-----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, AJyR0n2QfT+8Nn0VatBPDiud9BTMmeu1M07RmkfTwxtlZX9npthaM8No5UXcCQib rLo6NyKCayWcz9S1WXnYEA== 0000948688-03-000005.txt : 20040825 0000948688-03-000005.hdr.sgml : 20040825 20030813151128 ACCESSION NUMBER: 0000948688-03-000005 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20030630 FILED AS OF DATE: 20030813 DATE AS OF CHANGE: 20040825 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: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 001-11826 FILM NUMBER: 03840846 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 10QSB 1 tenqsb.txt MIDSOUTH BANCORP UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10QSB __X___QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended... June 30, 2003 ______TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ..... to ..... COMMISSION FILE NUMBER 1-11826 MIDSOUTH BANCORP, INC. Louisiana 72 -1020809 102 Versailles Boulevard, Lafayette, Louisiana 70501 (337) 237-8343 Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES __X__ NO _____ State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date. Outstanding as of July 31, 2003 Common stock, $.10 par value 3,191,256 Transitional Small Business Disclosure Format: Yes _______ No ____X____ Page 1 Page 2 PART 1 - FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) Page Statements of Condition - June 30, 2003 and December 31, 2002 3 Statements of Income - Three and Six Months Ended June 30, 2003 and 2002 4 Statement of Stockholders' Equity - Six Months Ended June 30, 2003 5 Statements of Cash Flows - Six Months Ended June 30, 2003 and 2002 6 Notes to Financial Statements 7 Item 2. Management's Discussion and Analysis or Plan of Operation 8 Item 3. Controls and Procedures 15 PART II - OTHER INFORMATION Item 4. Submission of Matters to a Vote of Security Holders 15 Item 6. Exhibits and Reports on Form 8-K 16 Signatures 18
MIDSOUTH BANCORP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CONDITION June 30, December 31, 2003 2002* ASSETS (unaudited) ___________ ___________ Cash and due from banks $20,539,097 $18,066,035 Federal funds sold 2,600,000 9,400,000 ___________ ___________ Total cash and cash equivalents 23,139,097 27,466,035 Interest bearing deposits in banks 78,436 1,694 Securities available-for-sale, at fair value (cost of $96,462,963 in June 2003 and $87,755,456 in December 2002) 98,601,923 89,575,706 Securities held-to-maturity (estimated market value of $25,953,992 in June 2003 and $25,660,511 in December 2002) 23,397,517 23,398,282 Loans, net of allowance for loan losses of $2,951,452 in June 2003 and $2,891,380 in December 2002 238,875,718 224,160,846 Bank premises and equipment, net 12,121,788 12,321,510 Other real estate owned, net 174,800 174,800 Accrued interest receivable 2,710,588 2,502,684 Goodwill 431,987 431,987 Other assets 2,708,592 2,653,449 ____________ ____________ Total assets $402,240,446 $382,686,993 ============ ============ LIABILITIES AND STOCKHOLDERS' EQUITY Deposits: Non-interest bearing $91,601,772 $94,452,378 Interest bearing 266,597,842 249,022,468 ____________ ____________ Total deposits 358,199,614 343,474,846 Securities sold under repurchase agreements and federal funds purchased 5,066,344 2,978,860 Accrued interest payable 612,013 705,106 Notes payable 421,000 568,030 Junior subordinated debenture 7,000,000 7,000,000 Other liabilities 1,041,854 841,592 ____________ ____________ Total liabilities 372,340,825 355,568,434 ____________ ____________ Commitments and contingencies - - Stockholders' Equity: Common stock, $.10 par value- 5,000,000 shares authorized, 3,191,256 and 2,901,142 issued and outstanding on June 30, 2003 and December 31, 2002, respectively 319,126 290,114 Surplus 18,582,456 12,997,762 Unearned ESOP shares (90,739) (108,975) Unrealized gains on securities available-for-sale, net of deferred taxes of $736,766 in June 2003 and $628,750 in December 2002 1,402,194 1,191,500 Treasury stock - 5,300 shares, at cost (91,257) - Retained earnings 9,777,841 12,748,158 ___________ ___________ Total stockholders' equity 29,899,621 27,118,559 ___________ ___________ Total liabilities and stockholders' equity $402,240,446 $382,686,993 ============= ============= * The consolidated statement of condition at December 31, 2002 is taken from the audited balance sheet on that date. See notes to unaudited consolidated financial statements.
MIDSOUTH BANCORP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) ============================================================================================== Three Months Ended Six Months Ended June 30, June 30, 2003 2002 2003 2002 _________________________ __________ __________ INTEREST INCOME: Loans, including fees $4,905,225 $4,777,307 $9,639,030 $9,357,437 Securities Taxable 499,589 847,314 1,140,184 1,602,909 Nontaxable 487,213 428,934 955,124 851,402 Federal funds sold 20,419 18,185 31,020 69,927 __________ __________ __________ __________ TOTAL 5,912,446 6,071,740 11,765,358 11,881,675 __________ __________ __________ __________ INTEREST EXPENSE: Deposits 962,199 1,472,088 2,035,148 3,084,129 Securities sold under repurchase agreements, federal funds purchased and advances 17,230 27,428 30,600 30,688 Long term debt 189,435 197,495 368,825 387,642 __________ __________ __________ __________ TOTAL 1,168,864 1,697,011 2,434,573 3,502,459 __________ __________ __________ __________ NET INTEREST INCOME 4,743,582 4,374,729 9,330,785 8,379,216 PROVISION FOR LOAN LOSSES 100,000 336,000 300,000 694,000 __________ __________ __________ __________ NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 4,643,582 4,038,729 9,030,785 7,685,216 __________ __________ __________ __________ OTHER OPERATING INCOME: Service charges on deposits 1,335,728 1,158,404 2,543,281 2,233,717 Gains on securities, net 92,935 - 87,632 - Credit life insurance 49,525 91,995 100,987 145,820 Other charges and fees 550,962 408,831 1,010,349 782,302 __________ __________ __________ __________ TOTAL OTHER INCOME 2,029,150 1,659,230 3,742,249 3,161,839 __________ __________ __________ __________ OTHER EXPENSES: Salaries and employee benefits 2,120,394 1,982,103 4,198,122 3,917,568 Occupancy expense 965,191 922,919 1,871,536 1,769,259 Other 1,352,869 1,292,543 2,680,670 2,588,738 __________ __________ __________ __________ TOTAL OTHER EXPENSES 4,438,454 4,197,565 8,750,328 8,275,565 __________ __________ __________ __________ INCOME BEFORE INCOME TAXES 2,234,278 1,500,394 4,022,706 2,571,490 PROVISION FOR INCOME TAXES 610,137 413,149 1,089,013 666,114 __________ __________ __________ __________ NET INCOME $1,624,141 $1,087,245 $2,933,693 $1,905,376 ========== ========== ========== ========== BASIC EARNINGS PER COMMON SHARE $0.51 $0.34 $0.92 $0.60 ========== ========== ========== ========== DILUTED EARNINGS PER COMMON SHARE $0.49 $0.34 $0.89 $0.59 ========== ========== ========== ========== See notes to unaudited consolidated financial statements.
MIDSOUTH BANCORP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY FOR THE SIX MONTHS ENDED JUNE 30, 2003 (UNAUDITED) UNREALIZED GAINS (LOSSES) COMMON STOCK ESOP ON SECURITIES TREASURY RETAINED SHARES AMOUNT SURPLUS OBLIGATION AFS, NET STOCK EARNINGS TOTAL ___________________ ___________ __________ ______________ ________ ________ __________ BALANCE, JANUARY 1, 2003 2,901,142 $290,114 $12,997,762 ($108,975) $1,191,500 $ - $12,748,158 $27,118,559 Dividends on common stock, $.10 per share (290,304) (290,304) Purchase of treasury stock (91,257) (91,257) Stock dividend 290,114 29,012 5,584,694 (5,613,706) - Net income 2,933,693 2,933,693 ESOP obligation, repayments 18,236 18,236 Net change in unrealized gain/loss on securities available-for -sale, net of income taxes 210,694 210,694 _________ ________ ___________ _________ __________ ________ __________ ___________ BALANCE, JUNE 30, 2003 3,191,256 $319,126 $18,582,456 ($90,739) $1,402,194 ($91,257) $9,777,841 $29,899,621 ========= ======== =========== ========= ========== ======== ========== =========== See notes to unaudited consolidated financial statements.
MIDSOUTH BANCORP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) FOR THE SIX MONTHS ENDED JUNE 30, 2003 AND 2002 _________________________________________________________________________________ June 30, 2003 June 30,2002 _______________ _______________ CASH FLOWS FROM OPERATING ACTIVITIES: Net income $2,933,693 $1,905,376 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 751,667 629,246 Provision for loan losses 300,000 694,000 Provision for deferred taxes (82,359) (16,418) Amortization of premiums on securities, net 543,817 213,304 Gain on sale of securities, net (87,632) - (Gain)/loss on sale of premises and equipment (14,834) 40,175 (Gain)/loss on sale of other assets repossessed/OREO (6,152) 25,571 Change in accrued interest receivable (207,904) (196,709) Change in accrued interest payable (93,093) (104,868) Other, net 231,365 3,845 _____________ ____________ NET CASH PROVIDED BY OPERATING ACTIVITIES 4,268,568 3,193,522 _____________ ____________ CASH FLOWS FROM INVESTING ACTIVITIES: Net increase in interest-bearing deposits in banks (76,742) (63,500) Proceeds from sales of securities available-for-sale 5,427,085 - Proceeds from maturities and calls of securities available-for-sale 20,618,435 18,542,669 Purchases of securities available-for-sale (35,208,449) (24,505,784) Loan originations, net of repayments (15,034,283) (10,762,635) Purchases of premises and equipment (543,881) (1,151,359) Proceeds from sales of premises and equipment 39,610 800 Proceeds from sales of other real estate owned 43,800 225,013 Net cash received in connection with acquisition - 6,043,721 _____________ ____________ NET CASH USED IN INVESTING ACTIVITIES (24,734,425) (11,671,075) _____________ ____________ CASH FLOWS FROM FINANCING ACTIVITIES: Net increase (decrease) in deposits 14,724,768 (952,240) Net increase in securities sold under repurchase agreements and federal funds purchased 2,087,484 3,034,934 Repayments of notes payable (147,030) (553,000) Purchase of treasury stock (91,257) - Payment of dividends (435,046) (290,114) _____________ ____________ NET CASH PROVIDED BY FINANCING ACTIVITIES 16,138,919 1,239,580 _____________ ____________ NET DECREASE IN CASH & CASH EQUIVALENTS (4,326,938) (7,237,973) CASH & CASH EQUIVALENTS AT BEGINNING OF PERIOD 27,466,035 35,847,278 _____________ ____________ CASH & CASH EQUIVALENTS AT END OF PERIOD $23,139,097 $28,609,305 ============= ============ See notes to unaudited consolidated financial statements.
MIDSOUTH BANCORP, INC. AND SUBSIDIARIES NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS 1. STATEMENT BY MANAGEMENT CONCERNING THE REVIEW OF UNAUDITED FINANCIAL INFORMATION The accompanying unaudited consolidated financial statements and notes thereto contain all adjustments, consisting only of normal recurring adjustments, necessary to present fairly, in accordance with accounting principles generally accepted in the United States of America, the financial position of MidSouth Bancorp, Inc. ("MidSouth") and its subsidiaries as of June 30, 2003 and the results of their operations and their cash flows for the periods presented. These consolidated financial statements should be read in conjunction with the annual consolidated financial statements and the notes thereto included in MidSouth's 2002 annual report and Form 10KSB. The results of operations for the six month period ended June 30, 2003 are not necessarily indicative of the results to be expected for the entire year. 2. ALLOWANCE FOR LOAN AND LOSSES
An analysis of the activity in the allowance for loan losses is as follows: Six Months Ended June 30, 2003 2002 __________ __________ Balance at beginning of period $2,891,380 $2,705,058 Provision for loan losses 300,000 694,000 Recoveries 108,516 61,488 Loans charged off (348,444) (604,702) __________ __________ Balance at end of period $2,951,452 $2,855,844 ========== ==========
3. COMPREHENSIVE INCOME Comprehensive income includes net income and other comprehensive income (losses) which, in the case of MidSouth, only includes unrealized gains and losses on securities available-for-sale. Following is a summary of MidSouth's comprehensive income for the six months ended June 30, 2003 and 2002.
Six Months Ended June 30, 2003 2002 __________ __________ Net income $2,933,693 $1,905,376 Other comprehensive income Unrealized gains (losses) on securities available-for-sale, net: Unrealized holding gains arising during the period 268,531 589,538 Less reclassification adjustment for (gains) losses included in net income 57,837 - __________ __________ Total other comprehensive loss 210,694 589,538 __________ __________ Total comprehensive income $3,144,387 $2,494,914 ========== ==========
4. STOCK DIVIDEND On May 27, 2003, MidSouth declared a 10% stock dividend to stockholders of record on July 31, 2003. All earnings per share information has been adjusted to give retroactive effect to this stock dividend.
MIDSOUTH BANCORP, INC. AND SUBSIDIARIES NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS 5. STOCK BASED COMPENSATION MidSouth applies the Accounting Practices Board (APB) Opinion No. 25 and related interpretations in accounting for its stock options. Accordingly, no compensation cost has been recognized. MidSouth has adopted the disclosure-only option under SFAS No. 123. Had compensation costs for MidSouth's stock options been determined based on the fair value at the grant date, consistent with the method under SFAS No. 123, MidSouth's net income and earnings per share would have been as indicated below: Three Months Ended Six Months Ended June 30, June 30, 2003 2002 2003 2002 ___________ ___________ ____________ ___________ Net earnings available to common stockholders (in thousands): As reported $1,624,141 $1,087,245 $2,933,693 $1,905,376 Deduct total stock based compensation determined under fair value method (12,000) (5,000) (30,000) (12,000) ____________ ____________ ____________ ____________ Pro forma $1,612,141 $1,082,245 $2,903,693 $1,893,376 Basic earnings per share: ============ ============ ============ ============ As reported $0.51 $0.34 $0.92 $0.60 Pro forma $0.51 $0.34 $0.91 $0.60 Diluted earnings per share: As reported $0.49 $0.34 $0.89 $0.59 Pro forma $0.49 $0.33 $0.88 $0.58
MIDSOUTH BANCORP, INC. AND SUBSIDIARIES FINANCIAL HIGHLIGHTS (UNAUDITED) Three Months Ended Six Months Ended June 30 June 30, EARNINGS DATA 2003 2002 2003 2002 ________________________________________________________ Total interest income $5,912,446 $6,071,740 $11,765,358 $11,881,675 Total interest expense 1,168,864 1,697,011 2,434,573 3,502,459 Net interest income 4,743,582 4,374,729 9,330,785 8,379,216 Provision for loan losses 100,000 336,000 300,000 694,000 Non-interest income 2,029,150 1,659,230 3,742,249 3,161,839 Non-interest expense 4,438,454 4,197,565 8,750,328 8,275,565 Provision for income tax 610,137 413,149 1,089,013 666,114 Net income 1,624,141 1,087,245 2,933,693 1,905,376 =========================================================================================== PER COMMON SHARE DATA Basic earnings per share $0.51 $0.34 $0.92 $0.60 Diluted earnings per share $0.49 $0.34 $0.89 $0.59 Book value at end of period $9.37 $7.79 $9.37 $7.79 Market price at end of period $20.77 $11.91 $20.77 $11.91 Weighted average shares outstanding Basic 3,179,256 3,173,256 3,179,256 3,173,256 Diluted 3,299,111 3,243,368 3,289,580 3,236,933 =========================================================================================== AVERAGE BALANCE SHEET DATA Total assets $393,459,700 $359,946,669 $386,060,930 $357,858,495 Earning assets 361,268,638 331,132,111 353,820,041 328,546,563 Loans and leases 238,763,121 220,395,576 234,958,882 216,785,462 Interest-bearing deposits 260,760,122 238,709,360 255,540,791 240,344,275 Total deposits 350,160,732 321,177,565 343,817,993 321,479,097 Total stockholders' equity 29,402,581 23,667,410 28,873,225 23,491,293 =========================================================================================== SELECTED RATIOS Return on average assets (annualize) 1.66% 1.21% 1.53% 1.07% Return on average total equity (annualize) 22.16% 18.43% 20.49% 16.36% Leverage capital ratio 8.82% 8.33% 8.82% 8.33% Tier 1 risk-based capital ratio 12.75% 11.96% 12.75% 11.96% Total risk-based capital ratio 13.84% 13.11% 13.84% 13.11% Allowance for loan losses as a % of total loans 1.22% 1.24% 1.22% 1.24% ============================================================================================ PERIOD ENDING BALANCE SHEET DATA 6/30/03 6/30/02 Net Change % Change Total assets $402,240,446 $379,991,713 $22,248,733 5.86% Earning assets 366,505,046 348,349,503 $18,155,543 5.21% Loans and leases, net 238,875,718 227,212,579 $11,663,139 5.13% Interest-bearing deposits 266,597,842 263,550,361 $3,047,481 1.16% Total deposits 358,199,614 341,799,739 $16,399,875 4.80% Total stockholders' equity 29,899,621 24,852,271 $5,047,350 20.31% ============================================================================================ On May 27, 2003, MidSouth announced a 10% stock dividend on its common stock to holders of record on July 31, 2003. Per common share data has been adjusted accordingly.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION This review should be read in conjunction with MidSouth Bancorp Inc.'s ("MidSouth") consolidated financial statements and accompanying notes contained herein, as well as with MidSouth's 2002 annual consolidated financial statements, the notes thereto and the related Management's Discussion and Analysis. MidSouth Bancorp, Inc. announced net income of $1,624,141 for the second quarter of 2003, a 24% improvement over first quarter 2003 earnings of $1,309,552 and a 49% increase over net income of $1,087,245 reported for the second quarter of 2002. Basic earnings per share were $.51 for the quarter ended June 30, 2003, up significantly from the $.41 reported for the first quarter of 2003 and $.34 for the quarter ended June 30, 2002. Diluted earnings per share were $.49 for the second quarter of 2003, $.40 for the first quarter of 2003 and $.34 for the second quarter of 2002. On May 27, 2003, MidSouth declared a 10% stock dividend on its common stock to holders of record on July 31, 2003. All earnings per share information has been adjusted to give retroactive effect to this stock dividend. Earnings for the six months ended June 30, 2003 were $2,933,693, a $1,028,317 or 54% increase over the $1,905,376 in earnings reported for the six months ended June 30, 2002. Basic earnings per share were $.92 for the first six months of 2003 versus $.60 for the first six months of 2002. Diluted earnings per share were $.89 and $.59, respectively. Earnings improved in quarterly and year-to-date comparison primarily due to an increase in net interest income, attributed primarily to a significant decline in interest expense combined with an increase in the volume of earning assets. An increase in non-interest income and a decrease in the provision for loan losses also contributed to the improvement in earnings. Net interest income increased $368,853 or 8% in quarterly comparison and $951,569 or 11% in year-to-date comparison. Non-interest income, excluding net gains on sales of securities recorded in 2003, increased $276,985 or 17% in quarterly comparison and $492,778 or 16% in year-to-date comparison. Non-interest income increased primarily due to increases in services charges on deposit accounts, fee income from third party mortgage loan originations, and income from Visa debit card and ATM processing fees. The provision for loan losses decreased $236,000 for the second quarter and $394,000 for the six months ended June 30, 2003 from the amounts in the comparable periods of 2002. The increases in net interest and non-interest income for the three and six months ended June 30, 2003 combined with the decrease in the provision for loan losses were partially offset by increases of $240,889 and $474,763, respectively, in non- interest expenses, primarily salaries and employee benefits, marketing and data processing expenses. Total consolidated assets increased $22.2 million or 6%, from $380.0 million at June 30, 2002 to $402.2 million at June 30, 1 2003. Deposits grew $16.4 million or 5%, from $341.8 million at June 30, 2002 to $358.2 million at June 30, 2003. Loans, net of Allowance for Loan Losses ("ALL"), increased $11.7 million or 5%, from $227.2 million in the second quarter of 2002 to $238.9 million in the second quarter of 2003. Provisions for loan and lease losses decreased to $300,000 at June 30, 2003 compared to $694,000 at June 30, 2002. Nonperforming loans as a percentage of total loans decreased from .36% in June of 2002 to .35% in June of 2003. The ALL represented 287% of nonperforming assets as of June 30, 2003 compared to 303% as of June 30, 2002. Loans past due ninety days and over also decreased in quarterly comparison, from $716,639 at June 30, 2002 to $477,153 at June 30, 2003. MidSouth's leverage ratio was 8.82% at June 30, 2003 compared to 8.33% at June 30, 2002. Return on average equity for the second quarter of 2003 was 22.16% compared to 18.43% for the second quarter of 2002. Earnings Analysis Net Interest Income Average earning assets increased 9%, or $30.1 million from $331.1 million for the three months ended June 30, 2002 to $361.2 million for the three months ended June 30, 2003. The mix of average earning assets shifted slightly, as loans represented 66% of average earning assets in the second quarter of 2003 compared to 67% in the second quarter of 2002. Average loans increased $18.4 million, from $220.4 million in the second quarter of 2002 to $238.8 million in the second quarter of 2003. The average yield on loans decreased 45 basis points in quarterly comparison, from 8.69% to 8.24% at June 30, 2003. Loan yields declined primarily due to a 50 basis point decrease in New York prime in November of 2002, combined with rate adjustments on other credits with scheduled repricing dates. Approximately 44% of MidSouth's loan portfolio earns a variable rate of interest, with 31% adjusting with changes in the prime rate and another 14% adjusting on a scheduled repricing date. Approximately 56% of the loan portfolio earns a fixed rate of interest, the majority of which matures within three years. The mix of variable and fixed rate loans provides some protection to changes in market rates of interest. However, the average yield on loans will continue to drop as fixed rate loans mature and reprice unless market rates begin to rise. The impact of the decline in yield over the twelve months ended June 30, 2003 was offset by the $18.4 million average volume increase in the loan portfolio, resulting in a $127,918 increase in interest income on loans in quarterly comparison. Average investments increased $8.9 million, from $106.3 million at June 30, 2002 to $115.2 million at June 30, 2003. The average taxable-equivalent yield on investments decreased 137 basis points, from 5.52% in the second quarter of 2002 to 4.15% in the second quarter of 2003, primarily due to the low 2 rate environment and high prepayment speeds on mortgage- backed securities. Additionally, federal funds sold volume increased $2.9 million and yields declined 46 basis points, from 1.56% to 1.10%. Decreased yields offset the volume increase in investments and resulted in a decrease in taxable-equivalent interest income on securities and federal funds sold of $267,665 in quarterly comparison A 99 basis point decrease in the average rate paid on interest- bearing deposits, partially offset by an average volume increase of $22.0 million, contributed to a $528,147 decrease in interest expense for the quarter ended June 30, 2003 compared to the quarter ended June 30, 2002. The average rate paid on interest-bearing deposits decreased from 2.47% at June 30, 2002 to 1.48% at June 30, 2003. The percentage of average noninterest-bearing deposits to average total deposits remained unchanged at 26% in quarterly comparison. The impact of these changes in the yields and volume of interest-bearing liabilities significantly contributed to the $368,853 quarterly increase in net interest income. The net taxable-equivalent yield on average earning assets decreased 3 basis points, from 5.52% for the quarter ended June 30, 2002 to 5.49% for the quarter ended June 30, 2003. A review of the changes in volume and yields of average earning assets and interest-bearing liabilities between the two six month periods ended June 30, 2002 and 2003 reflected results similar to the quarterly comparison. The net taxable-equivalent yield on average earning assets for the six months ended June 30, 2003 decreased 5 basis points, from 5.37% at June 30, 2002 to 5.32% at June 30, 2003. Non-interest Income MidSouth's primary source of non-interest income, service charges on deposit accounts, increased $177,324 or 15% for the three months ended and $309,564 or 14% for the six months ended June 30, 2003 as compared to the same period in 2002. The increase resulted primarily from an increase in insufficient funds ("NSF") fees due to an increase in the number of checking accounts from 18,431 at June 30, 2002 to 19,810 at June 30, 2003 and an increase in the number of accounts that had an NSF occurrence. The average number of NSF's per account per month remained relatively constant at an average of 2.38 per month in 2002 and an average of 2.35 per month in 2003. The NSF per item processing fee did not increase and is on the lower end of fees charged by competitors in MidSouth's markets. Other non-interest income increased $142,131 in quarterly comparison and 228,047 in year-to-date comparison, primarily due to increased third-party mortgage processing fees and VISA debit card and ATM processing fees. Third-party mortgage processing fees increased primarily due to continued refinancing activity. The improvement in ATM processing fees resulted from the elimination of a third party processor and establishing a direct connection to a regional switch. Bringing the processing in-house enabled MidSouth to reduce the processing cost per transaction and to retain a larger share of the interchange revenue. Beginning August 1, 2003, income from VISA debit card and ATM processing will be affected by a reduction in interchange revenue due to a lawsuit settlement 3 between VISA and Walmart. However, the cost savings of processing in-house is expected to exceed the reduction in interchange revenue in the current year. Net gains on sales of securities totaled $92,935 for the quarter ended June 30, 2003. The gains resulted from the sale of a $3 million agency bond and $1 million corporate bond that were scheduled to mature in 2004. Non-interest Expense Non-interest expense increased $240,889 and $474,763 for the three months and six months ended June 30, 2003 compared to the three and six months ended June 30, 2002, respectively. Increases were recorded primarily in the categories of salaries and employee benefits, occupancy and marketing expenses. Salaries increased $138,291 in quarterly comparison and $280,554 in year-to-date comparison primarily due to an increase in the number of full-time equivalent ("FTE") employees by 8, from 208 in June 2002 to 219 in June 2003. Additions to staff included a senior level credit administrator and an information services analyst. In addition, group health insurance and other benefits costs increased $6,444 in quarterly comparison and $49,528 in year-to date comparison. Occupancy expenses increased $42,272 in quarterly comparison and $102,277 in year-to-date comparison primarily due to increases in depreciation of data processing hardware and software and ad valorem taxes. Additional increases in land lease and fixed asset depreciation expenses were offset by decreases in maintenance costs associated with fixed assets and data processing hardware. Marketing expenses increased $42,168 and $96,421 for the three and six months ended June 30, 2003 compared to the three and six months ended June 30, 2002, respectively. The increase resulted primarily from sponsorships for trade shows and a radio advertising campaign. Balance Sheet Analysis MidSouth ended the second quarter of 2003 with consolidated assets of $402.2 million, an increase of $19.5 million from the $382.7 million reported for December 31, 2002. Deposits increased $14.7 million, from $343.5 million at December 31, 2002 to $358.2 million at June 30, 2003. The increase in deposits resulted primarily from increases in commercial deposit account balances. In the first week of July 2003, MidSouth received approximately $30 million in interest-bearing deposits through a two-year public funds contract. Net loans increased $14.7 million from $224.2 million at December 31, 2002 to $238.9 at June 30, 2003. The majority of the $14.7 million growth in net loans resulted from commercial real estate loans and participations. Securities available-for-sale increased $9.0 million in the six months ended June 30, 2003, as purchases of $35.2 million in securities available-for-sale were partially offset by maturities and calls 4 totaling $20.6 million and sales of $5.4 million. Continued refinancing activity in mortgages resulted in increased paydowns on mortgage-backed securities. Unrealized gains in the securities available-for-sale portfolio, net of unrealized losses and tax effect, were $1,402,194 at June 30, 2003, compared to a net unrealized gain of $1,191,500 at December 31, 2002. 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. Capital MidSouth's leverage ratio was 8.82% at June 30, 2003 compared to 8.45% at December 31, 2002. Tier 1 capital to risk-weighted assets was 12.75% and total capital to risk- weighted assets was 13.84% at the end of the second quarter of 2003. At year-end 2002, Tier 1 capital to risk-weighted assets was 12.57% and total capital to risk-weighted assets was 13.71%. During the first quarter of 2003, MidSouth repurchased 2,800 shares of its common stock at a total cost of $46,362. An additional 2,500 shares were repurchased during the second quarter of 2003 at a total cost of $44,895. On May 27, 2003, MidSouth declared a 10% stock dividend on its common stock to holders of record on July 31, 2003 and payable on August 29, 2003. All earnings per share information has been adjusted to give retroactive effect to this stock dividend. 5 Nonperforming Assets and Past Due Loans Table 1 summarizes MidSouth's nonaccrual, past due and restructured loans and nonperforming assets.
TABLE 1 Nonperforming Assets and Loans Past Due 90 Days =============================================================== June December June 30, 31, 30, 2003 2002 2002 Nonperforming loans $852,175 $710,546 $832,209 Other real estate owned, net 174,800 174,800 108,752 Other assets repossessed - 45,062 - ________________________________ Total nonperforming assets $1,026,975 $930,408 $940,961 Loans past due 90 days or more and still accruing $477,153 $818,727 $716,639 ================================ Nonperforming loans as a % of total loans 0.35% 0.31% 0.36% Nonperforming assets as a % of total loans, other real estate owned and other assets repossessed 0.42% 0.41% 0.41% Allowance for loan losses as a % of nonperforming assets 287.39% 310.76% 303.50% _________________________________
6 Nonperforming assets were $1,026,975 as of June 30, 2003, an increase of $96,567 from the $930,408 reported for December 31, 2002 and an increase of $86,014 from the $940,961 reported for June 30, 2002. Loans past due 90 days or more increased from $716,639 in June 2002 to $818,727 in December 2002 and decreased to $477,153 as of June 30, 2003. Specific reserves have been established in the ALL to cover probable losses on nonperforming assets. The ALL is analyzed quarterly and additional reserves, if needed, are allocated at that time. Management believes the $2,951,452 in the allowance as of June 30, 2003 is sufficient to cover probable losses in nonperforming assets and in the loan portfolio. Loans classified for regulatory purposes but not included in Table 1 do not represent material credits about which management has serious doubts as to the ability of the borrower to comply with loan repayment terms. 7 Page 14 Part I. Item 3. Controls and Procedures MidSouth's Chief Executive Officer and Chief Financial Officer have evaluated the effectiveness of the disclosure controls and procedures (as such term is defined in Rules 13a-14(c) and 15d-14(c) under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"). Based on such evaluation, such officers have concluded that, as of the Evaluation Date, MidSouth's disclosure controls and procedures are effective in alerting them on a timely basis to material information relating to MidSouth (including its consolidated subsidiaries) required to be included in MidSouth's periodic filings under the Exchange Act. Since the Evaluation Date, there have not been any significant changes in MidSouth's internal controls or in other factors that could significantly affect such controls. Part II. Item 4. Submission of Matters to a Vote of Security Holders At the annual meeting of shareholders of MidSouth Bancorp, Inc. held May 27, 2003 at 4:00 p.m., the Class I Directors were elected. The following provides information as to the votes: Election of Class I Directors For Withheld C. R. Cloutier 2,207,007 6,860 J. B. Hargroder, M.D. 2,207,007 6,860 William M. Simmons 2,206,707 7,160 Part II. Item 6. Exhibits and Reports on Form 8-K Page15 (a) Exhibits Exihibit Number Document Description 3.1 Amended and Restated Articles of Incorporation of MidSouth Bancorp, Inc. is included as Exhibit 3.1 to the MidSouth's Report on Form 10-K for the year ended December 31, 1993, and is incorporated herein byreference. 3.2 Articles of Amendment to Amended and Restated Articles of Incorporation dated July 19, 1995 are included as Exhibit 4.2 to MidSouth's Registration Statement on Form S-8 filed September 20, 1995 and is incorporated herein by reference. 3.3 Amended and Restated By-laws adopted by the Board of Directors on April 12, 1995 are included as Exhibit 3.2 to Amendment No. 1 to MidSouth's Registration Statement on Form S-4/A (Reg. No. 33-58499) filed on June 1, 1995. 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 MidSouth's annual report on Form 10-K for the Year Ended December 31, 1992, and is incorporated herein by reference. 10.2 First Amendment to Lease between MBL Life Assurance Corporation, successor in interest to Southwest Bank Building Limited Partnership in Commendam, and MidSouth National Bank is included as Exhibit 10.1 to Report on the MidSouth's annual report on Form 10-KSB for the year ended December 31, 1994, and is incorporated herein by reference. 10.2.1 Seventh Amendment to Lease between S & A Properties II, Inc., successor in interest to Southwest Bank Building Limited Partnership in Commendam, and MidSouth Bank, N.A. effective July 1, 2002 is included as Exhibit 10.2.1 to MidSouth's Annual Report on Form 10-KSB for the year ended December 31, 2002 and is incorporated herein by reference. Page 16 10.3 Amended and Restated Deferred Compensation Plan and Trust is included as Exhibit 10.3 to the MidSouth's annual report on Form 10-K for the year ended December 31, 1992 and is incorporated herein by reference. 10.3.1 Amended and Restated Deferred Compensation Plan and Trust effective October 9, 2002 is included as Exhibit 10.3.1 to MidSouth's Annual Report on Form 10-KSB for the year ended December 31, 2002 and is incorporated herein by reference. 10.5 Employment Agreements with C. R. Cloutier and Karen L. Hail are included as Exhibit 5(c) to MidSouth's Form 1-A and are incorporated herein by reference. 10.6 MidSouth Bancorp, Inc.'s 1997 Stock Incentive Plan is included as Exhibit 4.5 to MidSouth's definitive Proxy Statement filed April 11, 1997, and is incorporated herein by reference. 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. 11 Computation of earnings per share 99.1 Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 99.2 Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (b) Reports Filed on Form 8-K A press release regarding MidSouth's earnings for the quarter ended June 30, 2003 was attached as Exhibit 99.1 to the Form 8-K filed on July 25, 2003. Signatures In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. MidSouth Bancorp, Inc. (Registrant) Date: August 14, 2003 ________________ /s/ C. R. Cloutier _____________________ C. R. Cloutier, President & CEO /s/ Karen L. Hail _____________________ Karen L. Hail, Executive Vice President & CFO /s/ Teri S. Stelly _____________________ Teri S. Stelly, Senior Vice President & Controller CERTIFICATION I, C. R. Cloutier, President and CEO, certify that: 1. I have reviewed this quarterly report on Form 10- QSB of MidSouth Bancorp, Inc.; 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have: a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions): a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: August 14, 2003 /s/ C. R. Cloutier ___________________ Chief Executive Officer CERTIFICATION I, Karen L. Hail, Senior Executive Vice President & CFO, certify that: 1. I have reviewed this quarterly report on Form 10- QSB of MidSouth Bancorp, Inc.; 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have: a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions): a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: August 14, 2003 /s/ Karen L. Hail __________________ Chief Financial Officer EX-11 3 ex11.txt MIDSOUTH BANCORP, INC. EXHIBIT 11
MIDSOUTH BANCORP, INC. AND SUBSIDIARIES EXHIBIT 11 COMPUTATION OF EARNINGS PER SHARE (Unaudited) FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2002 AND 2001 Third Quarter Third Quarter Year-to-Date Year-to-Date September 30, September 30, September 30, September 30, BASIC 2002 2001 2002 2001 _____________ _____________ _____________ _____________ Earnings: Income applicable to common stock $1,241,673 $783,127 $3,147,049 $1,995,390 ============ ============ ============ ============ Shares: Weighted average number of common shares outstanding 2,883,142 2,734,556 2,883,142 2,539,255 ============ ============ ============ ============ Earnings per common share: Income applicable to common stock $0.43 $0.29 $1.09 $0.79 ============ ============ ============ ============ DILUTED Earnings: Net income $1,241,673 $783,127 $3,147,049 $2,048,141 ============ ============ ============ ============ Weighted average number of common shares outstanding 2,883,142 2,734,556 2,883,142 2,539,255 Assuming exercise of options, reduced by the number of shares which could have been purchased with the proceeds from exercise of such options at the average issue price 63,911 52,586 61,196 48,033 Assuming conversion of preferred stock at a conversion rate of 1 to 2 - 159,943 - 275,771 ____________ ____________ ____________ ____________ Weighted average number of common shares outstanding, as adjusted 2,947,053 2,947,085 2,944,338 2,863,059 ============ ============ ============ ============ Fully diluted earnings per common share $0.42 $0.27 $1.07 $0.72 ============ ============ ============ ============
EX-99 4 ex991.txt MIDSOUTH BANCORP, INC. EXHIBIT 99 Exhibit 99.1 CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Quarterly Report of MidSouth Bancorp, Inc. (the "Company") on Form 10-QSB for the period ending September 30, 2002 (the "Report"), I, C.R. Cloutier, Chief Executive Officer of the Company, certify that: (1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company. ________________________ C.R. Cloutier Chief Executive Officer November 14, 2002 EX-99 5 ex992.txt MIDSOUTH BANCORP, INC. EXHIBIT 99 Exhibit 99.2 CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Quarterly Report of MidSouth Bancorp, Inc. (the "Company") on Form 10-QSB for the period ending September 30, 2002 (the "Report"), I, Karen L. Hail, Chief Financial Officer of the Company, certify that: (1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company. ________________________ Karen L. Hail Chief Financial Officer November 14, 2002 -----END PRIVACY-ENHANCED MESSAGE-----