-----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, QHDM4Zfn6VVciqe/DpMRgm+gc345+nfRd5I8TOm1Jm9CxRNOE3bDZaxZicu3Ubjg bVaxv8aUlalKFZ2Sl0iGBw== 0000948688-96-000022.txt : 19961118 0000948688-96-000022.hdr.sgml : 19961118 ACCESSION NUMBER: 0000948688-96-000022 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19960930 FILED AS OF DATE: 19961114 SROS: AMEX 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: 96662971 BUSINESS ADDRESS: STREET 1: 102 VERSAILLES BLVD CITY: LAFAYETTE STATE: LA ZIP: 70501 BUSINESS PHONE: 3182378343 MAIL ADDRESS: STREET 1: 102 VERSAILLES BLVD CITY: LAFAYETTE STATE: LA ZIP: 70501 10QSB 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10QSB __X___QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended..........September 30, 1996 _____TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ..... to ..... COMMISSION FILE NUMBER 2-91-000FW MIDSOUTH BANCORP, INC. Louisiana 72 -1020809 102 Versailles Boulevard, Lafayette, Louisiana 70501 (318) 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 September 30, 1996 Common stock, $.10 par value 1,336,033 Preferred stock, no par value, $14.25 stated value 179,756 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 - September 30, 1996 and 3 December 31, 1995 Statements of Income - Three and Nine Months Ended September 30, 1996 and 1995 4 Statement of Stockholders' Equity - Nine Months Ended September 30, 1996 5 Statements of Cash Flows - Nine Months Ended September 30, 1996 and 1995 6 Notes to Consolidated Financial Statements 7 Item 2. Management's Discussion and Analysis or Plan of Operation 8 PART II - OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K 15 Signatures 16
MIDSOUTH BANCORP, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF CONDITION (UNAUDITED) _______________________________________________________________________________________________ September 30, December 31, ASSETS 1996 1995 ___________ ____________ Cash and due from banks $9,275,527 $10,298,209 Federal funds sold 7,400,000 15,800,000 ___________ ____________ Total cash and cash equivalents 16,675,527 26,098,209 Interest bearing deposits in banks 203,515 26,349 Securities available-for-sale, at fair value (cost of $50,356,903 in September 1996 and $35,868,018 in December 1995) 49,698,403 36,058,587 Securities held-to-maturity (estimated market value of $9,629,243 in September 1996 and $4,735,344 in December 1995) 9,568,694 4,545,849 Loans, net of allowance for loan and lease losses of $1,051,846 in September 1996 and $1,051,898 in December 1995 87,112,593 77,826,707 Bank premises and equipment, net 5,194,822 4,532,610 Other real estate owned, net 180,270 180,270 Accrued interest receivable 1,487,104 1,107,820 Goodwill, net 285,179 311,352 Other assets 1,375,058 495,488 ___________ ____________ Total assets $171,781,165 $151,183,241 =========== ============ LIABILITIES AND STOCKHOLDERS' EQUITY Deposits: Non-interest bearing $40,017,008 $40,471,206 Interest bearing 119,113,869 98,558,357 ___________ ____________ Total deposits 159,130,877 139,029,563 Securities sold under repurchase agreements 103,329 175,904 Accrued interest payable 400,759 322,891 Notes payable 1,201,346 972,617 Other liabilities 218,630 268,702 ___________ ____________ Total liabilities 161,054,941 140,769,677 ___________ ____________ Commitments and contingencies - - Stockholders' Equity: Preferred Stock, no par value, $14.25 stated value - 5,000,000 shares authorized, 179,756 and 187,286 issued and outstanding on September 30, 1996 and December 31, 1995, respectively 2,561,523 2,668,826 Common stock, $.10 par value- 5,000,000 shares authorized, 1,336,033 and 1,299,338 issued and outstanding on September 30, 1996 and December 31, 1995, respectively 133,604 96,794 Surplus 6,508,774 6,164,443 Unearned ESOP shares (36,768) (54,157) Unrealized gains/losses on securities available- for-sale, net of deferred taxes of $197,200 in September 1996 and $91,619 in December, 1995 (461,300) 98,950 Retained earnings 2,020,391 1,438,708 ___________ ____________ Total stockholders' equity 10,726,224 10,413,564 ___________ ____________ Total liabilities and stockholders' equity $171,781,165 $151,183,241 =========== ============ 3
MIDSOUTH BANCORP, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) _______________________________________________________________________________________________ Three Months Ended Nine Months Ended September 30, September 30, 1996 1995 1996 1995 __________________________ __________________________ INTEREST INCOME: Loans, including fees $2,266,637 $1,933,798 $6,433,531 $5,183,211 Securities 821,922 535,550 2,280,331 1,428,683 Federal funds sold 145,912 166,221 492,255 266,620 _________ _________ _________ _________ TOTAL 3,234,471 2,635,569 9,206,117 6,878,514 _________ _________ _________ _________ INTEREST EXPENSE: Deposits 1,165,419 876,133 3,263,448 2,124,550 Notes payable 19,963 31,891 59,467 89,280 _________ _________ _________ _________ TOTAL 1,185,382 908,024 3,322,915 2,213,830 _________ _________ _________ _________ NET INTEREST INCOME 2,049,089 1,727,545 5,883,202 4,664,684 PROVISION FOR LOAN LOSSES 224,804 60,000 534,804 150,000 _________ _________ _________ _________ NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 1,824,285 1,667,545 5,348,398 4,514,684 _________ _________ _________ _________ NON-INTEREST INCOME: Service charges on deposit accounts 384,530 313,400 1,071,900 837,461 Gains on sales of securities, net 1,175 - 1,175 - Other charges and fees 177,679 99,938 495,149 322,640 _________ _________ _________ _________ TOTAL NON-INTEREST INCOME 563,384 413,338 1,568,224 1,160,101 _________ _________ _________ _________ NON-INTEREST EXPENSE: Salaries and employee benefits 964,538 756,639 2,706,397 1,987,769 Occupancy expense 318,330 246,755 965,760 710,019 Professional fees 94,511 83,802 234,113 196,291 FDIC assessments 500 (8,823) 2,000 95,056 Marketing expenses 106,362 92,492 265,800 214,828 General and bond insurance 56,098 62,456 121,685 116,793 Data processing expenses 103,043 51,242 276,301 99,856 Postage 41,295 36,506 111,464 93,506 Director fees 24,967 21,682 73,972 69,789 Education and travel 34,959 33,030 112,449 81,405 Printing and supplies 60,962 40,315 168,858 114,258 Telephone 45,902 47,163 130,962 103,391 Expenses on other real estate owned, net 4,606 1,325 6,419 29,307 Other 183,308 136,372 500,013 382,314 _________ _________ _________ _________ TOTAL NON-INTEREST EXPENSE 2,039,381 1,600,956 5,676,193 4,294,582 _________ _________ _________ _________ NET INCOME BEFORE INCOME TAXES 348,288 479,927 1,240,429 1,380,203 PROVISION FOR INCOME TAXES 95,280 153,996 362,761 456,839 _________ _________ _________ _________ NET INCOME $253,008 $325,931 $877,668 $923,364 _________ _________ _________ _________ PREFERRED DIVIDEND REQUIREMENT $39,133 - $117,986 - _________ _________ _________ _________ INCOME AVAILABLE TO COMMON SHAREHOLDERS $213,875 $325,931 $759,682 $923,364 ========= ========= ========= ========= EARNINGS PER COMMON SHARE: PRIMARY $0.16 $0.25 $0.57 $0.71 ========= ========= ========= ========= FULLY DILUTED $0.15 $0.21 $0.53 $0.67 ========= ========= ========= ========= 4
MIDSOUTH BANCORP, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 (UNAUDITED) ____________________________________________________________________________________________________________________________________ UNREALIZED (GAINS) LOSSES RETAINED ON SECURITIES PREFERRED STOCK COMMON STOCK ESOP AVAILABLE RETAINED SHARES AMOUNT SHARES AMOUNT SURPLUS OBLIGATION FOR SALE EARNINGS TOTAL ___________________ ________________ _________ __________ _________ _________ __________ BALANCE, DECEMBER 31, 1995 187,286 $2,668,826 967,940 $96,794 $6,164,443 ($54,157) $98,950 $1,438,708 $10,413,564 Issuance of common stock 2,639 264 40,224 40,488 Dividends paid on common stock (58,074) (58,074) Dividends accrued on preferred stock (39,720) (39,720) Stock options exercised 3,000 300 29,265 29,565 Preferred stock conversion (5,530) (78,803) 7,371 737 78,066 Net income 288,247 288,247 ESOP obligation repayments 5,642 5,642 Net change in unrealized gain/loss on securities available-for-sale, net of tax (264,150) (264,150) _______ _________ ________ _______ __________ _______ ________ _________ __________ BALANCE, MARCH 31, 1996 181,756 $2,590,023 980,950 $98,095 $6,311,998 ($48,515)($165,200) $1,629,161 $10,415,562 _______ _________ ________ _______ __________ _______ ________ _________ __________ Issuance of common stock 2,574 258 38,233 38,491 Dividends paid on common stock (58,857) (58,857) Dividends accrued on preferred stock (39,133) (39,133) Stock options exercised 7,000 700 67,392 68,092 Preferred stock conversion (2,000) (28,500) 2,666 267 28,233 Net income 336,413 336,413 ESOP obligation repayments 5,806 5,806 Net change in unrealized gain/loss on securities available-for-sale, net of tax (379,600) (379,600) _______ _________ ________ _______ __________ _______ ________ _________ __________ BALANCE, JUNE 30, 1996 179,756 $2,561,523 993,190 $99,320 $6,445,856 ($42,709)($544,800) $1,867,584 $10,386,774 _______ _________ ________ _______ __________ _______ ________ _________ __________ Issuance of common stock 3,445 344 40,678 41,022 Dividends paid on common stock (59,548) (59,548) Dividends accrued on preferred stock (39,133) (39,133) Stock options exercised 8,000 800 55,380 56,180 Stock split and payment for fractional shares 331,398 33,140 (33,140) (1,520) (1,520) Net income 253,008 253,008 ESOP obligation repayments 5,941 5,941 Net change in unrealized gain/loss on securities available-for-sale, net of tax 83,500 83,500 _______ _________ ________ _______ __________ _______ ________ _________ __________ BALANCE, SEPTEMBER 30, 1996 179,756 $2,561,523 1,336,033 $133,604 $6,508,774 ($36,768)($461,300) $2,020,391 $10,726,224 ======= ========= ========= ======= ========= ====== ======= ========= ========== 5
MIDSOUTH BANCORP, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995 _____________________________________________________________________________________ September 30, 1996 1995 ________ ________ CASH FLOWS FROM OPERATING ACTIVITIES: Net Income $877,668 $923,364 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 470,497 258,767 Provision for loan losses 534,804 150,000 Provision for deferred taxes (157,422) - Premium amortization, net 127,065 91,927 Net (gain) loss on sale of fixed assets (22,129) - Net (gain) loss on sale of other real estate owned (163) 2,135 Write-down of other real estate owned - 12,400 Change in accrued interest receivable (379,284) (202,542) Change in accrued interest payable 77,868 103,815 Change in other liabilities 200,482 (307,022) Change in other assets (767,091) (285,720) __________ __________ NET CASH PROVIDED BY OPERATING ACTIVITIES 962,295 747,124 __________ __________ CASH FLOWS FROM INVESTING ACTIVITIES: Net decrease in interest-bearing deposits (177,166) (71,085) Proceeds from maturities and calls of securities available-for-sale 3,814,768 5,894,922 Proceeds from sales of securities available-for-sale 1,992,457 2,101,484 Purchases of securities held-to-maturity (5,026,109) (4,070,764) Purchases of securities available-for-sale (20,419,911) (6,281,324) Loan originations, net of repayments (9,841,416) (8,426,640) Purchases of premises and equipment (1,234,165) (1,351,670) Proceeds from sales of other real estate owned 3,500 21,545 Proceeds from sales of fixed assets 149,758 - Net cash received in connection with acquisition - 3,388,259 __________ __________ NET CASH USED IN INVESTING ACTIVITIES (30,738,284) (8,795,273) __________ __________ CASH FLOWS FROM FINANCING ACTIVITIES: Net increase in deposits 20,101,314 23,046,386 Net decrease in repurchase agreements (72,575) (226,692) Issuance of notes payable 354,293 1,000,000 Repayments of notes payable (125,564) (1,111,452) Proceeds from issuance of common stock 120,001 83,861 Payment of common stock dividends (176,479) (57,676) Payment of fractional shares resulting from stock dividend (1,520) (782) Proceeds from exercise of stock options 153,837 - __________ __________ NET CASH PROVIDED BY FINANCING ACTIVITIES 20,353,307 22,733,645 __________ __________ NET (DECREASE) INCREASE IN CASH & CASH EQUIVALENTS (9,422,682) 14,685,496 CASH & CASH EQUIVALENTS AT BEGINNING OF YEAR 26,098,209 8,641,989 __________ __________ CASH & CASH EQUIVALENTS AT END OF QUARTER $16,675,527 $23,327,485 ========== ==========
6 MIDSOUTH BANCORP, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. STATEMENT BY MANAGEMENT CONCERNING THE REVIEW OF UNAUDITED FINANCIAL INFORMATION The accompanying unaudited consolidated financial statements and notes thereto contain all adjustments, consisting only of normal recurring adjustments, necessary to present fairly the financial position of MidSouth Bancorp, Inc. ("MidSouth") and its subsidiary as of September 30, 1996 and the results of their operations and their cash flows for the periods presented. The consolidated financial statements should be read in conjunction with the annual consolidated financial statements and the notes thereto included in MidSouth's 1995 annual report and Form 10-KSB. The results of operations for the three and nine month periods ended September 30, 1996 are not necessarily indicative of the results to be expected for the entire year. 2. ALLOWANCE FOR LOAN AND LEASE LOSSES An analysis of the activity in the allowance for loan and lease losses is as follows: Nine Months Ended September 30, 1996 1995 _______ _______ Balance at beginning of year $1,052 $874 Provision for loan losses 535 150 Addition of Sugarland Bank reserve - 115 Recoveries 148 63 Loans charged off (683) (168) _______ _______ Balance at end of quarter $1,052 $1,034 ======= ======= 7 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 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 1995 consolidated financial statements, the notes thereto and the related Management's Discussion and Analysis. MidSouth reported net income for the third quarter of 1996 of $253,008, a $72,923 decrease in net income compared to the third quarter of 1995 of $325,931. Primary earnings per common share for the third quarter of 1996 were $.16 compared to $.25 for the third quarter of 1995. Fully diluted earnings per common share were $.15 and $.21 for the same periods, respectively. For the first nine months of 1996, net income totaled $877,668, a decrease of $45,696 compared to $923,364 in the first nine months of 1995. Primary earnings per common share were $.57 and $.71 for the nine month periods ending September 30, 1996 and 1995, respectively. Fully diluted earnings per common share were $.52 and $.67 for the same periods, respectively. Net income decreased in the third quarter and the nine months of 1996 primarily due to increased provisions to the Allowance for Loan and Lease Losses ("ALLL") and start-up costs associated with MidSouth's new finance company subsidiary, Financial Services of the South, Inc. ("FSS"). MidSouth increased the provision for loan and lease losses during the third quarter of 1996 by $164,804 more than the provision for the third quarter of 1995, primarily due to $134,000 in charge- offs of certain loans within a leasing program. Management is continuing negotiations with the lease program customers and expects partial recoveries of the $432,756 charged-off during the nine month period ending September 30, 1996. For the same period, recoveries of lease loan losses totaled $60,694. On August 1, 1996, FSS opened for business in Lafayette, Louisiana. Third quarter 1996 expenses attributed to FSS totaled $54,428. A second location in Jennings, Louisiana began operations on November 1, 1996. Management anticipates that FSS will have a positive impact on earnings within the second quarter of 1997. As of September 30, 1996, total loans increased $9.3 million to a total of $88.2 million, an increase of 12% from the $78.9 million reported at December 31, 1995. The ALLL totaled $1,051,846, or 1.19% of total loans. Nonperforming loans totaled $692,209 for the same period, representing .79% of total loans and an increase of $304,756 from year-end 1995. The increase in nonperforming loans results from the addition of one large commercial credit placed on nonaccrual in September 1996. At September 30, 1996, MidSouth's total consolidated assets were $171,781,165, an increase of 14% over the $151,183,241 reported at year-end 1995 and an 18% increase over the $145,780,65 6 reported at the end of the third quarter of 1995. MidSouth's annualized return on average common equity was 10.31% and annualized return on average assets was .50%. The leverage capital ratio was 6.53%. 8 On October 16, 1996, MidSouth announced plans to expand bank operations into Lake Charles, Louisiana with a loan production office targeted to open in November of 1996. Additionally, construction has begun on a full service branch of MidSouth National Bank in Morgan City, Louisiana. Earnings Analysis Net Interest Income Average earning assets increased $42.5 million from $104.8 million for the ninemonths ending September 30, 1995 to $147.3 million for the nine months ending September 30, 1996. An increase in interest income resulting from the increase in earning assets was partially offset by a 46 basis point decline in the average yield on earning assets in addition to a $34.2 million volume increase and 15 basis point rate increase associated with interest-bearing liabilities. Net interest income increased $1.2 million over the comparable 1995 period. Despite increased net interest income, the net interest margin decreased 64 basis points, from 5.96% for the nine months ended September 30, 1995 to 5.32% for the nine months ended September 30, 1996. The decrease in the net interest margin resulted primarily from a change in the mix of earning assets. For the first nine months of 1995, loans represented 63% of average earning assets. As of September 30, 1996, the percentage of loans to average earning assets fell to 57%. The volume of federal funds sold increased during the same period, with an average of $12.5 million earning a low average rate of 5.25%. The change in mix occurred as the increase in deposits during the past twelve months exceeded loan originations fundings and excess funds were used to purchase securities or federal funds sold. Although installment loan demand has remained constant for MidSouth, competition for quality commercial loans has resulted in slowed growth for the commercial and real estate loan portfolios. The influx of deposits resulted from the Sugarland acquisition, a public funds contract, deposit promotions and increased commercial deposits. An increase in the average rate paid on interest-bearing deposits and a change in the mix of deposits also contributed to the decline in the net interest margin. The deposit mix reflects a greater percentage of interest-bearing deposits for the nine months ending September 30, 1996 as compared to the same period of 1995, primarily due to a public funds contract and increased commercial deposits. Interest-bearing deposits averaged 73.5% of total deposits at September 30, 1996 as compared to 71.8% at September 30, 1995. The average rate paid on interest-bearing deposits increased 20 basis points, from 3.73% to 3.93% for the same period. 9 Non-interest Income MidSouth's primary source of non-interest income, service charges on deposit accounts, increased $71,130 for the quarter and $234,439 for the nine months ending September 30, 1996 as compared to the same periods in 1995. The increases result primarily from additional insufficient funds fees and fees earned on deposit accounts, including ATM fees. In past filings, ATM Fees have been reported as Other Non-Interest Income. For the current quarterly report and future filings, ATM Fees will be included in Service Charges on Deposit Accounts. Other non-interest income increased $77,741 and $172,509 in quarterly and year-to-date comparisons, respectively, primarily due to increases in income earned on the sale of credit life insurance, ATM transaction processing, check order processing and a third party brokerage service. Additionally, FSS contributed $15,455 to other non-interest income in the three and nine months ended September 30, 1996. Non-interest Expense Non-interest expense increased 27.39% for the three months and 32.17% for the nine months ended September 30, 1996 as compared to the same periods ended September 30, 1995. The increase resulted primarily from start up and operational costs associated with five new branch facilities, two of which were former Sugarland banking offices, and a loan processing office which produced significant increases in salaries and employee benefits, occupancy expenses, data processing expenses, printing and supplies, and marketing expenses. Additionally, start-up costs associated with FSS totaled $54,428. Salaries and employee benefits increased due the addition of 16 full-time equivalent ("FTE") employees from 106 in September 1995 to 122 in September 1996. Of the 106 FTE employees reported for September 30, 1995, 26 joined MidSouth on August 1, 1995 with the acquisition of Sugarland State Bank. Additional employees hired during 1995 included six to staff the Opelousas branch and seven for the Super 1 - New Iberia branch. In May 1996, seven employees were added to staff the Super 1 - Lafayette branch. Salaries and benefits associated with three full-time FSS employees totaled $32,523 for quarter and year-to-date periods ending September 30, 1996. Occupancy expense increased in the three and nine month periods ending September 30, 1996 as compared to the same periods of 1995 due to increases in building lease expense, depreciation and maintenance expenses associated with furniture and equipment, utilities, insurance and ad valorem taxes. Building lease expense increased due to the addition of leased branch facilities in Opelousas, New Iberia, Morgan City and Lafayette. Depreciation and maintenance expenses, in addition to utilities, insurance and ad valorem taxes, increased due to these four leased branch facilities and the two former Sugarland locations. 10 Marketing and promotional expenses increased in quarterly and year-to-date comparisons due to expenses related to quality service programs and special loan and deposit promotions. Data processing expense increased significantly due to a systems upgrade in July of 1995, conversion of the Sugarland branches in December 1995 and the addition of three branch locations during the past twelve months. In September of 1995, the FDIC revised its assessment fee schedule and refunded $68,703 in assessment fees to MidSouth. Subsequently, MidSouth's quarterly assessment fees, based on the FDIC classification, have been minimal and resulted in significant savings of $93,056 for the nine months ended September 30, 1996. Other non-interest expenses increased for the three and nine month periods ending September 30, 1996 primarily due to increases in bank auto expenses, ATM processing expense, service charges on correspondent bank accounts, armored car expense, and expenses associated with new product lines. New products introduced during the past twelve months included Visa debit and credit card services and direct leasing. Balance Sheet Analysis MidSouth ended the third quarter of 1996 with consolidated assets of $171,781,165, an increase of 13.6% over the $151,183,241 reported for December 31, 1995. Total deposits increased $20.1 million to $159.1 million as compared to $139.0 million at December 31, 1995. Approximately $7.2 million in additional public fund deposits contributed to the increase. Favorable economic conditions and increased business activity resulted in an increase of $2.8 million in commerical transaction and money market accounts and $5.1 million in commercial time deposits during the first nine months of 1996. A certificate of deposit promotion in the Jennings, Louisiana market contributed to the $1.7 million increase in individual time deposits for the same period. Total loans increased $9.3 million during the nine months ended September 30, 1996. The installment loan promotion held during the months of March and April 1996 contributed $5.2 million to the increase in loans. Agricultural loan activity in the third quarter of 1996 resulted in the addition of $1.4 million to total loans. Intense competition in MidSouth's market held growth in the commercial and real estate portfolios to an increase of $2.7 million. Securities available-for-sale increased $13.6 million, from $36.1 million at December 31, 1995 to $49.7 million at September 30, 1996. The increase reflects purchases of $ 20.4 million in U. S. Treasury and mortgage-backed securities partially offset by sales of $2.0 million and a net decrease of $849,069 in the market value of the securities available-for-sale. Additionally, $3.8 million in maturities and principal paydowns were received on securities available-for-sale during the first nine months of 1996. Unrealized losses in the securities available-for-sale portfolio, net of unrealized gains and tax effect, were $461,300 at September 30, 1996, compared to a net unrealized gain of $98,950 at December 31, 1995. These amounts result from interest 11 rate fluctuations and do not represent permanent impairment of value. Moreover, classification of securities as available-for- sale does not necessarily indicate that the securities will be sold prior to maturity. Tax-free municipal securities totaling $5.0 million were purchased for the held-to-maturity portfolio during the nine month period ending September 30, 1996. During the first quarter of 1996, MidSouth's Board of Directors approved the purchase of defined contribution retirement plans for two executive officers and one senior officer. The single premium paid of $575,000 constitutes an earning asset for MidSouth and is included in the "Other Assets" category on the balance sheet. In July 1996, the Bank received approval from the Office of the Comptroller of the Currency to acquire property in Morgan City, Louisiana with plans to open a full service facility in 1996. Construction began on the facility in October 1996. The Bank currently operates a loan production office in a leased facility in Morgan City. In October 1996, the Bank announced plans to open a loan production office in Lake Charles, Louisiana in early November 1996. Capital Ratios As of September 30, 1996, MidSouth's leverage ratio was 6.53% as compared to 6.99% at December 31, 1995. Tier 1 capital to risk- weighted assets was 11.85% and total capital to risk-weighted assets was 12.96% at the end of the third quarter of 1996. At year-end 1995, Tier 1 capital to risk-weighted assets was 12.11% and total capital to risk-weighted assets was 13.36%. On August 19, 1996, MidSouth effected a four for three stock split by way of a stock dividend on its common stock for holders of record as of July 31, 1996 payable. This follows a 5% stock dividend declared in February 1994 and a four for three stock split of September 1995. The annual dividend rate of $.24 per common share will continue to be paid quarterly, resulting in a 33% increase in the dividend payable. 12 Nonperforming Assets and Past Due Loans Table 1 summarizes MidSouth's nonaccrual, past due and restructured loans and nonperforming assets.
Nonperforming Assets and Loans Past Due 90 Days _____________________________________________________________________ September September December 30, 31, 30, 1996 1995 1995 _____________________________________________________________________ Nonperforming loans Nonaccrual loans $691,711 $386,510 $203,844 Restructured loans 498 943 4,518 ________ ________ _______ Total nonperforming loans 692,209 387,453 208,362 Other real estate owned, net 180,270 180,270 235,270 Other assets repossessed 3,596 3,118 - ________ _______ ________ Total nonperforming assets $876,075 $570,841 $443,632 ======== ======== ========= Loans past due 90 days or more and still accruing $318,604 $265,682 $279,112 Nonperforming loans as a % of total loans 0.79% 0.49% 0.27% Nonperforming assets as a % of total loans, other real estate owned and assets repossessed 0.99% 0.72% 0.57% ALLL as a % of nonperforming loans 151.95% 271.49% 496.08%
13 Nonperforming assets were $876,075 as of September 30, 1996, an increase of $305,234 from the $570,841 reported for December 31, 1995 and an increase of $432,443 from the $443,632 reported for September 30, 1995. The increase resulted primarily from one commercial credit placed on nonaccrual in September 1996. The credit represents a pool of automobile loans for which the initial servicer discontinued processing payments on the pool. Subsequently, a new service provider has continued payments on the pool and MidSouth has experienced no loss in payments as of the date of this filing. Loans past due 90 days or more and still accruing increased from $279,112 in September 1995 to $265,682 in December 1995 and to $318,604 as of September 30, 1996. Throughout the nine months ended September 30, 1996, MidSouth experienced decreasing payment streams in a group of lease loans. During the third quarter of 1996, approximately $134,000 of these past due lease loans were charged against the ALLL and approximately $98,000 remain past due. Management has focused its attention on resolving these loans and believes it has provided adequately for future losses and recoveries. However, no assurance can be given that these loans will not deteriorate further. Specific reserves have been established in the ALLL to cover potential losses on nonperforming assets. The ALLL is analyzed quarterly and additional reserves, if needed, are allocated at that time. Management believes the $1,051,846 in the ALLL as of September 30, 1996 is sufficient to cover potential losses in nonperforming assets and in the loan and lease portfolios. Loans classified for regulatory purposes but not included in Table 1 do not represent material credits about which management has serious doubts as to the ability of the borrower to comply with loan repayment terms. 14 Item 6. Exhibits and Reports on Form 8-K Page 15 (a) Exhibits Exihibit NumberDocument Description 3.1 Amended and Restated Articles of Incorporation of MidSouth Bancorp, Inc. is included as Exhibit 3.1 to the Report on Form 10-K for the year ended December 31, 1993, and is incorporated herein by reference. 3.2 Articles of Amendment to Amended and Restated Articles of Incorporation dated July 19, 1995 are included as Exhibit 4.2 to MidSouth's Registration Statement on Form S-8 filed September 20, 1995 and is incorporated herein by reference. 3.3 Amended and Restated By-laws adopted by the Board of Directors on April 12, 1995 are included as Exhibit 3.2 to Amendment No. 1 to MidSouth's Registration Statement on Form S-4 (Reg. No. 33-58499) filed on June 1, 1995. 10.1 MidSouth National Bank Lease Agreement with Southwest Bank Building Limited Partnership is included as Exhibit 10.7 to the Company's annual report on Form 10-K for the Year Ended December 31, 1992, and is incorporated herein by reference. 10.2 First Amendment to Lease between MBL Life Assurance Corporation, successor in interest to Southwest Bank Building Limited Partnership in Commendam, and MidSouth National Bank is included as Exhibit 10.1 to Report on the Company's annual report on Form 10-KSB for the yearended December 31, 1994, and is incorporated herein by reference. 10.3 Amended and Restated Deferred Compensation Plan and Trust is included as Exhibit 10.3 to the Company's annual report on Form 10-K for the year ended December 31, 1992 and is incorporated herein by reference. 10.4 Employment Agreements with C. R. Cloutier and Karen L. Hail are included as Exhibit 5(c) to MidSouth's Form 1-A and are incorporated herein by reference. 10.5 Description of the Incentive Compensation Plan for Officers of MidSouth National Bank is included as Exhibit 10.5 to the Company's annual report on Form 10-K for the year ended December 31, 1993, and is incorporated herein by reference. Page 16 10.6 Agreement and Plan of Merger between MidSouth Bancorp, Inc. and MidSouth National Bank and Sugarland Bancshares, Inc. and Sugarland State Bank is included as Exhibit 10.5 to the Company's annual report on Form 10-KSB for the year ended December 31, 1994, and is incorporated herein by reference 11 Computation of earnings per share (b) Reports Filed on Form 8-K (none) Signatures In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. MidSouth Bancorp, Inc. (Registrant) Date: November 13, 1996 _________________ _______________________________ C. R. Cloutier, President & CEO ________________________________ Karen L. Hail, Executive Vice President & CFO ________________________________ Teri S. Stelly, Vice President & Controller EX-11 2
MIDSOUTH BANCORP, INC. AND SUBSIDIARY EXHIBIT 11 COMPUTATION OF EARNINGS PER SHARE (Unaudited) FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995 Third Quarter Third Quarter Year-to-Date Year-to-Date September 30, September 30, September 30, September 30, PRIMARY 1996 1995 1996 1995 _____________ _____________ _____________ _____________ Earnings: Income applicable to common stock $213,875 $325,931 $759,682 $923,364 ============= ============= ============= ============= Shares: Weighted average number of common shares outstanding 1,330,036 1,291,810 1,317,781 1,289,188 ============= ============= ============= ============= Earnings per common share: Income applicable to common stock $0.16 $0.25 $0.58 $0.72 ============= ============= ============= ============= Weighted average number of common shares outstanding 1,330,036 1,291,810 1,317,781 1,289,188 ============= ============= ============= ============= 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 5,195 9,770 5,469 7,644 _____________ _____________ _____________ _____________ Weighted average number of common shares outstanding, as adjusted 1,335,231 1,301,580 1,323,250 1,296,832 ============= ============= ============= ============= Primary earnings per common share: Income applicable to common stock $0.16 $0.25 $0.57 $0.71 ============= ============= ============= ============= FULLY DILUTED Earnings: Net income $253,008 $325,931 $877,668 $923,364 ============= ============= ============= ============= Weighted average number of common shares outstanding 1,330,036 1,291,810 1,317,781 1,289,188 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 higher of the average issue price or period end price 5,288 16,809 5,288 16,809 Assuming conversion of preferred stock at a conversion rate of 1 to 1.776 shares 319,246 220,540 319,246 74,050 _____________ _____________ _____________ _____________ Weighted average number of common shares outstanding, as adjusted 1,654,570 1,529,159 1,642,315 1,380,047 ============= ============= ============= ============= Fully diluted earnings per common share: Income applicable to common stock $0.15 $0.21 $0.53 $0.67 ============= ============= ============= ============= 17
EX-27 3
9 3-MOS DEC-31-1995 SEP-30-1996 9,275,527 203,515 7,400,000 0 49,698,403 9,568,694 9,629,243 88,164,439 1,051,846 171,781,165 159,130,877 103,329 619,389 1,201,346 133,604 0 2,561,523 8,031,097 10,726,224 2,266,637 821,922 145,912 3,234,471 1,165,419 1,185,382 2,049,089 224,804 1,175 2,039,381 348,288 253,008 0 0 253,008 .16 .15 5.32 691,711 318,604 1 0 1,051,898 683,195 148,339 1,051,846 155,000 0 896,846
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