-----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, HUWZgBhA7zZnhGTb4kkvAW4Xte0MmyW4CSOCXzARqFXzMkxWfHyX+QEDOjhCFmC5 OKLEOnjnPQIxIWFcgLKsag== 0000948688-97-000017.txt : 19971117 0000948688-97-000017.hdr.sgml : 19971117 ACCESSION NUMBER: 0000948688-97-000017 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19970930 FILED AS OF DATE: 19971114 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: SEC FILE NUMBER: 001-11826 FILM NUMBER: 97717678 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 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, 1997 _____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 October 31, 1997 Common stock, $.10 par value 1,578,943 Preferred stock, no par value, $14.25 stated value 161,456 Transitional Small Business Disclosure Format: Yes _______ No X Page 1 Page 2 PART 1 - FINANCIAL INFORMATION Item 1. Consolidated Financial Statements (Unaudited) Page Financial Highlights 3 Statements of Condition - September 30, 1997 and December 31, 1996 4 Statements of Income - Three and Nine Months Ended September 30, 1997 and 1996 5 Statement of Stockholders' Equity - Nine Months Ended September 30, 1997 6 Statements of Cash Flows - Nine Months Ended September 30, 1997 and 1996 7 Notes to Financial Statements 8 Item 2. Management's Discussion and Analysis or Plan of Operation 9 PART II - OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K 16 Signatures 17
MIDSOUTH BANCORP, INC. AND SUBSIDIARIES FINANCIAL HIGHLIGHTS (UNAUDITED) ______________________________________________________________________________________________________ Three Months Ended Nine Months Ended September 30, September 30, EARNINGS DATA 1997 1996 1997 1996 _________________________________________________________ Net interest income $2,516,952 $2,049,089 $7,185,901 $5,883,202 Provision for loan losses 241,700 224,804 604,300 534,804 Non-interest income 735,354 563,384 2,146,014 1,568,224 Non-interest expense 2,474,093 2,039,381 7,025,825 5,676,193 Provision for income tax 127,220 95,280 428,564 362,761 Net income 409,293 253,008 1,273,226 877,668 Preferred dividend requirement 37,442 39,133 117,195 117,986 Income available to common shareholders $371,851 $213,875 $1,156,031 $759,682 ______________________________________________________________________________________________________ PER COMMON SHARE DATA Primary earnings per share $0.23 $0.14 $0.74 $0.51 Fully diluted earnings per share $0.21 $0.14 $0.67 $0.47 Book value at end of period $6.45 $5.43 $6.45 $5.43 Market price at end of period $16.25 $9.45 $16.25 $9.45 Weighted average shares outstanding Primary 1,595,916 1,511,138 1,565,926 1,498,436 Fully diluted 1,930,918 1,870,470 1,913,192 1,857,768 ______________________________________________________________________________________________________ AVERAGE BALANCE SHEET DATA Total assets $210,869,856 $170,715,583 $202,954,632 $162,927,970 Earning assets 190,599,040 155,060,362 183,360,010 147,421,704 Loans and leases 118,824,135 87,516,401 107,496,909 83,327,134 Interest-bearing deposits 142,509,715 116,531,168 139,542,546 110,484,955 Total deposits 191,343,608 157,828,297 186,703,236 150,387,753 Common stockholders' equity 9,931,230 8,298,866 9,431,211 8,110,061 Total stockholders' equity 12,340,991 10,860,389 11,866,265 10,690,515 ______________________________________________________________________________________________________ SELECTED RATIOS Return on average assets (annualized) 0.70% 0.50% 0.76% 0.62% Return on average common equity (annuali 14.85% 10.22% 16.39% 12.48% Return on average total equity ( annuali 11.95% 7.81% 13.03% 9.47% Leverage capital ratio 5.78% 6.35% 5.78% 6.35% Tier 1 risk-based capital ratio 9.36% 11.53% 9.36% 11.53% Total risk-based capital ratio 10.39% 12.65% 10.39% 12.65% Allowance for loan losses as a % of total loans 1.08% 1.19% 1.08% 1.19% ______________________________________________________________________________________________________ PERIOD ENDING BALANCE SHEET DATA 9/30/97 9/30/96 Net Change % Change Total assets $206,518,858 $171,781,165 $34,737,693 20.22% Earning assets 185,192,383 155,035,051 $30,157,332 19.45% Loans and leases 124,386,058 88,164,439 $36,221,619 41.08% Interest-bearing deposits 134,357,623 119,113,869 $15,243,754 12.80% Total deposits 181,475,290 159,130,877 $22,344,413 14.04% Common stockholders' equity 10,153,951 8,164,701 $1,989,250 24.36% Total stockholders' equity 12,454,699 10,726,224 $1,728,475 16.11% ______________________________________________________________________________________________________ All per share and shares outstanding data have been adjusted to reflect a 12.5% stock dividend payable on August 27, 1997 to common shareholders of record on August 6, 1997. 3
MIDSOUTH BANCORP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CONDITION (UNAUDITED) ________________________________________________________________________________ September 30, December 31, ASSETS 1997 1996 ___________ ___________ Cash and due from banks $12,164,721 $11,314,562 Federal funds sold 400,000 14,100,000 ___________ ___________ Total cash and cash equivalents 12,564,721 14,100,000 Interest bearing deposits in banks 93,046 406,798 Securities available-for-sale, at fair value (cost of $43,339,142 in September 1997 and $47,387,766 in December 1996) 43,360,187 47,249,059 Securities held-to-maturity (estimated market value of $17,554,695 in September 1997 and $9,700,307 in December 1996) 16,953,092 93,740,719 123,046,154 9,547,853 Loans, net of allowance for loan and lease losses of $1,339,904 in September 1997 and $1,087,790 in December 1996 123,046,154 93,740,719 Bank premises and equipment, net 6,835,182 5,808,952 Other real estate owned, net 146,552 180,270 Accrued interest receivable 1,784,837 1,386,596 Goodwill, net 250,558 276,523 Other assets 1,484,529 1,216,920 ___________ ___________ Total assets $206,518,858 $185,228,252 =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY Deposits: Non-interest bearing $47,117,667 $49,943,207 Interest bearing 134,357,623 121,673,301 ___________ ___________ Total deposits 181,475,290 171,616,508 Securities sold under repurchase agreements and federal funds purchased 3,677,516 104,414 Other borrowed funds 5,000,000 - Accrued interest payable 493,101 397,259 Notes payable 2,981,108 1,521,435 Other liabilities 437,144 228,465 ___________ ___________ Total liabilities 194,064,159 173,868,081 ___________ ___________ Commitments and contingencies - - Stockholders' Equity: Preferred Stock, no par value, $14.25 stated value - 5,000,000 shares authorized, 161,456 and 171,956 issued and outstanding on September 30, 1997 and December 31, 1996, respectively 2,300,748 2,450,373 Common stock, $.10 par value- 5,000,000 shares authorized, 1,574,674 and 1,537,649 issued and outstanding on September 30, 1997 and December 31, 1996, respectively 157,468 136,491 Surplus 9,803,782 6,738,943 Unearned ESOP shares (141,398) (30,836) Unrealized gains/losses on securities available-for-sale, net of deferred taxes of $12,630 in September 1997 and $24,177 in December 1996 8,415 (114,530) Retained earnings 325,684 2,179,730 ___________ ___________ Total stockholders' equity 12,454,699 11,360,171 ___________ ___________ Total liabilities and stockholders' equity $206,518,858 $185,228,252 =========== =========== 4
MIDSOUTH BANCORP, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) ___________________________________________________________________________________________________ Three Months Ended Nine Months Ended September 30, September 30, 1997 1996 1997 1996 ___________________________ ___________________________ INTEREST INCOME: Loans, including fees $3,108,931 $2,266,637 $8,325,336 $6,433,531 Securities 989,118 821,922 2,870,710 2,280,331 Federal funds sold 14,382 145,912 362,652 492,255 _________ _________ __________ _________ TOTAL 4,112,431 3,234,471 11,558,698 9,206,117 _________ _________ __________ _________ INTEREST EXPENSE: Deposits 1,487,968 1,164,349 4,190,220 3,260,277 Repurchase agreements and federal funds purchased 28,466 1,070 32,785 3,171 Other borrowed funds 18,968 - 18,968 - Notes payable 60,077 19,963 130,824 59,467 _________ _________ __________ _________ TOTAL 1,595,479 1,185,382 4,372,797 3,322,915 _________ _________ __________ _________ NET INTEREST INCOME 2,516,952 2,049,089 7,185,901 5,883,202 PROVISION FOR LOAN LOSSES 241,700 224,804 604,300 534,804 _________ _________ __________ _________ NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 2,275,252 1,824,285 6,581,601 5,348,398 _________ _________ __________ _________ NON-INTEREST INCOME: Service charges on deposit accou 553,168 387,599 1,514,244 1,086,610 Gains on sales of securities, ne (176) 1,175 85,179 1,175 Other charges and fees 182,362 174,610 546,591 480,439 _________ _________ __________ _________ TOTAL NON-INTEREST INCOME 735,354 563,384 2,146,014 1,568,224 _________ _________ __________ _________ NON-INTEREST EXPENSE: Salaries and employee benefits 1,202,047 964,538 3,356,084 2,706,397 Occupancy expense 561,181 413,796 1,601,615 1,228,722 Professional fees 86,942 94,511 235,700 234,113 FDIC assessments 5,702 500 15,397 2,000 Marketing expenses 135,250 106,362 358,501 265,800 General and bond insurance 32,283 56,098 102,162 121,685 Data processing expenses 36,351 39,729 112,201 104,792 Postage 58,060 41,295 164,533 111,464 Director fees 26,666 24,967 77,950 73,972 Education and travel 30,523 34,959 92,832 112,449 Printing and supplies 70,153 60,962 213,521 168,858 Telephone 52,014 45,902 151,779 130,962 Expenses on other real estate ow 7,876 4,606 47,475 6,419 Other 169,045 151,156 496,075 408,560 _________ _________ __________ _________ TOTAL NON-INTEREST EXPENSE 2,474,093 2,039,381 7,025,825 5,676,193 _________ _________ __________ _________ NET INCOME BEFORE INCOME TAXES 536,513 348,288 1,701,790 1,240,429 PROVISION FOR INCOME TAXES 127,220 95,280 428,564 362,761 _________ _________ __________ _________ NET INCOME $409,293 $253,008 $1,273,226 $877,668 _________ _________ __________ _________ PREFERRED DIVIDEND REQUIREMENT $37,442 $39,133 $117,195 $117,986 _________ _________ __________ _________ INCOME AVAILABLE TO COMMON SHAREHOLDERS $371,851 $213,875 $1,156,031 $759,682 ========= ========= ========== ========= EARNINGS PER COMMON SHARE: PRIMARY $0.23 $0.14 $0.74 $0.51 ========= ========= ========== ========= FULLY DILUTED $0.21 $0.14 $0.67 $0.47 ========= ========= ========== ========= See notes to consolidated financial statements. 5
MIDSOUTH BANCORP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997 (UNAUDITED) __________________________________________________________________________________________________________________________________ UNREALIZED (GAINS) LOSSES ON SECURITIES PREFERRED STOCK COMMON STOCK ESOP AVAILABLE RETAINED SHARES AMOUNT SHARES AMOUNT SURPLUS OBLIGATION FOR-SALE EARNINGS TOTAL ____________________ ____________________ __________ __________________________________ ___________ BALANCE, DECEMBER 31, 1996 171,956 $2,450,373 1,364,903 $136,491 $6,738,943 ($30,836) ($114,530) $2,179,730 $11,360,171 Issuance of common on stock 16,617 1,661 186,218 187,879 Dividends paid on common stock (259,473) (259,473) Dividends paid on preferred stock (117,195) (117,195) Stock dividend on common stock 174,496 17,450 2,730,862 (2,750,557) (2,245) Preferred stock conversion (10,500) (149,625) 18,658 1,866 147,759 (47) (47) Net income 1,273,226 1,273,226 ESOP obligation, net of repayments (110,562) (110,562) Net change in unrealized gain/loss on securities available-for-sale, net of tax 122,945 122,945 ________ _________ _________ ________ _________ ________ _________ _________ __________ BALANCE, SEPTEMBER 30, 1997 161,456 $2,300,748 1,574,574 $157,468 $9,803,782 ($141,398) $8,415 $ 325,684 $12,454,699 ======== ========= ========= ======== ========= ======== ========= ========= ========== 6
MIDSOUTH BANCORP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997 and 1996 __________________________________________________________________________________________________ September 30, September 30, 1997 1996 ____________ ____________ CASH FLOWS FROM OPERATING ACTIVITIES: Net Income $1,273,226 $ 877,668 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 628,701 470,497 Provision for loan losses 604,300 534,804 Provision for deferred taxes 40,116 (157,422) Premium amortization, net (164,224) 127,065 Net (gain) loss on sales of securities (85,180) (22,129) Net (gain) loss on sale of other real estate owned - (163) Write-down of other real estate owned 33,718 - Change in accrued interest receivable (398,241) (379,284) Change in accrued interest payable 95,842 77,868 Change in other liabilities 182,326 200,482 Change in other assets (318,179) (767,091) ____________ ____________ NET CASH PROVIDED BY OPERATING ACTIVITIES 1,892,405 962,295 ____________ ____________ CASH FLOWS FROM INVESTING ACTIVITIES: Net decrease (increase) in interest-bearing deposits in banks 313,752 (177,166) Proceeds from maturities and calls of securities available- for-sale 16,932,739 3,814,768 Proceeds from sales of securities available-for-sale 12,990,400 1,992,457 Purchases of securities held-to-maturity (7,577,947) (5,026,109) Purchases of securities available-for-sale (25,452,403) (20,419,911) Loan originations, net of repayments (30,020,297) (9,841,416) Purchases of premises and equipment (1,628,966) (1,234,165) Proceeds from sale of other real estate owned - 3,500 Proceeds from sales of fixed assets - 149,758 ____________ ____________ NET CASH USED IN INVESTING ACTIVITIES (34,442,722) (30,738,284) ____________ ____________ CASH FLOWS FROM FINANCING ACTIVITIES: Net increase in deposits 9,858,782 20,101,314 Net increase (decrease) in securities sold under repurchase agreements and federal funds purchased 3,573,102 (72,575) Net increase in other borrowed funds 5,000,000 - Issuance of notes payable 3,024,210 354,293 Repayments of notes payable (1,564,537) (125,564) Proceeds from issuance of common stock 187,879 120,001 Payment of dividends (376,668) (176,479) Payment of fractional shares resulting from conversion of preferred stock and stock dividends (2,292) (1,520) Proceeds from exercise of stock options - 153,837 ____________ ____________ NET CASH PROVIDED BY FINANCING ACTIVITIES 19,700,476 20,353,307 ____________ ____________ NET DECREASE IN CASH & CASH EQUIVALENTS (12,849,841) (9,422,682) CASH & CASH EQUIVALENTS AT BEGINNING OF YEAR 25,414,562 26,098,209 ____________ ____________ CASH & CASH EQUIVALENTS AT END OF QUARTER 12,564,721 16,675,527 ============ ============ 7
MIDSOUTH BANCORP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. STATEMENT BY MANAGEMENT CONCERNING THE REVIEW OF UNAUDITED FINANCIAL INFORMATION The accompanying unaudited consolidated financial statements and notes thereto contain all adjustments, consisting only of normal recurring adjustments, necessary to present fairly the financial position of MidSouth Bancorp, Inc. ("MidSouth") and its subsidiaries as of September 30, 1997 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 1996 annual report and Form 10-KSB. The results of operations for the nine month period ended September 30, 1997 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 ("ALLL") is as follows: Nine Months Ended September 30, (in thousands) 1997 1996 _____ _____ Balance at beginning of year $1,087 $1,052 Provision for loan losses 604 535 Recoveries 190 148 Loans charged off (541) (683) _____ _____ Balance at end of quarter $1,340 $1,052 ===== ===== 3. NEW ACCOUNTING STANDARD In February 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards (SFAS) No. 128, " Earnings per Share." This new standard requires dual presentation of basic and diluted earnings per share (EPS) on the face of the earnings statement and requires a reconciliation of the numerators and denominators of the basic and diluted EPS calculations. This statement will be effective for financial statements issued for periods ending after December 15, 1997. Basic and diluted earnings per share, as computed under SFAS No. 128, would have been $.24 and and $.21 , respectively, for the three months ended September 30, 1997. For the nine months ended September 30, 1997, basic earnings per share would have been $.74 and diluted earnings per share would have been $.67. 4. STOCK DIVIDEND On July 16, 1997, the Board of Directors declared a 12.5% stock dividend payable on August 27, 1997 to shareholders of record on August 6, 1997. All per share and weighted average share data have been restated to reflect this stock dividend. 8 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 1996 annual consolidated financial statements, the notes thereto and the related Management's Discussion and Analysis. All per share data has been adjusted for a 12.5% common stock dividend payable on August 27, 1997 to common shareholders of record on August 6, 1997. MidSouth reported net income for the third quarter of 1997 of $409,293 , representing a 62 % increase over net income for the third quarter of 1996 of $253,008. Income available to common shareholders was $371,851 for the third quarter of 1997 compared to $213,875 for the third quarter of 1996. Primary earnings per share were $.23 and $.14 for the quarters ending September 30, 1997 and 1996, respectively. Fully diluted earnings per share were $.21 for the third quarter of 1997 compared to $.14 for the third quarter of 1996. Year-to-date earnings totaled $1,273,226 at September 30, 1997 compared to $877,668 at September 30, 1996. Income available to common shareholders for the nine months ending September 30, 1997 was $1,156,031 compared to $759,682 for the same period in 1996. Primary earnings per common share were $.74 and $.51 for the nine month periods ending September 30, 1997 and 1996, respectively. Fully diluted year-to-date earnings per share were $.67 and $.47 for the nine month periods ending September 30, 1997 and 1996, respectively. Return on average common equity was 14.85% for the third quarter of 1997 compared to 10.22% for the third quarter of 1996. Return on average assets was .70% and .50% for the same periods, respectively. For the first nine months of 1997, returns on average common equity and average assets were 16.39% and .76%, respectively. For the first nine months of 1996, return on average common equity was 12.48% and return on average assets was .62%. Total assets were $206.5 million at September 30, 1997, up 20% from $171.8 million at September 30, 1996. Quarterly earnings improved primarily due to a 23% increase in the average volume of earning assets from $155.1 million at September 30, 1996 to $190.6 million at September 30, 1997. The mix of average earning assets shifted to 62.4% in loans and 37.6% in investment securities and federal funds sold for the quarter ended September 30, 1997 compared to 56.4% in loans and 43.6% in investment securities and federal funds sold for the quarter ended September 30, 1996. The increased volume and shift in the mix of earning assets resulted in increased net interest income of $467,863 in quarterly comparison and $1,302,699 in year-to-date comparison. Non-interest income, excluding securities transactions, increased 31% in quarterly comparison and 32% in year-to-date comparison primarily due to an increase in insufficient funds fees ("NSF" fees) and service charges on deposit accounts. This increase resulted from a greater number of accounts serviced and a slight change in the assessment of NSF fees. In addition, fees earned 9 through increased usage of ATM's, cash machines and VISA debit cards, and lease income from a third party brokerage firm contributed to the increase in non-interest income. Loan demand remained strong in the third quarter of 1997 bringing total loans to $124.4 million at September 30, 1997, up $29.6 million from $94.8 million at December 31, 1996 and up $36.2 million from $88.2 million at September 30, 1996. The commercial, agricultural and real estate portfolios have continued to increase as a result of loan demand stimulated by a healthy, growing economy. The Lake Charles loan production office which opened in November of 1996 contributed $9.3 million to the growth in total loans. Due to the loan growth, provisions for loan and lease losses increased $16,896 for the quarter and $69,496 for the nine month period ended September 30, 1997 as compared to the same periods of 1996. Credit quality remained strong. Nonperforming assets totaled $528,973 at September 30, 1997 compared to $714,140 at December 31, 1996 and $876,075 at September 30, 1996. Nonperforming loans as a percentage of total loans were .29% at September 30, 1997, down from .55% at December 31, 1996 and down from .79% at September 30, 1996. Deposits increased over the twelve month period ended September 30, 1997 by $22.3 million, or 14%, despite the withdrawal of approximately $28 million in public funds deposits, $13 million of which was deposited within the same twelve month period. A new public funds contract initiated on July 1, 1997 added approximately $11 million to total deposits. Increases totaling $13.1 million were recorded in commercial demand and money market deposits and certificates of deposit due to favorable economic conditions and increased business activity. Individual certificates of deposit increased $7.2 million due to branch market promotions and concern among consumers over the possibility of a stock market correction. The new Morgan City office, opened in March of 1997, contributed $4.3 million to the increase in deposits. Earnings Analysis Net Interest Income Average earning assets increased 23%, or $35.7 million, from $155.0 million for the three months ending September 30, 1996 to $190.6 million for the three months ending September 30, 1997. A change in the mix of earning assets contributed to earnings as higher-yielding loans represented 62.3% of average earning assets in the third quarter of 1997 compared to 56.5% in the third quarter of 1996. The average yield on loans improved 10 basis points, from 10.39% at September 30, 1996 to 10.49% at September 30, 1997, primarily due to finance company loans and credit card loans added to the loan portfolio within the past year. The increased volume of earning assets and the increase in loan yields boosted the yield on average earning assets 27 basis points, from 8.38% for the third quarter of 1996 to 8.65% for the third quarter of 1997. These changes in the earning asset mix resulted in increased interest income of $877,960 in quarterly comparison and $2,352,581 in nine month comparison. 10 Volume increases in interest-bearing deposits and an increase in borrowed funds resulted in a $410,097 quarterly increase and $1,049,882 year-to-date increase in interest expense. Additionally, the percentage of average interest-bearing deposits to average total deposits and the average rate paid on interest- bearing liabilities increased in quarterly comparison, reflective of a high volume of interest-bearing public fund deposits. For the quarter ending September 30, 1997, 74.5% of total average deposits were interest-bearing compared to 73.8% for the quarter ending September 30, 1996. The average rate paid on interest- bearing deposits increased 18 basis points, from 4.01% to 4.19% for the same period. The increase in borrowed funds resulted from the purchase of $3,500,000 in federal funds and a $5,000,000 short-term borrowing from the Federal Home Loan Bank of Dallas. These borrowing provided liquidity for MidSouth National Bank (the "Bank") to cover the withdrawal of approximately $28 million in deposits associated with a public funds contract. In addition, MidSouth and its subsidiary, Financial Services of the South, Inc. (the "Finance Company"), increased borrowings against their lines of credit by $1,459,673 during the nine month period ending September 30, 1997. The net effect of changes in the volume and mix of earning assets and interest bearing liabilities increased net interest income of $467,863 in quarterly comparison and $1,302,699 in year-to- date comparison. The net yield on average earning assets fell 1 basis point, from 5.31% for the quarter ending September 30, 1996, to 5.30% for the quarter ending September 30, 1997. Non-interest Income MidSouth's primary source of non-interest income, service charges on deposit accounts, increased $165,569 for the quarter and $427,634 for the nine months ending September 30, 1997 as compared to the same periods in 1996. The increases resulted primarily from additional insufficient funds fees and fees earned on deposit accounts added in the past twelve months. Other non-interest income increased $7,752 and $66,152 in quarterly and year-to-date comparisons, respectively. Increases were recorded in the third quarter of 1997 in lease income from a third party investment company and VISA debit card income. The increase in year-to-date comparisons resulted primarily from a $32,575 increase in income earned through the sale of credit life and other credit-related insurance at the Finance Company. Non-interest Expense Non-interest expense increased 21% for the three months and 24% for the nine months ended September 30, 1997 as compared to the same periods ended September 30, 1996. The increase resulted primarily from start up and operational costs associated with new office facilities and promotions to expand MidSouth's market presence. Specifically, increases were recorded in salaries and employee benefits, occupancy expenses, marketing expenses, postage, and printing and supplies. 11 Salaries and employee benefits increased due to the addition of the Morgan City Office and Lake Charles Office staffs and an increase in incentive compensation. The number of full-time equivalent ("FTE") employees increased by 17 from 122 in September 1996 to 139 in September 1997. Occupancy expense increased in the three and nine month periods ending September 30, 1997 as compared to the same periods of 1996 due to increases in building lease expense, depreciation and maintenance expenses associated with furniture and equipment, fuel and maintenance of bank autos and ad valorem taxes. These increases result primarily from the Super 1 Lafayette and Morgan City offices added in 1996 and early 1997 and the loan production office opened in Lake Charles in the fourth quarter of 1996. Marketing and promotional expenses increased due to the introduction of MidSouth to these new markets and to quality service programs and special loan and deposit promotions. Balance Sheet Analysis MidSouth ended the third quarter of 1997 with consolidated assets of $206,518,858 an increase of 11% over the $185,228,252 reported for December 31, 1996. Deposits increased over the nine months ended September 30, 1997 by $9.9 million despite the withdrawal of approximately $28 million in funds on deposit under a public funds contract that expired on July 31, 1997. In order to fund the withdrawal, MidSouth purchased $3,500,000 in federal funds from two correspondent banks and borrowed $5,000,000 in short- term funds from the Federal Home Loan Bank of Dallas. In addition, approximately $11 million was deposited under a new public funds contract. The $3,500,000 in federal funds purchased was paid out in early October and the $5,000,000 short-term borrowing from the Federal Home Loan Bank of Dallas was paid out upon maturity at November 4, 1997. In addition to the public funds deposit activity, increases were recorded in commercial demand and money market deposits and certificates of deposit due to favorable economic conditions and increased business activity throughout MidSouth's market. Loan growth experienced in the first nine months of 1997 was primarily in the commercial, agricultural and real estate portfolios. The Bank's new Morgan City Office and Lake Charles Loan Production Office contributed $5.6 million and $9.3 million, respectively, to the $29.6 million growth in loans during this period. Securities available-for-sale decreased $3.8 million, from $47.2 million at December 31, 1996 to $43.4 million at September 30, 1997. The net decrease reflects purchases of $25.5 million, sales of $13.0 million, and maturities and principal paydowns of $16.9 million. Tax-free municipal securities totaling $7.6 million were purchased for the held-to-maturity portfolio during the first nine months of 1997. Unrealized gains in the securities available-for-sale portfolio, net of unrealized losses and tax effect, were $8,415 at September 30, 1997, compared to a net unrealized loss of $114,530 at December 31, 1996. These amounts result from interest 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. 12 Notes payable to financial institutions increased $1.5 million from December 31, 1996 to September 30, 1997. On June 23, 1997, MidSouth refinanced its $2.5 million line of credit with another financial institution, paying out existing borrowings of $833,355 and receiving advances of $1,385,024 under the new line of credit. An additional $500,000 advanced under the line was injected into the capital of the Bank. In August 1997, MidSouth borrowed an additional $200,000 for operational expenses. At any time prior to June 30, 2007, MidSouth may request advances up to but not exceeding an aggregate principal amount of $2,500,000 at any one time outstanding. Advances under the 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 (0.50%). The current rate is 8.00%. Interest under the note is due and payable quarterly in arrears on the last day of each quarter beginning September 30, 1997. Beginning June 30, 1999, principal payments in the amount of 11.11% of the amount of the loan balance on June 30 ,1999 are due and payable in eight consecutive annual installments on June 30 of each succeeding calendar year. The entire outstanding balance of the loan is due and payable in a ninth and final installment on June 30, 2007. The Finance Company paid out borrowings of $600,000 against its line of credit on June 23, 1997 with $675,000 in advances against a new $1,200,000 line of credit. 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 current rate is 8.75%. Interest on the line is payable monthly, with principal due at maturity on May 1, 1998. Advances totaling $260,000 were funded under the line during the third quarter of 1997. Capital Ratios As of September 30, 1997, MidSouth's leverage ratio was 5.78% as compared to 6.30% at December 31, 1996. Tier 1 capital to risk- weighted assets was 9.36% and total capital to risk-weighted assets was 10.39% at the end of the third quarter of 1997. At year-end 1996, Tier 1 capital to risk-weighted assets was 10.82% and total capital to risk-weighted assets was 11.87%. 13 Nonperforming Assets and Past Due Loans Table 1 summarizes MidSouth's nonaccrual, past due and restructured loans and nonperforming assets.
TABLE 1 Nonperforming Assets and Loans Past Due 90 Days _________________________________________________________________________ September December September 30, 31, 30, 1997 1996 1996 _________________________________________________________________________ Nonperforming loans Nonaccrual loans $365,595 $523,020 $691,711 Restructured loans - 835 498 ______________________________________ Total nonperforming 365,595 523,855 692,209 loans Other real estate 146,552 180,270 180,270 owned, net Other assets 16,826 10,015 3,596 repossessed ______________________________________ Total nonperforming $528,973 $714,140 $876,075 assets ====================================== Loans past due 90 days or more and still $133,755 $338,294 $318,604 accruing Nonperforming loans as a % of total loans .29% 0.55% 0.79% Nonperforming assets as a % of total loans, other real estate owned and other assets repossessed 0.42% 0.75% 0.99% ALLL as a % of 366.50% 207.65% 151.95% nonperforming loans
14 Nonperforming assets were $528,973 as of September 30, 1997, a decrease of $185,167 from the $714,140 reported for December 31, 1996 and a decrease of $347,102 from the $876,075 reported for September 30, 1996. The decrease from year-end 1996 results primarily from the charge-off of $115,000 on a commercial credit that represents a pool of automobile loans. Loans past due 90 days or more increased from $318,604 in September 1996 to $338,294 in December 1996 and decreased to $133,755 as of September 30, 1997. 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 $1,339,904 in the reserve as of September 30, 1997 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. The Year 2000 Issue On May 16, 1997, the Office of the Comptroller of the Currency ("OCC") issued an advisory letter addressing Year 2000 issues and their examination approach. To maintain safe and sound banking practices, institutions are required to take appropriate measures to insure efficient operations of computer systems beyond the year 2000. Programming changes for critical systems and testing of vendors and service providers should be completed by December 31, 1998. MidSouth's Board of Directors established a Year 2000 compliance committee in June of 1997. The committee will assess the size and complexity of the Year 2000 issues, recommend changes to hardware and software and conduct testing of all areas to insure efficient computer operations. The committee is currently analyzing the the impact that compliance with the Year 2000 issues may have on earnings. 15 Item 6. Exhibits and Reports on Form 8-K Page 16 (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 forthe 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 (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 17 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 Loan documents detailing notes payable were filed as Exhibit 10.7 of MidSouth's Form 10-QSB for the quarter ending June 30, 1997 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 14, 1997 /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 EX-11 2
MIDSOUTH BANCORP, INC. AND SUBSIDIARY EXHIBIT 11 COMPUTATION OF EARNINGS PER SHARE (Unaudited) Page 18 For the Three and Nine Months Periods Ended September 30, 1997 and 1996 Third Quarter Third Quarter Year to Date Year to Date September 30, September 30, September 30, September 30, PRIMARY 1997 1996 1997 1996 _____________ _____________ _____________ _____________ Earnings: Income applicable to common stock $371,851 $213,875 $1,156,031 $759,682 ============= ============= ============= ============= Shares: Weighted average number of common shares outstanding 1,572,470 1,504,532 1,558,803 1,492,277 ============= ============= ============= ============= Earnings per common share: Income applicable to common stock $0.24 $0.14 $0.74 $0.51 ============= ============= ============= ============= Weighted average number of common shares outstanding 1,572,470 1,504,532 1,558,803 1,492,277 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 23,446 6,606 7,123 6,159 _____________ _____________ _____________ _____________ Weighted average number of common shares outstanding, as adjusted 1,595,916 1,511,138 1,565,926 1,498,436 ============= ============= ============= ============= Primary earnings per common share $0.23 $0.14 $0.74 $0.51 ============= ============= ============= ============= FULLY DILUTED Earnings: Net income $409,293 $253,008 $1,273,226 $877,668 ============= ============= ============= ============= Weighted average number of common shares outstanding 1,572,470 1,504,532 1,558,803 1,492,277 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 35,697 6,606 18,045 6,159 Assuming conversion of outstanding shares of preferred stock at a conversion rate of 1 to 1.999 shares 322,751 359,332 336,344 359,332 _____________ _____________ _____________ _____________ Weighted average number of common shares outstanding, as adjusted 1,930,918 1,870,470 1,913,192 1,857,768 ============= ============= ============= ============= Fully diluted earnings per common share $0.21 $0.14 $0.67 $0.47 ============= ============= ============= =============
EX-27 3
9 9-MOS DEC-31-1996 SEP-30-1997 12,164,721 93,046 400,000 0 43,360,187 16,953,092 17,554,695 124,386,058 1,339,904 206,518,858 181,475,290 3,677,516 5,930,245 2,981,108 0 2,300,748 157,468 9,996,483 206,518,858 3,108,931 989,118 14,382 4,112,431 1,487,968 1,595,479 2,516,952 241,700 (176) 2,474,093 536,513 536,513 0 0 409,293 .23 .21 5.39 365,595 133,755 0 0 1,087,000 541,000 190,000 1,340,000 82,000 0 1,258,000
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