have steadily decreased from $533,107 in 1998 to $234,962 in 1999 and to $159,726 at year-end December 31, 2000. Loans past due 90 days and still accruing totaled $967,721 at December 31, 2000 compared to $793,823 at December 31, 1999 and $329,116 at December 31, 1998. Although the dollar amount of loans past due 90 days or more and still accruing increased, the percentage of these past due loans to total loans remained constant at .47% for the years ended 2000 and 1999, up from .21% at year-end 1998. Of the $967,721 in 90 days past due loans still accruing for December 31, 2000, $126,838 was reported past due by the Finance Company. Loans to commercial borrowers are placed on nonaccrual when principal or interest is 90 days past due, or sooner if the full collectability of principal or interest is doubtful, except if the underlying collateral supports both the principal and accrued interest and the loan is in the process of collection. Retail loans that are not placed on nonaccrual but that become 120 days past due are routinely charged off. Loans classified for regulatory purposes but not included in Table 3 do not represent material credits about which management has serious doubts as to the ability of the borrower to comply with the loan repayment terms. Allowance for Loan Losses. Provisions totaling $897,038, $906,950, and $999,950 for the years 2000, 1999 and 1998, respectively, were necessary to bring the allowance to a level considered by management to be sufficient to cover probable losses in the loan portfolio. Table 4 analyzes activity in the allowance for 2000 and 1999.
TABLE 4 - Summary of Loan Loss Experience (in thousands) 2000 1999 ______ ______ BALANCE AT BEGINNING OF YEAR $1,967 $1,860 CHARGE-OFFS Commercial, Financial and Agricultural 73 282 Real Estate - Construction - - Real Estate - Mortgage 12 - Installment Loans to Individuals 565 599 Lease Financing Receivables 14 33 Other 44 27 ______ ______ Total Charge-offs 708 941 ______ ______ RECOVERIES Commercial, Financial and Agricultural 3 11 Real Estate - Construction - - Real Estate - Mortgage - 2 Installment Loans to Individuals 107 122 Lease Financing Receivables 1 1 Other 9 5 ______ ______ Total Recoveries 120 141 ______ ______ Net Charge-offs 588 800 Additions to allowance charged to operating expenses 897 907 ______ ______ BALANCE AT END OF YEAR $2,276 $1,967 ====== ====== Net charge-offs to average loans 0.32% 0.49% Year-end allowance to year-end loans 1.11% 1.15%
Refer to "Balance Sheet Analysis - Asset Quality - Allowance for Loan Losses" for a description of the factors which influence management's judgement in determining the amount of the provisions to the allowance.
% of category % of category Allowance for Loan Losses 2000 to total 1999 to total loans _______________________________________________________________________________ Commercial, Financial an Agricultural 10 33.91% 72 33.20% Real Estate - Construction 2.32% 1.93% Real Estate - Mortgage 44.46% 43.80% Installment Loans to Individuals 16.73% 17.52% Lease Financing Receivables 2.46% 3.00% Other 0.12% 0.55% Unallocated 2,266 1,895 ______________________________________________ $2,276 100.00% $1,967 100.00% ==============================================
The allowance is comprised of specific reserves (assigned to each loan that is impaired or for which probable loss has been identified) and an unallocated reserve. Specific reserves within the allowance are allocated to loans on a nonaccrual status for which the underlying collateral value is insufficient to cover the principal remaining on the loan. Factors contributing to the assignment of specific reserves include the financial condition of the borrower, changes in the value of collateral and economic conditions. A portion of the unallocated reserve is assigned to accruing loans that are classified for regulatory purposes. The remainder of the allowance represents a percentage of all other credits based on gradings assigned in the loan review process. Quarterly evaluations of the allowance are performed in accordance with accounting principles generally accepted in the Unites States of America and Section 217 of the OCC's manual and Banking Circular 201. Factors considered in determining provisions include estimated losses in significant credits; known deterioration in concentrations of credit; historical loss experience; trends in nonperforming assets; volume, maturity and composition of the loan portfolio; off balance sheet credit risk; lending policies and control systems; national and local economic conditions; the experience, ability and depth of lending management and the results of examinations of the loan portfolio by regulatory agencies and others. The process by which management determines the appropriate level of the allowance, and the corresponding provision for possible credit losses, involves considerable judgment; therefore, no assurance can be given that future losses will not vary from current estimates. Sources of Funds Deposits. Continuing to focus on increasing market share, MidSouth worked on profiling existing clients and building financial relationships during 2000. Combined with rising interest rates and lackluster performance in the stock market, profiling clients contributed to the growth in MidSouth's deposits. As of December 31, 2000, total deposits increased $67.9 million to $319.6 million, up from $251.7 million at December 31, 1999. Included in total deposits at year-end 2000 was a significant short-term deposit of approximately $24.6 million, most of which was withdrawn within the month of January 2001. Excluding this short-term deposit, MidSouth realized a 17% increase in deposits over the past year, primarily in money market indexed deposits and certificates of deposit. In 1999, total deposits increased $21.8 million, from $229.9 million at December 31, 1998 compared to $251.7 million at December 31, 1999. During the second quarter of 1999, MidSouth held a deposit incentive promotion that resulted in additional deposits of $27.5 million. The $27.5 million increase was partially offset in the third quarter of 1999 by the withdrawal of approximately $18.2 million in deposits held under a public fund contract. During the fourth quarter of 1999, MidSouth added $12.0 million in CD's through a special rate promotion. Non-interest bearing deposits represented 24% of total deposits at December 31, 2000 and 1999 and 25% at December 31, 1998. Core deposits, defined as all deposits other than certificates of deposit ("CD's") of $100,000 or more, represented 86% of total deposits at year-end 2000 and 83% of total deposits at year-end 1999. CD's of $100,000 or more totaled $46.1 million at December 31, 2000, an increase of $4.4 million from the $41.7 million reported at year-end 1999. MidSouth's deposit rates are competitive within its market and MidSouth has no brokered deposits. Although time deposits of $100,000 can exhibit greater volatility due to changes in interest rates and other factors than do core deposits, management believes that any volatility experienced could be adequately met with current levels of asset liquidity or access to alternate funding sources. Additional information on MidSouth's deposits appears in Note 6 to MidSouth's Consolidated Financial Statements. Borrowed Funds. Long term borrowings increased $1,191,871 from December 31, 1999 to $2,500,000 at December 31, 2000. MidSouth borrowed the remaining $700,000 under its line of credit in September 2000. Proceeds were used to inject $225,000 of capital into the Bank, retire 11,000 shares of preferred stock, and pay dividends and other operating expenses. The Finance Company borrowed an additional $825,000 under its line of credit. Advances under MidSouth's line of credit bear interest at a variable rate equal to the prime commercial rate of interest quoted in the "Money Rates" section of the Wall Street Journal minus fifty basis points (.50%). The rate at December 31, 2000 was 9.00%. Interest under the note is due and payable quarterly. Beginning June 30, 2001, principal payments in the amount of $312,500 are due and payable in six consecutive annual installments with an seventh and final installment on June 30, 2007. The Finance Company increased its line of credit to $2,000,000 on May 1, 2000. Advances under the line of credit bear interest at a variable rate equal to the commercial prime rate as quoted in the "Money Rates" section of the Wall Street Journal plus 25 basis points (0.25%). The rate at December 31, 2000 was 9.75%. Interest on the line is payable monthly, with principal due at maturity on April 30, 2001. Additional information regarding long-term debt is provided in Note 7 to MidSouth's Consolidated Financial Statements. The ESOP note held by the Bank was refinanced in the amount of $150,000 on March 11, 1997 at a fixed rate of 7.00% payable in monthly installments of $2,264 with payment in full due on March 10, 2004. A second note was financed on May 11, 2000 in the amount of $130,656 at a fixed rate of 8.00% payable in monthly installments of $1,701 with payment in full due on May 10, 2009. The ESOP obligation constitutes a reduction of MidSouth's stockholders' equity because the primary source of loan repayment is contributions by the Bank to the ESOP; however, the loan is not guaranteed by MidSouth Bank or MidSouth. The ESOP note is eliminated from total loans and long-term debt as an intercompany balance in MidSouth's December 31, 2000 and 1999 consolidated financial statements. Capital. MidSouth and the Bank are required to maintain certain minimum capital levels. Risk-based capital requirements are intended to make regulatory capital more sensitive to the risk profile of an institution's assets. At December 31, 2000, MidSouth and the Bank were in compliance with statutory minimum capital requirements. Minimum capital requirements include a total risk-based capital ratio of 8.0%, with Tier 1 capital not less than 4.0%, and a leverage ratio (Tier 1 to total average adjusted assets) of 4.0% based upon the regulators latest composite rating of the institution. As of December 31, 2000, MidSouth's Tier 1 capital to average adjusted assets (the "leverage ratio") was 6.05% as compared to 6.23% at December 31, 1999. Tier 1 capital to risk weighted assets was 8.54% and 9.47% for 2000 and 1999, respectively. Total capital to risk weighted assets was 9.55% and 10.55%, respectively, for the same periods. The Bank's leverage ratio was 6.74% at December 31, 2000 compared to 6.79% at December 31, 1999. The Federal Deposit Insurance Corporation Improvement Act of 1991 established a capital-based supervisory system for all insured depository institutions that imposes increasing restrictions on the institution as its capital deteriorates. The Bank continued to be classified as "well capitalized" throughout 1998, 1999 and 2000 and also improved its supervisory subgroup rating. No significant restrictions are placed on the Bank as a result of this classification. As discussed under the heading "Balance Sheet Analysis - Securities," $148,100 in unrealized gains on securities available- for-sale, less a deferred tax liability of $62,900, was recorded as an addition to stockholders' equity as of December 31, 2000. As of December 31, 1999, $1,416,930 in unrealized losses on securities available-for-sale, less a deferred tax asset of $468,500, was recorded as a reduction to stockholders' equity. While the net unrealized gain or loss on securities available for sale is required to be reported as a separate component of stockholders' equity, it does not affect operating results or regulatory capital ratios. The net unrealized gains and losses reported for December 31, 2000 and 1999 did, however, effect MidSouth's equity to assets ratio for financial reporting purposes. The ratio of equity to assets was 5.73% at December 31, 2000 and 6.12% at December 31, 1999. Interest Rate Sensitivity. Interest rate sensitivity is the sensitivity of net interest income and economic value of equity to changes in market rates of interest. The initial step in the process of monitoring MidSouth's interest rate sensitivity involves the preparation of a basic gap analysis of earning assets and interest-bearing liabilities. The analysis presents differences in the repricing and maturity characteristics of earning assets and interest-bearing liabilities for selected time periods. During 2000, MidSouth utilized the Sendero model of asset and liability management. The Sendero model uses basic gap data and additional information regarding rates and prepayment characteristics to construct a gap analysis that factors in repricing characteristics and cash flows from payments received on loans and mortgage-backed securities. The resulting Sendero gap analysis is presented in Table 5. With the exception of NOW, money market and savings deposits, the table presents interest-bearing liabilities on a contractual basis. While NOW, money market and savings deposits are contractually due on demand, historically, MidSouth has experienced stability in these deposits despite changes in market rates. Presentation of these deposits in the table, therefore, reflects delayed repricing throughout the time horizon. The resulting cumulative gap at one year is approximately $41,021,000 at December 31, 2000. An increase in variable rate loans and a higher volume of federal funds sold resulted in a one-year cumulative gap to total assets ratio of 11.84%. The 11.84% ratio is within internal policy guidelines of + or - 15% of total assets. The Sendero model also uses the gap analysis data in Table 5 and additional information regarding rates and payment characteristics to perform three simulation tests. The tests use market data to perform rate shock, rate cycle and rate forecast simulations to measure the impact of changes in interest rates, the yield curve and interest rate forecasts on MidSouth's net interest income and economic value of equity. Results of the simulations at December 31, 2000 were within policy guidelines. The results of the simulations are reviewed quarterly and discussed at MidSouth's Funds Management committee meetings. MidSouth does not invest in derivatives and has none in its securities portfolio.
Table 5 Interest Rate Sensitivity and Gap Analysis Table December 31, 2000 (in thousands) Non-interest 0-3 MOS 4-6 MOS 7-12 MOS 1-5 YRS > 5YRS Bearing Total ______________________________________________________________ ASSETS Interest Bearing Deposits $68 $ - $ - $ - $ - $ - $68 Fed Funds Sold 34,100 34,100 Investments Mutual Funds 963 963 Investment Securities 4,547 2,565 1,540 15,677 23,416 47,745 Mortgage-backed Securitie 3,558 1,907 3,880 12,654 6,874 28,873 Loans Fixed Rate 38,625 19,029 27,748 56,668 1,834 143,904 Variable Rate 60,681 60,681 Other Assets 32,315 32,315 Allowance for Loan Losses (2,276) (2,276) _____________________________________________________________ Total Assets $142,542 $23,501 $33,168 $84,999 $32,124 $30,039 $346,373 ============================================================= LIABILITIES NOW $2,985 $2,699 $4,652 $16,754 $4,227 $31,317 MMDA 32,638 8,777 13,587 30,751 2,050 87,803 Savings 1,191 1,078 1,857 6,689 1,688 12,503 CD'S 27,103 28,854 29,483 27,332 112,772 Demand Deposits 75,152 75,152 Other Liabilities 998 2,288 1,426 937 1,315 6,964 Stockholders' Equity 19,862 19,862 _____________________________________________________________ Total Liabilities $64,915 $43,696 $49,579 $82,952 $8,902 $96,329 $346,373 ============================================================= Repricing/maturity gap: Period $77,627 ($20,195)($16,411) $2,047 $23,222 ($66,290) Cumulative $77,627 $57,432 $41,021 $43,068 $66,290 $ - ==================================================== Cumualtive Gap/Total Assets 22.41% 16.58% 11.84% 12.43% 19.14% ___________________________________________
Liquidity Bank Liquidity. Liquidity is the availability of funds to meet contractual obligations as they become due and to fund operations. The Bank's primary liquidity needs involve its ability to accommodate customers' demands for deposit withdrawals as well as their requests for credit. Liquidity is deemed adequate when sufficient cash to meet these needs can be promptly raised at a reasonable cost to the Bank. Liquidity is provided primarily by three sources: a stable base of funding sources, an adequate level of assets that can be readily converted into cash, and borrowing lines with correspondent banks. MidSouth's core deposits are its most stable and important source of funding. Further, the low variability of the core deposit base lessens the need for liquidity. Cash deposits at other banks, federal funds sold and principal payments received on loans and mortgage-backed securities provide additional primary sources of asset liquidity for the Bank. Approximately $17.0 million in projected cash flows from securities during 2001 provides an additional source of liquidity. MidSouth also has borrowing lines with three correspondent banks, including significant borrowing capacity with the FHLB of Dallas, Texas. The Bank borrowed an average of $2.9 million from FHLB under short-term advances during 2000 at an average rate of 6.72%. Parent Company Liquidity. At the parent company level, cash is needed primarily to service debt and pay dividends on preferred and common stock. The parent company has a note payable to a financial institution, the terms of which are described in Note 7 to MidSouth's Consolidated Financial Statements. Dividends from the Bank totaling $925,000 provided additional liquidity for the parent company in 2000. As of January 1, 2001, the Bank had the ability to pay dividends to the parent company of approximately $1.2 million without prior approval from its primary regulator. As a publicly traded company, MidSouth also has the ability to issue trust preferred and other securities instruments to provide additional funds as needed for operations and future growth of the company. Dividends. The primary source of cash dividends on MidSouth's preferred and common stock is distributions from the Bank. The Bank has the ability to declare dividends to the parent company without prior approval of its primary regulator. However, the Bank's ability to pay dividends would be prohibited if the result would cause the Bank's regulatory capital to fall below minimum requirements. Cash dividends totaling $501,443 and $492,415 were declared to common stockholders during 2000 and 1999, respectively. It is the intention of the Board of Directors of MidSouth to continue to pay quarterly dividends on the common stock at the rate of $.05 per share. Cash dividends on the common stock are subject to payment of dividends on the Cumulative Convertible Preferred Stock, Series A ("Preferred Stock") issued in conjunction with the acquisition of Sugarland Bank, as well as other considerations. Additional information regarding MidSouth's Preferred Stock is included in Note 12 to MidSouth's Consolidated Financial Statements. On August 31, 1998, MidSouth effected a three for two stock split by way of a stock dividend to its common shareholders of record as of July 31, 1998. The stock split increased the common shares outstanding at the time from 1,611,377 to 2,417,683. The conversion rate on the preferred stock was adjusted to 2.998 due to the stock split. Forward Looking Statements The Private Securities Litigation Act of 1995 provides a safe harbor for disclosure of information about a company's anticipated future financial performance. This act protects a company from unwarranted litigation if actual results differ from management expectations. This management's discussion and analysis reflects management's current views and estimates of future economic circumstances, industry conditions, MidSouth's performance and financial results. A number of factors and uncertainties could cause actual results to differ from the anticipated results and expectations expressed in the discussion.
MIDSOUTH BANCORP, INC. LOAN PORTFOLIO LOAN MATURITIES AND SENSITIVITY TO INTEREST RATES for the Year Ended December 31, 2000 (dollars in thousands) Fixed and Variable Rate Loans at Stated Maturities Amounts Over One Year With ______________________________________________ _________________________________ 1 Year 1 Year - Over Predetermined Floating or Less 5 Years 5 Years Total Rates Rates Total ______________________________________________ _________________________________ Commercial, Financial Industrial, Commercial Real Estate Mortgage and Commercial Real Estate - Construction $54,861 $74,674 $23,193 $152,728 $66,195 $31,672 $97,867 Installment Loans to Individuals and Real Estate Mortgage 12,022 33,845 726 $46,593 31,409 3,162 $34,571 Lease Financing Receivables 285 4,741 - $5,026 4,741 - $4,741 Other 238 - - $238 - - - ______________________________________________ _________________________________ TOTAL $67,406 $113,260 $23,919 $204,585 $102,345 $34,834 $137,179 ============================================== =================================
MIDSOUTH BANCORP, INC. SECURITIES PORTFOLIO MATURITIES AND AVERAGE YIELDS for the Year Ended December 31, 2000 (dollars in thousands) After 1 but After 5 but Within 1 Year Within 5 Years Within 10 Years After 10 Years SECURITIES AVAILABLE FOR SALE Amount Yield Amount Yield Amount Yield Amount Yield Total ____________________________________________________________________________________________ U.S. Treasury and U.S. Government Agency securities $6,025 6.12% $6,701 6.35% $2,025 6.52% $113 8.99% $14,864 Obligations of State and Political Subdivisions 65 7.16% 573 7.40% 1,764 7.35% 3,078 7.65% 5,480 Mortgage Backs and CMOs - 0.00% 743 7.08% 5,216 6.52% 22,913 6.66% 28,872 Corporates and other securities 1,000 5.35% 1,542 7.19% - 1,247 7.02% 3,789 Mutual funds 963 6.06% - - - 963 ____________________________________________________________________________________________ Total Fair Value $8,053 $9,559 $9,005 $27,351 $53,968 ============================================================================================ After 1 but After 5 but Within 1 Year Within 5 Years Within 10 Years After 10 Years HELD TO MATURITY Amount Yield Amount Yield Amount Yield Amount Yield Total ____________________________________________________________________________________________ Obligations of State and Political Subdivisions $25 5.74% $1,434 5.50% $16,412 5.20% $5,740 4.98% $23,611 ____________________________________________________________________________________________ Total Amortized Cost $25 $1,434 $16,412 $5,740 $23,611 ============================================================================================
MIDSOUTH BANCORP, INC. SUMMARY OF AVERAGE DEPOSITS (in thousands) 2000 1999 AVERAGE AVERAGE AVERAGE AVERAGE AMOUNT YIELD AMOUNT YIELD _______ _______ _______ _______ Non-interest bearing $63,713 0.00% $60,192 0.00% Demand Deposits Interest bearing Deposits Savings, NOW, MMKT 102,709 3.42% 91,559 2.87% Time Deposits 101,446 5.59% 95,109 4.98% ________ ________ Total $267,868 3.43% $246,860 2.99% ======== ========
MATURITY SCHEDULE TIME DEPOSITS OF $100,000 OR MORE (in thousands) 2000 1999 _______ _______ 3 months or less $13,059 $15,237 3 months through 6 months 9,956 14,238 7 months through 12 months 13,283 10,114 over 12 months 9,774 2,154 _______ _______ Total $46,072 $41,743 ======= ======= SUMMARY OF RETURN ON EQUITY AND ASSETS 2000 1999 _______ _______ Return on Average Assets 0.98% 0.97% Return on Average Common Equity 17.70% 17.45% Dividend Payout Ratio on Common Stock 18.93% 19.55% Average Equity to Average Assets 5.97% 6.10%
Selected Quarterly Financial Data (unaudited) 2000 __________________________________________________________ (Dollars in thousands, except per share date) IV III II I _______ _______ _______ _______ Interest income $6,734 $6,238 $5,885 $5,592 Interest expense 2,886 2,528 2,254 2,119 _______ _______ _______ _______ Net interest income 3,848 3,710 3,631 3,473 Provision for possible credit losses 302 201 177 217 _______ _______ _______ _______ Net interest income after provision for possible credit losses 3,546 3,509 3,454 3,256 Noninterest income, excluding securities gains 1,243 1,131 1,158 1,035 Net securities gains - 14 - 2 Noninterest expense 3,820 3,582 3,511 3,589 _______ _______ _______ _______ Income before income tax expense 969 1,072 1,101 704 Income tax expense 209 276 310 156 _______ _______ _______ _______ Net income 760 796 791 548 Preferred stock dividend requirement (33) (140) (35) (38) _______ _______ _______ _______ Income applicable to common shareholders $727 $656 $756 $510 ======= ======= ======= ======= Earnings per common share Basic $0.29 $0.26 $0.30 $0.21 Diluted $0.26 $0.24 $0.27 $0.18 Market price of common stock High $8.69 $8.38 $8.81 $9.44 Low $8.13 $7.75 $8.00 $8.63 Close $8.63 $8.25 $8.06 $8.75 Average shares outstanding Basic 2,489,829 2,489,829 2,500,019 2,470,551 Diluted 2,910,494 2,901,198 2,968,851 2,964,655 1999 __________________________________________________________ (Dollars in thousands, except per share IV III II I _______ _______ _______ _______ Interest income $5,494 $5,393 $5,324 $4,862 Interest expense 2,090 1,932 2,027 1,840 _______ _______ _______ _______ Net interest income 3,404 3,461 3,297 3,022 Provision for possible credit losses 229 173 238 267 _______ _______ _______ _______ Net interest income after provision for possible credit losses 3,175 3,288 3,059 2,755 Noninterest income, excluding securities gains 1,044 1,048 979 909 Net securities gains - - - - Noninterest expense 3,352 3,360 3,125 2,903 _______ _______ _______ _______ Income before income tax expense 867 976 913 761 Income tax expense 194 263 245 164 _______ _______ _______ _______ Net income 673 713 668 597 Preferred stock dividend requirement (33) (33) (33) (33) _______ _______ _______ _______ Income applicable to common shareholders $640 $680 $635 $564 ======= ======= ======= ======= Earnings per common share Basic $0.26 $0.28 $0.26 $0.23 Diluted $0.23 $0.24 $0.23 $0.20 Market price of common stock High $10.13 $11.00 $11.69 $11.63 Low $9.00 $9.63 $10.50 $10.75 Close $9.00 $9.69 $10.88 $11.06 Average shares outstanding Basic 2,460,413 2,448,731 2,450,164 2,439,256 Diluted 2,961,008 2,957,899 2,967,157 2,965,203
MIDSOUTH BANCORP, INC. AND SUBSIDIARIES ITEM 7. Consolidated Financial Statements for the Years Ended December 31, 2000, 1999 and 1998 and Independent Auditors' Report INDEPENDENT AUDITORS' REPORT To the Stockholders and Board of Directors of MidSouth Bancorp, Inc. Lafayette, Louisiana We have audited the accompanying consolidated statements of condition of MidSouth Bancorp, Inc. and its subsidiaries as of December 31, 2000 and 1999, and the related consolidated statements of income, comprehensive income, stockholders' equity, and cash flows for each of the three years in the period ended December 31, 2000. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of MidSouth Bancorp, Inc. and subsidiaries at December 31, 2000 and 1999 and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2000 in conformity with accounting principles generally accepted in the United States of America. DELOITTE & TOUCHE LLP New Orleans, Louisiana February 2, 2001
MIDSOUTH BANCORP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CONDITION DECEMBER 31, 2000 AND 1999 ================================================================================================= ASSETS 2000 1999 Cash and due from banks $ 15,698,538 $ 13,587,690 Federal funds sold 34,100,000 900,000 _______________ ____________ Total cash and cash equivalents 49,798,538 14,487,690 Interest-bearing deposits in banks 68,682 356,124 Securities available-for-sale at fair value (amortized cost of $53,821,526 in 2000 and $57,106,793 in 1999) 53,969,626 55,689,863 Securities held-to-maturity (estimated fair value of $24,474,077 in 2000 and $20,776,767 in 1999) 23,611,057 21,287,597 Loans, net of allowance for loan losses of $2,276,187 in 2000 and $1,967,326 in 1999 202,308,673 168,501,407 Accrued interest receivable 2,365,350 1,919,182 Premises and equipment, net 11,739,575 11,367,815 Other real estate owned, net 446,046 569,963 Goodwill, net 493,071 554,153 Other assets 1,572,815 1,990,047 _______________ ____________ $ 346,373,433 $ 276,723,841 =============== ============ LIABILITIES AND STOCKHOLDERS' EQUITY Deposits: Non-interest bearing $ 75,151,653 $ 63,668,676 Interest bearing 244,395,552 188,021,530 _______________ ____________ Total deposits 319,547,205 251,690,206 Securities sold under repurchase agreements 997,616 606,601 FHLB advances 3,000,000 Accrued interest payable 1,007,302 715,171 Long-term notes payable 4,650,968 3,459,097 Other liabilities 307,964 327,605 _______________ ____________ Total liabilities 326,511,055 259,798,680 _______________ ____________ Commitments and Contingencies - Stockholders' equity: Convertible preferred stock, $14.25 par value, 5,000,000 shares authorized, 130,620 and 152,736 issued and outstanding at December 31, 2000 and 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 at December 31, 2000 and 1999, respectively 251,517 248,184 Additional paid in capital 11,147,534 10,983,714 Unearned ESOP shares (185,127) (89,044) Unrealized gains (losses) on securities available-for-sale, net of deferred taxes 85,200 (948,430) Retained earnings 6,701,919 4,554,249 _______________ ____________ Total stockholders' equity 19,862,378 16,925,161 _______________ ____________ $ 346,373,433 $ 276,723,841 =============== ============ See notes to consolidated financial statements.
MIDSOUTH BANCORP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998 ============================================================================================================= 2000 1999 1998 INTEREST INCOME: Loans, including fees $ 19,440,991 $ 16,282,923 $ 14,803,065 Securities: Taxable 3,445,594 3,277,619 2,460,266 Nontaxable 1,231,074 1,105,320 924,669 Federal funds sold 331,456 406,871 567,764 _____________ _____________ _____________ Total interest income 24,449,115 21,072,733 18,755,764 _____________ _____________ _____________ INTEREST EXPENSE: Deposits 9,180,999 7,371,194 6,663,372 Securities sold under repurchase agreements, federal funds purchased and advances 259,399 253,869 3,310 Long-term debt 346,767 263,288 264,874 _____________ _____________ _____________ Total interest expense 9,787,165 7,888,351 6,931,556 _____________ _____________ _____________ NET INTEREST INCOME 14,661,950 13,184,382 11,824,208 PROVISION FOR LOAN LOSSES 897,038 906,950 999,950 _____________ _____________ _____________ NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 13,764,912 12,277,432 10,824,258 _____________ _____________ _____________ NONINTEREST INCOME: Service charges on deposit accounts 3,234,954 2,972,024 2,606,903 Gains on sale of securities, net 16,126 - Credit life insurance 271,875 159,014 133,217 Other charges and fees 1,060,040 849,458 746,817 _____________ _____________ _____________ 4,582,995 3,980,496 3,486,937 _____________ _____________ _____________ NONINTEREST EXPENSES: Salaries and employee benefits 6,830,062 6,037,935 5,274,992 Occupancy expense 3,261,020 2,850,428 2,360,665 Other 4,410,484 3,851,944 3,387,588 _____________ _____________ _____________ 14,501,566 12,740,307 11,023,245 _____________ _____________ _____________ INCOME BEFORE INCOME TAXES 3,846,341 3,517,621 3,287,950 PROVISION FOR INCOME TAXES 951,204 867,417 842,167 _____________ _____________ _____________ NET INCOME 2,895,137 2,650,204 2,445,783 PREFERRED DIVIDENDS AND OTHER 246,024 131,582 148,971 _____________ _____________ _____________ NET INCOME AVAILABLE TO COMMON STOCKHOLDERS $ 2,649,113 $ 2,518,622 $ 2,296,812 ============= ============= ============= EARNINGS PER COMMON SHARE: BASIC $1.07 $1.03 $.95 ===== ===== ==== DILUTED $ .95 $ .90 $.83 ===== ===== ==== See notes to consolidated financial statements.
MIDSOUTH BANCORP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998 =============================================================================================================== 2000 1999 1998 Net income $ 2,895,137 $ 2,650,204 $ 2,445,783 Other comprehensive income (loss): Unrealized gain (loss) on securities available-for-sale, net: Unrealized holding gains (losses) arising during the year 1,044,273 (1,225,130) 194,734 Less reclassification adjustment for gains included in net income (10,643) - - ____________ ____________ ____________ Total other comprehensive income (loss) 1,033,630 (1,225,130) 194,734 ____________ ____________ ____________ TOTAL COMPREHENSIVE INCOME $ 3,928,767 $ 1,425,074 $ 2,640,517 ============ ============ ============ See notes to consolidated financial statements.
MIDSOUTH BANCORP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998 =================================================================================================================================== Unrealized Gains (Losses) on Additional Securities Preferred Stock Common Stock Paid in ESOP Available Retained Shares Amount Shares Amount Capital Obligation for Sale Earnings Total BALANCE, JANUARY 1, 1998 160,756 $2,290,773 1,581,053 $ 158,106 $9,862,700 $(137,243) $ 81,966 $ 675,008 $12,931,310 Issuance of common stock - - 36,140 3,612 691,399 - - - 695,011 Dividends on common stock - $.23 per share - - - - - - - (434,334) (434,334) Dividends on preferred stock - - - - - - - (148,971) (148,971) Preferred stock conversion (3,829) (54,563) 8,517 852 53,711 - - (70) (70) Stock split on common stock effected in the form of 50% dividend - - 806,306 80,631 (72,945) - - (9,374) (1,688) Registration and related costs associated with dividend reinvestment plan - - - - (13,845) - - - (13,845) Net income - - - - - - - 2,445,783 2,445,783 ESOP obligation repayments - - - - - 18,192 - - 18,192 Net change in unrealized gains (losses) on securities available-for-sale, net of tax - - - - - - 194,734 - 194,734 ________ __________ _________ _________ ___________ _________ _________ __________ ___________ BALANCE, DECEMBER 31, 1998 156,927 2,236,210 2,432,016 243,201 10,521,020 (119,051) 276,700 2,528,042 15,686,122 Issuance of common stock - - 37,267 3,727 386,728 - - - 390,455 Dividends on common stock - $.20 per share - - - - - - - (492,415) (492,415) Dividends on preferred stock - - - - - - - (131,582) (131,582) Preferred stock conversion (4,191) (59,722) 12,560 1,256 58,466 - - - - Excess of market value over book value of ESOP shares released - - - - 17,500 - - - 17,500 Net income - - - - - - - 2,650,204 2,650,204 ESOP obligation repayments - - - - - 30,007 - - 30,007 Net change in unrealized gains (losses) on securities available-for- sale, net of tax - - - - - - (1,225,130) - (1,225,130) ________ __________ _________ _________ ___________ _________ _________ __________ ___________ 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 - $.20 per share - - - - - - - (501,443) (501,443) Dividends on preferred stock - - - - - - - (138,774) (138,774) Preferred stock conversion (11,116) (158,403) 33,323 3,333 155,070 - - - - Redemption of preferred stock (11,000) (156,750) - - - - - (107,250) (264,000) Excess of market value over book value of ESOP shares released - - - - 8,750 - - - 8,750 Net income - - - - - - - 2,895,137 2,895,137 ESOP new obligations, net - - - - - (96,083) - - (96,083) Net change in unrealized gains (losses) on securities available-for- sale, net of tax - - - - - - 1,033,630 - 1,033,630 ________ __________ _________ _________ ___________ _________ _________ __________ ___________ BALANCE, DECEMBER 31, 2000 130,620 $1,861,335 2,515,166 $ 251,517 $11,147,534 $(185,127) $ 85,200 $6,701,919 $19,862,378 ======== ========== ========= ========= =========== ========= ========= ========== =========== See notes to consolidated financial statements.
CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 2,895,137 $ 2,650,204 $ 2,445,783 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 1,371,272 1,199,447 975,889 Provision for loan losses 897,038 906,950 999,950 Provision for and losses on other real estate owned 104,226 5,100 3,037 Deferred income taxes (17,000) 20,500 (55,023) (Discount accretion) premium amortization of securities, net 80,327 62,577 (39,702) Gain on sales of securities (16,126) - - Change in accrued interest receivable (446,168) (178,668) (101,583) Change in accrued interest payable 292,131 149,275 21,960 Other, net (205,911) (75,268) (311,344) ____________ ____________ _____________ Net cash provided by operating activities 4,954,926 4,740,117 3,938,967 ____________ ____________ _____________ CASH FLOWS FROM INVESTING ACTIVITIES: Net decrease (increase) in interest- bearing deposits in banks 287,442 (339,999) 32,803 Proceeds from sales of securities available-for-sale 2,064,519 - - Proceeds from maturities and calls of securities available-for-sale 14,949,666 13,596,064 14,675,141 Proceeds from maturities of securities held-to-maturity 50,000 50,000 25,000 Purchases of securities available-for-sale (13,790,321) (27,260,358) (21,387,038) Purchases of securities held-to-maturity (2,376,258) (2,030,269) (2,539,451) Loan originations, net of repayments (34,881,779) (13,207,947) (25,148,249) Purchases of premises and equipment (1,681,950) (3,488,024) (3,063,110) Proceeds from sales of other real estate owned 197,186 51,374 17,000 Purchase of insurance premium financing company - (3,503,497) - Other, net - 25,636 30,363 ____________ ____________ _____________ Net cash used in investing activities (35,181,495) (36,107,020) (37,357,541) ____________ ____________ _____________ (Continued)
MIDSOUTH BANCORP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998 =============================================================================================================================== 2000 1999 1998 CASH FLOWS FROM FINANCING ACTIVITIES: Net increase in deposits 67,856,999 21,765,904 29,856,551 Net increase (decrease) in repurchase agreements 391,015 606,601 (69,443) Proceeds from (repayments of) FHLB advances, net (3,000,000) 3,000,000 - Issuance of long-term debt 1,525,000 190,000 460,000 Repayments of long-term debt (333,129) (234,571) (155,126) Proceeds from issuance of common stock - 390,455 695,011 Payment of dividends on common and preferred stock (638,468) (467,332) (583,305) Redemption of preferred stock (264,000) - - Payment of fractional shares resulting from stock dividend - - (1,757) Costs associated with dividend reinvestment plan - - (13,845) ____________ ____________ ____________ Net cash provided by financing activities 65,537,417 25,251,057 30,188,086 ____________ ____________ ____________ NET DECREASE IN CASH AND CASH EQUIVALENTS 35,310,848 (6,115,846) (3,230,488) CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 14,487,690 20,603,536 23,834,024 ____________ ____________ ____________ CASH AND CASH EQUIVALENTS AT END OF YEAR $ 49,798,538 $ 14,487,690 $ 20,603,536 ============ ============ ============ SUPPLEMENTAL CASH FLOW INFORMATION: Interest paid $ 9,495,034 $ 7,739,076 $ 6,975,476 ============ ============ ============ Income taxes paid $ 985,408 $ 845,488 $ 970,153 ============ ============ ============ See notes to consolidated financial statements. (Concluded)
MIDSOUTH BANCORP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The consolidated financial statements of MidSouth Bancorp, Inc. (the Company) and its wholly owned subsidiaries MidSouth Bank, N.A. (the Bank) and Financial Services of the South, Inc. (the Finance Company), have been prepared in accordance with generally accepted accounting principles and conform with general practices within the banking industry. A summary of significant accounting policies follows: Description of Business - The Company is a bank holding company headquartered in Lafayette, Louisiana operating principally in the community banking business segment by providing banking services to commercial and retail customers through its wholly owned subsidiary, the Bank. The Bank is community oriented and focuses primarily on offering competitive commercial and consumer loan and deposit services to individuals and small to middle market business. The Company also provides consumer loan services to individuals through the Finance Company. Comprehensive Income - Comprehensive income includes net income and other comprehensive income which, in the case of the Company, includes only unrealized gains and losses on securities available-for-sale. Consolidation - The consolidated financial statements of the Company include the accounts of the Company, the Bank and the Finance Company. Significant intercompany transactions and balances have been eliminated. Use of Estimates - The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosures of contingent assets and liabilities at the date of the financial statement and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Securities - Securities are being accounted for in accordance with Statement of Financial Accounting Standards (SFAS) No. 115 "Accounting for Certain Investments in Debt and Equity Securities". SFAS No. 115 requires the classification of securities into one of three categories: trading, available-for-sale, or held-to-maturity. Management determines the appropriate classification of debt securities at the time of purchase and re-evaluates this classification periodically. Trading account securities are held for resale in anticipation of short-term market movements. Debt securities are classified as held-to-maturity when the Company has the positive intent and ability to hold the securities to maturity. Securities not classified as held-to-maturity or trading are classified as available-for-sale. The Company had no trading account securities during the three years ended December 31, 2000. Held-to-maturity securities are stated at amortized cost. Available-for-sale securities are stated at fair value, with unrealized gains and losses, net of deferred taxes, reported as a separate component of stockholders' equity until realized. The amortized cost of debt securities classified as held-to-maturity or available-for-sale is adjusted for amortization of premiums and accretion of discounts to maturity or, in the case of mortgage-backed securities, over the estimated life of the security. Amortization, accretion and accrued interest are included in interest income on securities. Realized gains and losses, and declines in value judged to be other than temporary, are included in net securities gains. Gains and losses on the sale of securities available-for-sale are determined using the specific-identification method. Loans - Loan origination fees and certain direct origination costs are capitalized and recognized as an adjustment to yield over the life of the related loan. Interest on commercial and real estate mortgage loans is recorded as income based upon the principal amount outstanding. Unearned income on installment loans is credited to operations based on a method which approximates the interest method. Where doubt exists as to collectibility of a loan, the accrual of interest is discontinued and subsequent payments received are applied first to principal. Upon such discontinuances all unpaid accrued interest is reversed. Interest income is recorded after principal has been satisfied and as payments are received. The Company considers a loan to be impaired when, based upon current information and events, it believes it is probable that the Company will be unable to collect all amounts due according to the contractual terms of the loan agreement. The Company's impaired loans include troubled debt restructurings, and performing and non-performing major loans in which full payment of principal or interest is not expected. Non-major homogenous loans, which are evaluated on an overall basis, generally include all loans under $50,000. The Company calculates a reserve required for impaired loans 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 its collateral. Generally, loans of all types which become 90 days delinquent are either in the process of collection through repossession or foreclosure or alternatively, are deemed currently uncollectible. Loans deemed currently uncollectible are charged-off against the allowance account. As a matter of policy, loans are placed on a non-accrual status where doubt exists as to collectibility. 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. Periodically during the year, management estimates the probable level of losses in the existing portfolio based on the Company's past loan loss experience, known inherent risks in the portfolio, adverse situations that may affect the borrowers ability to repay, the estimated value of any underlying collateral and current economic conditions. Based on these estimates, the allowance for loan losses is increased by charges to income and decreased by charge-offs (net of recoveries). Premises and Equipment - Premises and equipment are stated at cost less accumulated depreciation and amortization. Depreciation and amortization are computed using the straight-line method over the estimated useful lives of the assets which generally range from 3 to 30 years. Leasehold improvements are amortized over the estimated useful lives of the improvements or the term of the lease, whichever is shorter. Other Real Estate Owned - Real estate properties acquired through, or in lieu of, loan foreclosures are initially recorded at fair value at the date of foreclosure establishing a new cost basis. After foreclosure, valuations are periodically performed by management and the real estate is carried at the lower of carrying amount or fair value less cost to sell. Revenues and expenses from operations and changes in the valuation allowance are included in loss on foreclosed real estate. Income Taxes - Deferred income taxes are provided for temporary differences between items of income or expense reported in the consolidated financial statements and those reported for income tax purposes. The Company computes deferred income taxes based on the difference between the financial statements and tax basis of assets and liabilities using enacted tax rates in effect in the years in which the differences are expected to reverse. Goodwill - Goodwill represents the excess of the cost over the fair value of net assets purchased and is being amortized over 15 years. During 1999, the Company acquired a small company involved in the financing of insurance premiums. An intangible asset of approximately $400,000 resulted from this acquisition which was accounted for using the purchase method. Stock-Based Compensation - The Company applies APB Opinion No. 25 and related interpretations in accounting for its stock options. Since all options are exercisable at the estimated fair value at the date of grant, no compensation cost has been recognized. The pro forma disclosures required by SFAS 123 are included in Note 11. Basic and Diluted Earnings Per Common Share - Basic earnings per common share (EPS) excludes dilution and is computed by dividing income available to common stockholders by the weighted-average number of common shares outstanding for the period. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the income of the Company. Diluted EPS is computed by dividing net income by the total of the weighted-average number of shares outstanding plus the effect of outstanding options and convertible preferred stock. Statements of Cash Flows - For purposes of reporting cash flows, cash and cash equivalents include cash on hand, amounts due from banks, and federal funds sold. Generally, federal funds are purchased or sold for one-day periods. Reclassifications - Certain reclassifications have been made to the 1998 and 1999 consolidated financial statements in order to conform to the classifications adopted for reporting in 2000. 2. CASH AND DUE FROM BANKS The Company is required to maintain average reserve balances with the Federal Reserve Bank. "Cash and due from banks" in the consolidated statements of condition included amounts so restricted of $622,000 and $4,898,000 at December 31, 2000 and 1999, respectively. 3. INVESTMENT SECURITIES The portfolio of securities consisted of the following:
December 31, 2000 __________________________________________________________________________________ Gross Gross Amortized Unrealized Unrealized Available-for-Sale Cost Gains Losses Fair Value U.S. Treasury securities $ 5,610,508 $ 42,980 $ - $ 5,653,488 U.S. Government agencies 9,125,358 84,558 - 9,209,916 Obligations of states and political subdivisions 5,385,799 94,933 - 5,480,732 Mortgage-backed securities 22,067,196 - 47,964 22,019,232 Collateralized mortgage - obligations 6,866,052 - 11,659 6,854,393 Corporate securities 2,519,313 22,252 - 2,541,565 Mutual funds 1,000,000 - 37,000 963,000 Other 1,247,300 - - 1,247,300 ___________ __________ __________ ____________ $53,821,526 $ 244,723 $ 96,623 $ 53,969,626 =========== ========== ========== ============
December 31, 1999 ____________________________________________________________________________________ Gross Gross Amortized Unrealized Unrealized Available-for-Sale Cost Gains Losses Fair Value U.S. Treasury securities $ 11,632,385 $ 16,262 $ 22,951 $ 11,625,696 U.S. Government agencies 8,871,214 - 121,932 8,749,282 Obligations of states and political subdivisions 2,408,808 495 144,280 2,265,023 Mortgage-backed securities 19,940,622 5,027 883,289 19,062,360 Collateralized mortgage obligations 9,785,272 - 196,043 9,589,229 Corporate securities 1,922,792 - 31,219 1,891,573 Mutual funds 1,000,000 - 39,000 961,000 Other 1,545,700 - - 1,545,700 _____________ ___________ _____________ _____________ $ 57,106,793 $ 21,784 $ 1,438,714 $ 55,689,863 ============= =========== ============= =============
December 31, 2000 ________________________________________________________ Gross Gross Amortized Unrealized Unrealized Held-to-Maturity Cost Gains Losses Fair Value Obligations of states and political subdivisi $ 23,611,057 $ 871,464 $ 8,444 $ 24,474,077 ============== =========== ========== =============
December 31, 1999 ________________________________________________________ Gross Gross Amortized Unrealized Unrealized Held-to-Maturity Cost Gains Losses Fair Value Obligations of states and political subdivisi $ 21,287,597 $ 67,787 $ 578,617 $ 20,776,767 ============== =========== ========== =============
The amortized cost and fair value of securities at December 31, 2000 by contractual maturity, are shown below. Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.
Amortized Available-for-Sale Cost Fair Value Due in one year or less $ 7,079,741 $ 7,089,756 Due after one year through five years 8,674,780 8,815,336 Due after five years through ten years 3,796,814 3,789,281 Due after ten years 3,089,642 3,191,323 Mortgage-backed securities 28,933,249 28,873,630 Other securities 1,247,300 1,247,300 Mutual funds 1,000,000 963,000 _____________ _____________ $ 53,821,526 $ 53,969,626 ============= ============= Held-to-Maturity Due in one year or less $ 25,000 $ 25,226 Due after one year through five years 1,433,533 1,491,416 Due after five years through ten years 16,412,344 17,106,794 Due after ten years 5,740,180 5,850,641 _____________ _____________ $ 23,611,057 $ 24,474,077 ============= =============
Proceeds from sales of securities available-for-sale during 2000 were $2,065,000. There were no sales of securities available-for-sale during 1999 or 1998. A gross gain of $16,126 was recognized on sales in 2000. Securities with an aggregate carrying value of approximately $20,000,000 and $18,000,000 at December 31, 2000 and 1999 were pledged to secure public funds on deposit and for other purposes required or permitted by law. The Company's collateralized mortgage obligations (CMO's) consist primarily of (1) four Fixed Rate FNMA Remic securities, two with a collateral pass-thru pay structure, one with a planned amortization class pay structure, and one with a targeted amortization class pay structure, and (2) three fixed rate FHLMC Remic securities, one with a sequential pay structure and two with a planned amortization class pay structure. All are classified as available-for-sale. 4. LOANS The loan portfolio consisted of the following: December 31, _________________________________________ 2000 1999 Commercial, financial and agricultural $ 69,383,791 $ 56,598,730 Lease financing receivable 5,025,722 5,119,795 Real estate - mortgage 90,952,647 74,665,579 Real estate - construction 4,740,917 3,297,150 Installment loans to individuals 34,243,331 30,632,469 Other 238,452 155,010 204,584,860 170,468,733 _____________ ____________ Less allowance for loan losses (2,276,187) (1,967,326) _____________ ____________ $ 202,308,673 $ 168,501,407 ============= ============
Loans are stated net of unearned income and loan origination fees in the above table. The amount of such items is not significant. An analysis of the activity in the allowance for loan losses is as follows:
Year Ended December 31, __________________________________________________________ 2000 1999 1998 Balance at beginning of year $ 1,967,326 $ 1,860,490 $ 1,414,826 Provision for loan losses 897,038 906,950 999,950 Recoveries 120,250 141,299 147,817 Loans charged off (708,427) (941,413) (702,103) ___________ ___________ ___________ Balance at end of year $ 2,276,187 $ 1,967,326 $ 1,860,490 =========== =========== ===========
During the years ended December 31, 2000, 1999 and 1998, there were approximately $177,000, $581,000 and $14,000, respectively, of net transfers from loans to other real estate owned. As of December 31, 2000 and 1999, loans outstanding to directors, executives officers, and their affiliates were $1,240,383 and $841,178, respectively. In the opinion of management, all transactions entered into between the Bank and such related parties have been and are made in the ordinary course of business, on substantially the same terms and conditions, including interest rates and collateral, as similar transactions with unaffiliated persons and do not involve more than the normal risk of collection. An analysis of the 2000 activity with respect to these related party loans is as follows:
Balance, January 1, 2000 $ 841,178 New loans 711,292 Repayments (312,087) __________ Balance, December 31, 2000 $ 1,240,383 ==========
Non-accrual and renegotiated loans amounted to approximately $160,000 and $235,000 at December 31, 2000 and 1999, respectively. The Company's other individually evaluated impaired loans were not significant at December 31, 2000 and 1999. The related allowance amounts on impaired loans were not significant and there was no significant change in these amounts during the years ended December 31, 2000, 1999 or 1998. The amount of interest not accrued on these loans did not have a significant effect on earnings in 2000, 1999 or 1998. 5. BANK PREMISES AND EQUIPMENT Premises and equipment consisted of the following:
December 31, _____________________________________ 2000 1999 Buildings and improvements $ 9,302,432 $ 7,960,580 Furniture, fixtures, and equipment 7,621,387 6,585,951 Automobiles 276,151 270,328 Leasehold improvements 685,568 640,410 Construction-in-process 2,978 887,943 ___________ ___________ 17,888,516 16,345,212 Less accumulated depreciation and amortization (6,148,941) (4,977,397) ___________ ___________ $ 11,739,575 $ 11,367,815 =========== ===========
6. DEPOSITS Deposits consisted of the following:
December 31, _________________________________________ 2000 1999 Non-interest bearing $ 75,151,653 $ 63,668,676 Savings and money market 100,306,058 56,862,506 NOW accounts 31,317,013 28,190,168 Time deposits under $100,000 66,700,305 61,225,647 Time deposits over $100,000 46,072,176 41,743,209 _____________ ____________ $ 319,547,205 $ 251,690,206 ============= ============
Approximately $85,440,000 of time deposits mature in 2001 and the balance of $27,332,000 principally in 2002. 7. FHLB ADVANCES AND LONG-TERM DEBT At December 31, 1999, the Company had a $3,000,000 short-term advance outstanding with the Federal Home Loan Bank. This advance bore interest at 6.02% and was paid off in January 2000. Long-term debt consisted of the following:
December 31, __________________________________ 2000 1998 Notes payable to financial institutions $ 4,475,000 $ 3,235,024 FHLB advances - long term 175,968 224,073 __________ __________ $ 4,650,968 $ 3,459,097 ========== ==========
The notes payable to financial institutions consist of advances against Lines of Credit established by the Company and the Finance Company. The Line of Credit for the Company is in the amount of $2,500,000 and is dated June 23, 1997. Advances under the Line of Credit bear interest at a variable rate equal to the prime commercial rate of interest as quoted in the "Money Rates" section of the Wall Street Journal minus fifty basis points (0.50%). At December 31, 2000 and 1999, the effective rate was 9.00% and 8.00%, respectively. Interest under the note is due and payable quarterly. Principal payments in the amount of $312,500 beginning on June 30, 2001 are due and payable in six consecutive annual installments. The remaining balance of the loan is due and payable in a seventh and final installment on June 30, 2007. The Company has pledged all of the Bank's stock as collateral on this note. The loan agreement has certain covenants which, among other things, require the maintenance of certain levels of stockholders' equity and net income and sets a limit on the maximum amount of nonperforming assets. The Company was in compliance with these covenants at December 31, 2000. The principal balance on this note at December 31, 2000 and 1999 was $2,500,000 and $2,085,024, respectively. The Line of Credit for Financial Services of the South is in the amount of $2,000,000 and was last renewed May 1, 2000. Advances under the Line of Credit bear interest at a variable rate equal to the commercial prime rate as quoted in the "Money Rates" section of the Wall Street Journal plus twenty-five basis points (0.25%). At December 31, 2000 and 1999, the effective rate was 9.75% and 8.75%, respectively. Interest on this note is payable monthly, with principal due at maturity on April 30, 2001. Advances under this note totaled $1,975,000 at December 31, 2000 and $1,150,000 at December 31, 1999. The Finance Company has pledged (1) all its promissory notes, credit sales agreements, installment sales contracts, chattel paper, negotiable paper or other written evidence of indebtedness; (2) all of its accounts receivable; and (3) all of its common stock as collateral on this note. At December 31, 2000, the Bank had two long-term FHLB borrowings outstanding. These borrowings bear interest at rates of 6.17% and 7.28%, and have maturities from April 2001 to June 1, 2004. Monthly principal and interest payments range from approximately $354 on the smallest borrowing to approximately $4,732 on the largest borrowing, with balloon payments due at maturity. The FHLB short-term and long-term advances are collaterized by a blanket floating lien on certain of the Bank's mortgage loans. Aggregate annual maturities on long-term debt are payable as follows:
2001 $ 2,463,468 2002 312,500 2003 312,500 2004 312,500 2005 312,500 Thereafter 937,500 ___________ $ 4,650,968 ===========
8. COMMITMENTS AND CONTINGENCIES At December 31, 2000, future annual minimum rental payments due under noncancellable operating leases, primarily for land, are as follows:
2001 $ 446,801 2002 408,647 2003 406,406 2004 362,393 2005 156,298 Thereafter through 2058 616,686 ___________ $ 2,397,231 ===========
Minimum rental payments have not been reduced by minimum sublease rentals of approximately $60,000 due in the future under noncancellable subleases. Rental expense under operating leases for 2000, 1999 and 1998 was $519,984, $447,409, and $422,662, respectively. Sublease income for 2000, 1999 and 1998 amounted to $31,800 each year. The Company and its subsidiaries are parties to various legal proceedings arising in the ordinary course of business. In the opinion of management, the ultimate resolution of these legal proceedings will not have a material adverse effect on the Company's financial position, results of operations or cash flows. 9. INCOME TAXES Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company's deferred tax assets and liabilities as of December 31, 2000 and 1999 are as follows:
2000 1999 Deferred tax assets: Unrealized loss on securities $ - $ 468,500 Allowance for loan losses 557,000 469,000 Other 89,000 16,000 ________ ________ Total deferred tax assets 646,000 953,500 ________ ________ Deferred tax liabilities: FHLB stock dividends (78,000) (56,000) Depreciation (260,000) (178,000) Unrealized gain on securities (63,000) - Other (125,000) (84,500) ________ ________ Total deferred tax liabilities (526,000) (318,500) ________ ________ Net deferred tax asset $ 120,000 $ 635,000 ======== ========
Components of income tax expense are as follows:
2000 1999 1998 Current $968,204 $846,917 $897,190 Deferred (17,000) 20,500 (55,023) ________ ________ ________ $951,204 $867,417 $842,167 ======== ======== ========
The provision for federal income taxes differs from the amount computed by applying the U.S. Federal income tax statutory rate of 34% on income as follows:
Year Ended December 31, ____________________________________ 2000 1999 1998 Taxes calculated at statutory rate $1,307,756 $1,195,991 $1,117,903 Increase (decrease) resulting from: Tax-exempt interest (370,894) (334,386) (280,412) Other 14,342 5,812 4,676 __________ __________ __________ $ 951,204 $ 867,417 $ 842,167 ========== ========== ==========
The deferred income tax expense (credit) relating to unrealized gains (losses) on securities available-for-sale included in other comprehensive income amounted to $531,500 in 2000, $(627,500) in 1999 and, $107,495 in 1998. Income taxes relating to gains on sales of securities amounted to $5,483 in 2000. 10. EMPLOYEE BENEFITS The Company sponsors a leveraged employee stock ownership plan (ESOP) that covers all employees who meet minimum age and service requirements. The Company makes annual contributions to the ESOP in amounts as determined by the Board of Directors. These contributions are used to pay debt service and purchase additional shares. Certain ESOP shares are pledged as collateral for this debt. As the debt is repaid, shares are released from collateral and allocated to active employees, based on the proportion of debt service paid in the year. The note is payable to the Bank. Because the source of the loan payments are contributions received by the ESOP from the Company, the related note receivable is shown as a reduction of stockholders' equity. The balance of the note receivable from the ESOP was $185,127 and $89,044 at December 31, 2000 and 1999, respectively. In accordance with the American Institute of Certified Public Accountants' Statement of Position 93-6 (SOP), compensation costs relating to shares purchased subsequent to December 31, 1992 are based on the market price of the shares on the date released for allocation and the related unreleased shares are not considered outstanding in the computation of income per common share. The Company has elected to not apply the provisions of the SOP to shares purchased on or before December 31, 1992 and therefore compensation costs relating to those shares was based upon cost and those shares were considered as outstanding in the computation of income per common share. All of the unrealized shares at December 31, 2000 and 1999 were purchased after December 31, 1992. ESOP compensation expense was $156,750, $145,500 and $102,000 for the years ended December 31, 2000, 1999 and 1998, respectively. The ESOP shares as of December 31, 2000 and 1999 were as follows:
2000 1999 Allocated shares 245,516 228,990 Shares released for allocation 5,211 5,002 Unreleased shares 23,251 13,462 ________ ________ Total ESOP shares 273,978 247,454 ======== ======== Fair value of unreleased shares at December 31, $ 200,540 $ 121,158 ======== ========
During 1996 the Company adopted a deferred compensation plan for certain officers which qualifies as a defined contribution plan. Contributions to the plan are required only if "excess earnings", as defined, are achieved. The participants accrue benefits based only on the contributions made. During 2000, 1999 and 1998 no contributions were required. 11. EMPLOYEE STOCK PLANS In May 1997 the stockholders of the Company approved the 1997 Stock Incentive Plan to provide incentives and awards for employees of the Company and its subsidiaries. "Awards" as defined in the Plan includes, with limitations, stock options (including restricted stock options), stock appreciation rights, performance shares, stock awards and cash awards, all on a stand-alone, combination or tandem basis. A total of 8% of the Company's common shares outstanding can be granted under the Plan. The exercise price of options is equal to the market price on the date of grant. The Company is applying APB Opinion No. 25 and related interpretations in accounting for stock options. Since all options are exercisable at the estimated fair market value at the date of grant, no compensation expense has been recognized. During 1998, options to purchase 23,155 shares were granted which are exercisable at $15.42 per share. During 1997, options to purchase 139,223 shares were granted which are exercisable at $6.67 per share. These options are exercisable in 20% increments beginning one year from the date of grant. The options expire ten years after the date of grant. Below is a summary of the transactions:
Exercise Price ______________________ Number of Average Options Price Outstanding Per Share Balance, January 1, 1998 139,223 6.67 Granted 23,155 15.42 ________ ______ Balance, December 31, 1998 162,378 7.92 Granted - - ________ ______ Balance, December 31, 1999 162,378 7.92 Granted - - ________ ______ Balance, December 31, 2000 162,378 7.92 ======== ======
Options on 83,533 shares at $6.67 per share and on 9,262 shares at $15.42 per share were exercisable at December 31, 2000. Options on 55,690 shares at $6.67 per share and on 4,631 shares at $15.42 per share were exercisable at December 31, 1999. The weighted average remaining contractual life of options outstanding at December 31, 2000 was 6.2 years. The Company has adopted the disclosure-only option under SFAS No. 123, "Accounting for Stock Based Compensation." The fair value of options granted was $4.63 in 1998. Had compensation cost for the Company's stock options been determined based on the fair value at the grant date consistent with the method under SFAS No. 123, the Company's net income available to common stockholders and income per common share would have been as indicated below:
Year Ended _____________________________________ 2000 1999 1998 Net income available to common stockholders: As reported $ 2,649,113 $ 2,518,622 $ 2,296,812 Pro forma 2,601,041 2,434,668 2,169,732 Basic income per common share: As reported $ 1.07 $ 1.03 $ .95 Pro forma 1.05 1.00 .90 Diluted income per common share: As reported $ .95 $ .90 $ .83 Pro forma .94 .87 .79
The fair value of the options granted under the Company's stock option plans during the year ended December 31, 1998 was estimated using the Black-Scholes Pricing Model with the following assumptions used: dividend yield of 1.5%, expected volatility of 20%, risk free interest rate of 4.9%, and expected lives of 8 years. 12. STOCKHOLDERS' EQUITY On July 31, 1995, the Company issued 187,286 shares of Series A Cumulative Convertible Preferred Shares with a stated value of $14.25. The Convertible Preferred Shares are convertible at any time at the option of the holder into common stock, at the rate of 2.998 shares of Common Stock for each Convertible Preferred Share. On or after July 31, 2000, the Convertible Preferred Shares are redeemable, in whole or in part, at the option of the Company at the stated value of $14.25. The liquidation value of the Convertible Preferred Stock is $14.25 plus accrued dividends. Dividends on the Convertible Preferred Shares are determined each year on an annual rate, fixed on December 31 of each year for the ensuing calendar year and was 6.51% at December 31, 2000. The dividends are cumulative and payable quarterly in arrears. Holders of Convertible Preferred Shares are not entitled to normal voting rights unless certain conditions exist. During the year ended December 31, 2000, the Company redeemed 11,000 shares for $107,250 in excess of their carrying amount. The $107,250 is included in the amount recorded as preferred stock dividends in order to compute net income available to common stockholders. The payment of dividends by the Bank to the Company is restricted by various regulatory and statutory limitations. At December 31, 2000, the Bank has approximately $1,200,000 available to pay dividends to the Parent Company without regulatory approval. 13. NET INCOME PER COMMON SHARE Following is a summary of the information used in the computation of earnings per common share.
Year Ended December 31, ______________________________________________ 2000 1999 1998 Net income $ 2,895,137 $ 2,650,204 $ 2,445,783 Preferred dividend requirement on shares redeemed 107,250 - - ______________ ______________ ______________ Net income, as adjusted - used in computation of diluted earnings per common share 2,787,887 2,650,204 2,445,783 Preferred dividend requirement on shares excluding shares redeemed 138,774 131,582 148,971 ______________ ______________ ______________ Net income available to common stockholders - used in computation of basic earnings per common share $ 2,649,113 $ 2,518,622 $ 2,296,812 ============== ============== ============== Weighted average number of common shares outstanding - used in computation of basic earnings per common share 2,487,187 2,441,461 2,410,926 Effect of dilutive securities: Stock options 29,196 51,616 72,317 Convertible preferred stock 406,428 463,185 475,138 ______________ ______________ ______________ Weighted average number of common shares outstanding plus effect of dilutive securities - used in computation of diluted earnings per common share 2,922,811 2,956,262 2,958,381 ============== ============== ==============
14. FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK The Bank is a party to various financial instruments with off- balance sheet risk in the normal course of business to meet the financing needs of its customers and to reduce its own exposure to fluctuations in interest rates. These financial instruments include commitments to extend credit and standby letters of credit. Those instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amounts recognized in the statements of financial condition. The contract or notional amounts of those instruments reflect the extent of the involvement the Bank has in particular classes of financial instruments. The Bank's exposure to loan loss in the event of nonperformance by the other party to the financial instrument for commitments to extend credit, standby letters of credit and financial guarantees is represented by the contractual amount of those instruments. The Bank uses the same credit policies, including considerations of collateral requirements, in making these commitments and conditional obligations as it does for on-balance sheet instruments. Financial instruments whose contract amounts represent credit risk: Commitments to extend credit $52,700,000 $32,900,000 Standby letters of credit 1,200,000 800,000
Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments are expected to expire without being fully drawn upon, the total commitment amounts disclosed above do not necessarily represent future cash requirements. Substantially all of these commitments are at variable rates. Standby letters of credit and financial guarantees are conditional commitments issued by the Bank to guarantee the performance of a customer to a third party. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to its customers. Approximately 75% of these letters of credit were secured by marketable securities, cash on deposits or other assets at December 31, 2000 and 1999. 15. REGULATORY MATTERS The Company and the Bank are subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the financial statements. Under capital adequacy guidelines, the Company and the Bank must meet specific capital guidelines that involve quantitative measures of assets, liabilities, and certain off-balance-sheet items as calculated under regulatory accounting practices. The capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors. Quantitative measures established by regulation to ensure capital adequacy require the Company and the Bank to maintain minimum amounts and ratios (set forth in the table below) of total and Tier I capital (as defined in the regulations) to risk-weighted assets (as defined), and of Tier I capital (as defined) to average assets (as defined). As of December 31, 2000 and 1999, the most recent notifications from the Federal Deposit Insurance Corporation categorized the Bank as well capitalized under the regulatory framework for prompt corrective action. To be categorized as well capitalized the Bank must maintain minimum total risk-based, Tier I risk-based, Tier I leverage ratios as set forth in the table. There are no conditions or events since those notifications that management believes have changed the Bank's category. The Company's and the Bank's actual capital amounts and ratios are presented in the table.
To Be Well Capitalized Under For Capital Prompt Corrective Actual Adequacy Purposes Action Provisions ________________________ _______________________ ___________________ Amount Ratio Amount Ratio Amount Ratio As of December 31, 2000: Total capital to risk weighted assets: Company $ 21,523,294 9.55 % $ 18,023,954 8.00 % N/A N/A Bank 23,506,666 10.54 % 17,842,682 8.00 % 22,303,352 10.00 % Tier I capital to risk weighted assets: Company 19,247,107 8.54 % 9,011,977 4.00 % N/A N/A Bank 21,313,084 9.56 % 8,921,341 4.00 % 13,382,011 6.00 % Tier I capital to average assets: Company 19,247,107 6.05 % 12,734,767 4.00 % N/A N/A Bank 21,313,084 6.74 % 12,654,316 4.00 % 15,817,895 5.00 %
To Be Well Capitalized Under For Capital Prompt Corrective Actual Adequacy Purposes Action Provisions ________________________ ________________________ ___________________ Amount Ratio Amount Ratio Amount Ratio As of December 31, 1999: Total capital to risk weighted assets: Company $ 19,247,764 10.55 % $ 14,600,062 8.00 % N/A N/A Bank 20,628,906 11.41 % 14,465,478 8.00 % 18,081,848 10.00 % Tier I capital to risk weighted assets: Company 17,280,438 9.47 % 7,300,031 4.00 % N/A N/A Bank 18,729,581 10.36 % 7,232,739 4.00 % 10,849,107 6.00 % Tier I capital to average assets: Company 17,280,438 6.23 % 11,093,925 4.00 % N/A N/A Bank 18,729,581 6.79 % 11,035,784 4.00 % 13,794,731 5.00 %
16. DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS The following methods and assumptions were used to estimate the fair value of each class of financial instruments for which it is practicable to estimate that value: Cash, Due From Banks and Federal Funds Sold - For those short- term instruments, the carrying amount is a reasonable estimate of fair value. Securities - For securities, fair value equals quoted market price, if available. If a quoted market price is not available, fair value is estimated using quoted market prices for similar securities. Loans, Net - The fair value of 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 and for the same remaining maturities. Deposits - The fair value of demand deposits, savings accounts, and certain money market deposits is the amount payable on demand at the reporting date. The fair value of fixed-maturity certificates of deposit is estimated using the rates currently offered for deposits of similar remaining maturities. Notes Payable - Rates currently available to the Company for debt with similar terms and remaining maturities are used to estimate fair value of existing debt. Commitments - The fair value of commitments to extend credit was not significant. The estimated fair values of the Company's financial instruments are as follows at December 31, 2000 and 1999 (in thousands):
2000 1999 _____________________ _________________ Carrying Fair Carrying Fair Amount Value Amount Value Financial assets: Cash, due from banks and federal fund sold $ 49,867 $ 49,867 $ 14,488 $ 14,488 Securities available-for-sale 53,970 53,970 55,690 55,690 Securities held-to-maturity 23,611 24,474 21,288 20,777 Loans, net 202,309 202,200 168,501 168,793 Financial liabilities: Non-interest bearing deposits 75,152 75,152 63,669 63,669 Interest bearing deposits 244,396 244,800 188,022 188,135 FHLB advances - - 3,000 3,000 Long-term notes payable 4,651 4,651 3,459 3,459
17. OTHER NON-INTEREST EXPENSE Other non-interest expense consisted of the following for the years ended December 31, 2000, 1999 and 1998:
2000 1999 1998 Professional fees $ 375,012 $ 369,672 $ 397,880 FDIC assessments 50,612 27,470 23,540 Marketing expenses 748,261 789,666 672,896 Data processing 193,796 192,360 163,839 Postage 249,950 249,836 211,179 Education and travel 156,851 172,559 168,038 Printing and supplies 366,652 341,452 319,713 Telephone 281,890 267,325 241,455 Other 1,987,460 1,441,604 1,189,048 ____________ __________ __________ $ 4,410,484 $ 3,851,944 $ 3,387,588 ============ ========== ==========
18. CONDENSED FINANCIAL INFORMATION OF PARENT COMPANY Summarized financial information for MidSouth Bancorp, Inc. (parent company only) follows:
STATEMENTS OF CONDITION December 31, ____________________________ ASSETS 2000 1999 Cash and interest-bearing deposits in banks $ 226,744* $ 202,782* Other assets 87,840 102,444 Investment in and advances to subsidiaries 22,391,334* 18,954,629* ____________ ____________ $ 22,705,918 $ 19,259,855 ============ ============ LIABILITIES AND STOCKHOLDERS' EQUITY Liabilities: Dividends payable $ 158,413 $ 156,664 Notes payable to financial institutions 2,500,000 2,087,486 Note payable to Bank 185,127* 90,544* ____________ ____________ Total liabilities 2,843,540 2,334,694 ____________ ____________ Total stockholders' equity 19,862,378 16,925,161 ____________ ____________ $ 22,705,918 $ 19,259,855 ============ ============
STATEMENTS OF INCOME Years Ended December 31, ___________________________________________ 2000 1999 1998 Revenue: Dividends from Bank $ 925,000* $ 375,000* $ 85,000* Equity in undistributed income of subsidiaries 2,169,325* 2,469,841* 2,529,618 Rental and other income 50,682 42,988 44,553 _________ _________ _________ 3,145,007 2,887,829 2,659,171 _________ _________ _________ Expenses: Interest on notes payable 192,131 157,000 146,831 Professional fees 75,073 99,741 83,304 Other expenses 84,820 79,636 66,544 _________ _________ _________ 352,024 336,377 296,679 _________ _________ _________ Income before income taxes 2,792,983 2,551,452 2,362,492 Income tax benefit 102,154 98,752 83,291 _________ _________ _________ Net income $2,895,137 $ 2,650,204 $ 2,445,783 ========= ========= =========
STATEMENTS OF CASH FLOWS Years Ended December 31, ___________________________________________ 2000 1999 1998 Cash flows from operating activities: Dividends from bank $ 925,000* $ 375,000* $ 85,000* Other, net (184,584) (131,448) (158,044) _________ _________ _________ Net cash provided by (used in) operating activities 740,416 243,552 (73,044) _________ _________ _________ Cash flows from investing activities: Investment in and advances to subsidiares (225,000)* _ (350,000)* _________ _________ _________ Net cash used in investing activities (225,000) _ (350,000) _________ _________ _________ Cash flows from financing activities: Capital stock transactions (96,083) 372,955 679,409 Redemption of Preferred Stock (264,000) - - Payment of dividends (638,468) (467,332) (583,305) Proceeds of notes payable, net 507,097 34,706 325,000 _________ _________ _________ Net cash provided by financing activities (491,454) (59,671) 421,104 _________ _________ _________ Net increase (decrease) in cash 23,962 183,881 (1,940) Cash, beginning of year 202,782 18,901 20,841 _________ _________ _________ Cash, end of year $ 226,744 $ 202,782 $ 18,901 ========= ========= ========= *Eliminated in consolidation
19. IMPACT OF NEW ACCOUNTING STANDARDS 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 activities. 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 requirements of SFAS No. 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. The Company will adopt this accounting standard on January 1, 2001. The adoption of SFAS No. 133 will not have a significant effect on the Company's financial position, results of operations or cash flows on the date of adoption. There are no other pronouncements of the Financial Accounting Standards Board which have been issued and not yet been adopted which will have a significant effect on the Company's financial position, results of operations or cash flows on the date of adoption. * * * * * ITEM 8 - Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. Not applicable. PART III ITEM 9 - Directors, Executive Officers, Promotors and Control Persons; Compliance with Section 16(a) of the Exchange Act The information contained in Registrant's definitive proxy statement for its 2001 annual meeting of shareholders, is incorporated herein by reference in response to this Item. Information concerning executive officers is provided following Item 4. ITEM 10 - Executive Compensation The information contained in Registrant's definitive proxy statement for its 2001 annual meeting of shareholders is incorporated herein by reference in response to this Item. ITEM 11 - Security Ownership of Certain Beneficial Owners and Management The information contained in Registrant's definitive proxy statement for its 2001 annual meeting of shareholders is incorporated herein by reference in response to this Item. ITEM 12 - Certain Relationships and Related Transactions The information contained in Registrant's definitive proxy statement for its 2001 annual meeting of shareholders is incorporated herein by reference in response to this Item. ITEM 13 - Exhibits and Reports on Form 8-K. Exhibits Exhibit No. Description 3.1 Amended and Restated Articles of Incorporation of MidSouth Bancorp, Inc. are included as Exhibit 3.1 to MidSouth's Annual 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 of MidSouth 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, and is incorporated herein by reference. 4.1 MidSouth agrees to furnish to the Commission on request a copy of the instruments defining the rights of the holder of its long-term debt, which debt does not exceed 10% of the total consolidated assets of MidSouth. 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 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 MidSouth's Annual Report on Form 10-K for the year ended December 31, 1992 and is incorporated herein by reference. 10.5 Employment Agreements with C. R. Cloutier and Karen L. Hail are included as Exhibit 5c to MidSouth's Form 1-A and are incorporated herein by reference. 10.6 The MidSouth Bancorp, Inc. 1997 Stock Incentive Plan is included as a form of option agreement in Exhibit 4.5 to MidSouth's definitive proxy statement filed April 11, 1997 and is incorporated herein by reference. 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 to MidSouth Bancorp, Inc.'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 to MidSouth Bancorp, Inc.'s Form 10-QSB filed on August 13, 1999 and is incorporated herein by reference. 21 Subsidiaries of the Registrant 23 Independent Auditors' Consent 27 Financial Data Schedule Reports on Form 8-K None SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. MIDSOUTH BANCORP, INC. By: /s/ C.R. Clutier C. R. Cloutier President and Chief Executive Officer Dated: March 30, 2001 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated. Signatures Title Date /s/ C. R. Cloutier President, Chief Executive C. R. Cloutier Officer and Director March 30, 2001 /s/ Karen L. Hail Chief Financial Officer, Karen L. Hail Executive Vice President, March 30, 2001 Secretary/Treasurer and Director /s/ Teri S. Stelly Chief Accounting Officer March 30, 2001 Teri S. Stelly /s/ J. B. Hargroder, M.D. Director March 30, 2001 J. B. Hargroder, M.D. /s/ William M. Simmons Director March 30, 2001 William M. Simmons /s/ Will G. Charbonnet, Sr. Director March 30, 2001 Will G. Charbonnet, Sr. /s/ Clayton Paul Hilliard Director March 30, 2001 Clayton Paul Hilliard /s/ James R. Davis Director March 30, 2001 James R. Davis, Jr. /s/ Milton B. Kidd, III Director March 30, 2001 Milton B. Kidd, III., O.D. EX-21 2 0002.txt EXHIBIT 21 SUBSIDIARIES OF THE REGISTRANT MidSouth Bank, N.A. Financial Services of the South, Inc. EX-23 3 0003.txt EXHIBIT 23 INDEPENDENT AUDITORS' CONSENT We consent to the incorporation by reference in Registration Statement No. 333-32107 of MidSouth Bancorp, Inc. on Form S-3D of our report dated February 2, 2001, appearing in this Annual Report on Form 10-KSB of MidSouth Bancorp, Inc. for the year ended December 31, 2000. DELOITTE & TOUCHE, LLP New Orleans, Louisiana March 30, 2001 EX-27 4 0004.txt
9 YEAR DEC-31-2000 DEC-31-2000 15,698 69 34,100 0 53,970 23,611 24,474 204,585 2,276 346,373 319,547 998 1,315 4,651 0 1,861 252 17,749 19,862 19,441 4,677 331 24,449 9,181 9,787 14,662 897 16 14,502 3,846 2,895 0 0 2,895 1.07 .95 4.63 160 968 0 0 1,967 708 120 2,276 10 0 2,266
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