-----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, IkGXkBrkoRF2zmMA8cjSRDyx2f1ZsaAKmGcQjlAR8IpVc80vq4aExtbwzYgGRDD+ 1MkGRlpFTqRy7SGNSQ79jg== 0000948688-98-000009.txt : 19980814 0000948688-98-000009.hdr.sgml : 19980814 ACCESSION NUMBER: 0000948688-98-000009 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19980630 FILED AS OF DATE: 19980813 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: 98685570 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........ June 30, 1998 _____ 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 July 31, 1998 Common stock, $.10 par value 1,609,361 Preferred stock, no par value, $14.25 stated value 158,797 Transitional Small Business Disclosure Format: Yes No X ________ ________ Page 1 Page 2 PART 1 - FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) Page Financial Highlights 3 Statements of Condition - June 30, 1998 and December 31, 1997 4 Statements of Income - Three and Six Months Ended June 30, 1998 and 1997 5 Statement of Stockholders' Equity - Six Months Ended June 30, 1998 6 Statements of Cash Flows - Six Months Ended June 30, 1998 and 1997 7 Notes to Financial Statements 8 Item 2. Management's Discussion and Analysis or Plan of Operation 9 PART II - OTHER INFORMATION Item 4. Submission of Matters to a Vote of Security Holders 16 Item 6. Exhibits and Reports on Form 8-K 17 Signatures 18
MIDSOUTH BANCORP, INC. AND SUBSIDIARIES FINANCIAL HIGHLIGHTS (UNAUDITED) Three Months Ended Six Months Ended June 30, June 30, EARNINGS DATA 1998 1997 1998 1997 ____________________________________________________ Net interest income $2,941,826 $2,430,987 $5,633,548 $4,668,949 Provision for loan losses 238,000 209,332 496,000 362,600 Non-interest income 872,174 814,171 1,651,014 1,410,660 Non-interest expense 2,629,198 2,368,565 5,136,454 4,551,732 Provision for income tax 268,150 184,750 420,948 301,344 Net income 678,652 482,511 1,231,160 863,933 Preferred dividend requirement 37,444 39,946 74,964 79,753 Income available to common shareholders $641,208 $442,565 $1,156,196 $784,180 ______________________________________________________________________________________________ PER COMMON SHARE DATA Basic earnings per share $0.40 $0.28 $0.73 $0.51 Diluted earnings per share $0.35 $0.25 $0.63 $0.46 Book value at end of period $7.57 $6.16 $7.57 $6.16 Market price at end of period $21.81 $12.89 $21.81 $12.89 Market price of preferred stock at end of period $44.25 $26.00 $44.25 $26.00 Weighted average shares outstanding Basic 1,597,367 1,559,891 1,592,547 1,551,856 Diluted 1,966,324 1,897,595 1,962,848 1,886,542 ______________________________________________________________________________________________ AVERAGE BALANCE SHEET DATA Total assets $230,492,703 $205,894,127 $226,389,477 $198,940,158 Earning assets 209,768,889 185,878,244 205,514,205 179,680,868 Loans and leases 139,609,048 106,759,581 135,744,324 101,739,790 Interest-bearing deposits 158,387,576 143,677,505 155,086,933 138,034,371 Total deposits 211,819,511 190,730,243 208,344,912 184,349,417 Common stockholders' equity 11,985,587 9,446,536 11,492,493 9,270,020 Total stockholders' equity 14,264,461 11,892,634 13,764,949 11,717,721 ______________________________________________________________________________________________ SELECTED RATIOS Return on average assets (annualized) 1.18% 0.86% 1.10% 0.79% Return on average common equity (annualized) 21.46% 18.79% 20.29% 17.06% Return on average total equity (annualized) 19.08% 14.93% 18.04% 13.50% Leverage capital ratio 6.06% 5.79% 6.06% 5.79% Tier 1 risk-based capital ratio 9.24% 9.85% 9.24% 9.85% Total risk-based capital ratio 10.36% 10.95% 10.36% 10.95% Allowance for loan losses as a % of total loans 1.17% 1.16% 1.17% 1.16% ______________________________________________________________________________________________ PERIOD ENDING BALANCE SHEET DATA 6/30/98 6/30/97 Net Change % Change Total assets $235,816,742 $212,617,670 $23,199,072 10.91% Earning assets 213,316,617 189,611,750 $23,704,867 12.50% Loans and leases, net 143,521,513 113,047,556 $30,473,957 26.96% Interest-bearing deposits 162,003,496 144,797,535 $17,205,961 11.88% Total deposits 216,994,125 195,081,301 $21,912,824 11.23% Common stockholders' equity 12,130,557 9,573,596 $2,556,961 26.71% Total stockholders' equity 14,393,414 12,019,694 $2,373,720 19.75% ______________________________________________________________________________________________
MIDSOUTH BANCORP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CONDITION June 30, December 31, 1998 1997 * ASSETS (unaudited) ___________ ___________ Cash and due from banks $12,890,224 $15,774,024 Federal funds sold 11,000,000 8,060,000 ___________ ___________ Total cash and cash equivalents 23,890,224 23,834,024 Interest bearing deposits in banks 53,152 48,928 Securities available-for-sale, at fair value (cost of $40,018,375 in June 1998 and $36,750,950 in December 1997) 40,325,095 36,884,465 Securities held-to-maturity (estimated market value of $17,651,135 in June 1998 and $17,459,865 in December 1997) 16,731,169 16,732,827 Loans, net of allowance for loan losses of $1,685,688 in June 1998 and $1,414,826 in December 1997 143,521,513 129,473,318 Bank premises and equipment, net 8,015,747 6,973,150 Other real estate owned, net 39,100 45,100 Accrued interest receivable 1,646,604 1,638,931 Goodwill, net 224,591 241,902 Other assets 1,369,547 1,239,770 ___________ ___________ Total assets $235,816,742 $217,112,415 =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY Deposits: Non-interest bearing $54,990,629 $58,464,087 Interest bearing 162,003,496 141,603,664 ___________ ___________ Total deposits 216,994,125 200,067,751 Securities sold under repurchase agreements - 69,443 Accrued interest payable 568,422 543,936 Notes payable 3,543,973 3,198,794 Other liabilities 316,808 301,181 ___________ ___________ Total liabilities 221,423,328 204,181,105 ___________ ___________ Commitments and contingencies - - Stockholders' Equity: Preferred Stock, no par value, $14.25 stated value - 5,000,000 shares authorized, 158,797 and 160,756 issued and outstanding on June 30, 1998 and December 31, 1997, respectively 2,262,857 2,290,773 Common stock, $.10 par value- 5,000,000 shares authorized, 1,601,759 and 1,581,053 issued and outstanding on June 30, 1998 and December 31, 1997, respectively 160,176 158,106 Surplus 10,264,907 9,862,700 Unearned ESOP shares (128,349) (137,243) Unrealized gains/losses on securities available-for-sale, net of deferred taxes of $112,445 in June 1998 and $51,549 in December 1997 194,275 81,966 Retained earnings 1,639,548 675,008 ___________ ___________ Total stockholders' equity 14,393,414 12,931,310 ___________ ___________ Total liabilities and stockholders' equity $235,816,742 $217,112,415 =========== ===========
* The consolidated statement of condition at December 31, 1997 is taken from the audited balance sheet on that date.
MIDSOUTH BANCORP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME Three Months Ended Six Months Ended June 30, June 30, 1998 1997 1998 1997 (unaudited) (unaudited) ___________________________ ___________________________ INTEREST INCOME: Loans, including fees $3,640,074 $2,756,657 $6,961,806 $5,216,405 Securities Taxable $601,915 785,491 1,190,426 $1,532,780 Nontaxable 224,177 205,080 444,253 348,812 Federal funds sold 169,700 145,355 349,737 348,270 __________ __________ __________ __________ TOTAL 4,635,866 3,892,583 8,946,222 7,446,267 __________ __________ __________ __________ INTEREST EXPENSE: Interest on deposits 1,628,696 1,418,057 3,182,996 2,702,252 Interest on note payable 65,344 43,539 129,678 75,066 __________ __________ __________ __________ TOTAL 1,694,040 1,461,596 3,312,674 2,777,318 __________ __________ __________ __________ NET INTEREST INCOME 2,941,826 2,430,987 5,633,548 4,668,949 PROVISION FOR LOAN LOSSES 238,000 209,332 496,000 362,600 __________ __________ __________ __________ NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 2,703,826 2,221,655 5,137,548 4,306,349 __________ __________ __________ __________ OTHER OPERATING INCOME: Service charges on deposits 629,353 522,862 1,214,274 961,076 Gains on securities, net - 85,355 - 85,355 Credit life insurance 40,953 50,660 68,071 101,255 Other charges and fees 201,868 155,294 368,669 262,974 __________ __________ __________ __________ TOTAL OTHER INCOME 872,174 814,171 1,651,014 1,410,660 __________ __________ __________ __________ OTHER EXPENSES: Salaries and employee benefits 1,283,611 1,126,065 2,533,904 2,154,037 Occupancy expense 565,470 534,910 1,113,608 1,040,434 Other 780,117 707,590 1,488,942 1,357,261 __________ __________ __________ __________ TOTAL OTHER EXPENSES 2,629,198 2,368,565 5,136,454 4,551,732 __________ __________ __________ __________ INCOME BEFORE INCOME TAXES 946,802 667,261 1,652,108 1,165,277 PROVISION FOR INCOME TAXES 268,150 184,750 420,948 301,344 __________ __________ __________ __________ NET INCOME $678,652 $482,511 $1,231,160 $863,933 PREFERRED DIVIDEND REQUIREMENT 37,444 39,946 74,964 79,753 __________ __________ __________ __________ INCOME AVAILABLE TO COMMON SHAREHOLDERS $641,208 $442,565 $1,156,196 $784,180 ========== ========== ========== ========== BASIC EARNINGS PER COMMON SHARE $0.40 $0.28 $0.73 $0.51 ========== ========== ========== ========== DILUTED EARNINGS PER COMMON SHARE $0.35 $0.25 $0.63 $0.46 ========== ========== ========== ==========
5
MIDSOUTH BANCORP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY FOR THE SIX MONTHS ENDED JUNE 30, 1998 (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, 1997 160,756 $2,290,773 1,581,053 $158,106 $9,862,700 ($137,243) $81,966 $675,008 $12,931,310 Issuance of common stock 16,795 1,679 374,682 376,361 Dividends paid on common stock (191,586) (191,586) Dividends paid on preferred stock (74,964) (74,964) Preferred stock conversion (1,959) (27,916) 3,911 391 27,525 (70) (70) Net income 1,231,160 1,231,160 ESOP obligation, net of repayments 8,894 8,894 Net change in unrealized gain/ loss on securities available-for-sale, net of tax 112,309 112,309 _______ __________ _________ ________ ___________ _________ ________ __________ ___________ BALANCE, JUNE 30, 1998 158,797 $2,262,857 1,601,759 $160,176 $10,264,907 ($128,349) $194,275 $1,639,548 $14,393,414 ======= ========== ========= ======== =========== ========= ======== ========== ===========
MIDSOUTH BANCORP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) FOR THE SIX MONTHS ENDED JUNE 30, 1998 and 1997 June 30, 1998 June 30, 1997 _____________ _____________ CASH FLOWS FROM OPERATING ACTIVITIES: Net Income $1,231,160 $863,933 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 462,292 408,807 Provision for loan losses 415,000 362,600 Provision for deferred income taxes 49,330 40,116 Provision for losses on other real estate owned - 33,718 Discount accretion (premium amortization), net (13,235) (20,449) Gain on sale of premises and equipment (750) - Loss on sale of other real estate owned 3,037 - Gain on sale of securities - (85,356) Change in accrued interest receivable (7,673) (273,557) Change in accrued interest payable 24,486 74,084 Change in other liabilities (67,757) 35,030 Change in other assets (156,618) (182,613) __________ __________ NET CASH PROVIDED BY OPERATING ACTIVITIES 1,939,272 1,256,313 __________ __________ CASH FLOWS FROM INVESTING ACTIVITIES: Net decrease (increase) in interest-bearing deposits in banks (4,224) 235,562 Proceeds from maturities and calls of securities available-for-sale 4,988,673 1,343,689 Proceeds from sales of securities available-for-sale - 8,494,338 Purchases of securities held-to-maturity - (8,737,947) Purchases of securities available-for-sale (8,241,206) (19,321,260) Loan originations, net of repayments (14,468,338) (19,784,433) Purchases of premises and equipment (1,516,789) (1,423,762) Proceeds from sales of premises and equipment 29,961 - Proceeds from sales of other real estate owned 17,000 - __________ __________ NET CASH USED IN INVESTING ACTIVITIES (19,194,923) (39,193,813) __________ __________ CASH FLOWS FROM FINANCING ACTIVITIES: Net increase in deposits 16,926,374 23,464,793 Net (decrease) increase in securities sold under repurchase agreements and federal funds purchased (69,443) 2,192,910 Issuance of notes payable 435,000 2,564,210 Repayments of notes payable (89,821) (1,552,405) Proceeds from issuance of common stock 376,361 180,001 Payment of dividends (266,550) (244,748) Payment of fractional shares resulting from conversion of preferred stock and stock dividends (70) (47) __________ __________ NET CASH PROVIDED BY FINANCING ACTIVITIES 17,311,851 26,604,714 __________ __________ NET DECREASE IN CASH & CASH EQUIVALENTS 56,200 (11,332,786) CASH & CASH EQUIVALENTS AT BEGINNING OF PERIOD 23,834,024 25,414,562 __________ __________ CASH & CASH EQUIVALENTS AT END OF PERIOD $23,890,224 $14,081,776 ========== ==========
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 subsidiary as of June 30, 1998 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 1997 annual consolidated report and Form 10-KSB. The results of operations for the three and six month periods ended June 30, 1998 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:
Six Months Ended June 30, (in thousands) 1998 1997 ______ ______ Balance at beginning of year $1,415 $1,087 Provision for loan losses 496 363 Recoveries 83 163 Loans charged off (308) (281) ______ ______ Balance at end of quarter $1,686 $1,332 ====== ======
3. NEW ACCOUNTING STANDARD MidSouth adopted Statement of Financial Accounting Standards No. 130 "Reporting Comprehensive Income" ("SAFS 130") effective January 1, 1998. SFAS 130 establishes standards for reporting and display of comprehensive income and its components. Comprehensive income includes net income and other comprehensive income 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, 1998 and 1997.
1998 1997 __________ ________ Net income $1,231,160 $863,933 Other comprehensive income, net of tax 112,309 (24,620) __________ ________ Total comprehensive income $1,343,469 $839,313 ========== ========
4. SUBSEQUENT EVENT On June 17, 1998, MidSouth announced a three-for-two (50%) stock split on its common stock to holders of record as of July 31, 1998 payable August 31, 1998. This split will be effected by way of a dividend of one share of common stock for each two shares of common stock outstanding on the record date. Earnings per share information as adjusted for the split is presented below:
2nd Qtr 98 2nd Qtr 97 YTD 6/98 YTD 6/97 __________ ___________ _________ _________ Basic EPS $0.27 $0.19 $0.49 $0.34 Diluted EPS $0.23 $0.17 $0.42 $0.31 Weighted average shares Basic 2,396,051 2,339,837 2,388,821 2,327,784 Diluted 2,949,486 2,846,393 2,944,272 2,829,813
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION This review should be read in conjunction with the MidSouth Bancorp, Inc. ("MidSouth") consolidated financial statements and accompanying notes contained herein, as well as with MidSouth's 1997 annual consolidated financial statements, the notes thereto and the related Management's Discussion and Analysis. MidSouth completed a second strong quarter for 1998, with continued growth in loans, deposits and net income. Net income totaled $678,652 for the quarter, an increase of 41% over net income of $482,511 reported for the second quarter of 1997. Income available to common shareholders totaled $641,208 for the quarter, compared to $442,565 for the second quarter of 1997. Basic earnings per share were $.40 and $.28 for the quarters ended June 30, 1998 and 1997, respectively. Diluted earnings per share were $.35 for the second quarter of 1998 compared to $.25 for the second quarter of 1997. Net income for the six months ended June 30, 1998 totaled $1,231,160 compared to $863,933 for the first six months of 1997. Income available to common shareholders totaled $1,156,196 for the six months ended June 30, 1998 compared to $784,180 for the six months ended June 30, 1997. Basic earnings per share were $.73 and $.51 for the six month periods ended June 30, 1998 and 1997, respectively. Diluted earnings per share were $.63 for the first six months of 1998 compared to $.46 for the first six months of 1997. The increase in earnings resulted primarily from increased net interest income due to increased loan volume. Net interest income increased $510,839, or 20%, in quarterly comparison and $964,599, or 25%, in year- to-date comparison. Non-interest income, exclusive of net gains on sales of investment securities, increased $143,358 in quarterly comparison and $325,709 in annual comparison. Increases in service charges and fees on deposit accounts contributed most of the increase to non-interest income. Loans, net of Allowance for Loan Losses ("ALL"), increased $30.5 million or 27%, from $113.0 million in the second quarter of 1997 to $143.5 million in the second quarter of 1998. Deposits grew $21.9 million or 11%, from $195.1 million at June 30, 1997 to $217.0 million at June 30, 1998. Of the $21.9 million increase, $17.2 million represented interest bearing deposits. Provisions for loan and lease losses increased $133,400, from $362,600 in June 1997 to $496,000 in June 1998, primarily due to loan growth. Non- performing loans as a percentage of total loans decreased from .45% in June of 1997 to .24% in June of 1998. The ALL represents 494% of non- performing loans as of June 30, 1998. MidSouth's leverage ratio was 6.06% at June 30, 1998. Second quarter 1998 return on average common equity was 21.46% and return on average assets was 1.18%. 9 Earnings Analysis Net Interest Income Average earning assets increased 13%, or $23.9 million, from $185.9 million for the three months ended June 30, 1997 to $209.8 million for the three months ended June 30, 1998. A change in the mix of earning assets increased net interest income as higher-yielding loans represented 66.6% of average earning assets in the second quarter of 1998 compared to 57.4% in the second quarter of 1997. The average yield on loans increased 10 basis points, from 10.36% to 10.46% at June 30, 1998. Yields on commercial and real estate loans declined 19 basis points, while consumer loan yields rose 89 basis points. Consumer loan yields increased primarily due to loans funded by MidSouth's consumer finance subsidiary, Financial Services of the South, Inc. (the "Finance Company"), and credit card loans. The Finance Company's portfolio averaged $1.4 million in consumer finance loans yielding an average of 24%. Credit card loans at the Bank averaged $1.0 million and yielded an average of 17%. Investment volume decreased $11.2 million, from $68.9 million at June 30, 1997 to $57.7 million at June 30, 1998 due to increased loan funding. The average taxable-equivalent yield on investments improved by 14 basis points for the same period, from 6.30% to 6.44%. The change in mix and increase in the volume of earning assets boosted the taxable-equivalent yield on quarterly average earning assets 45 basis points, from 8.60% for the second quarter of 1997 to 9.05% for the second quarter of 1998. An average volume increase of $14.7 million and a 17 basis point rate increase on interest-bearing liabilities resulted in increased interest expense for the quarter ended June 30, 1998 compared to the quarter ended June 30, 1997. The percentage of average interest-bearing deposits to average total deposits remained constant at 75% in quarterly comparison. The average rate paid on interest-bearing deposits increased 17 basis points, from 3.95% at June 30, 1997 to 4.12% at June 30, 1998, primarily due to higher yielding public fund deposits. In addition, in February 1998, MidSouth introduced a new money market account indexed to the 90-day Treasury bill less 50 basis points. The average rate paid on the indexed account was 4.56% for the second quarter of 1998. The average volume of notes payable increased $2.0 million in quarterly comparison as MidSouth and the Finance Company increased borrowings against their lines of credit during 1997 and the second quarter of 1998. The net effect of changes in the volume and mix of average earning assets and interest-bearing liabilities increased net interest income $510,839 in quarterly comparison. The net taxable-equivalent yield on average earning assets increased 38 basis points, from 5.44% for the quarter ended June 30, 1997 to 5.82% for the quarter ended June 30, 1998. Review of the changes in the volume and yields of average earning assets and interest- bearing liabilities between the two six month periods ended June 30, 1998 and 1997 reflected results similar to the quarterly comparison. The net taxable-equivalent yield on average earning assets for the six months ended June 30, 1998 increased 31 basis points to 5.72% at June 30, 1998 as compared to 5.41% at June 30, 1997. 10 Non-interest Income MidSouth's primary source of non-interest income, service charges on deposit accounts, increased $106,491 for the three months and $253,198 for the six months ended June 30, 1998 as compared to the same periods in 1997. The increases resulted primarily from additional insufficient funds fees and a change in January 1998 in the monthly service charge balance calculation method from average collected balance to minimum balance. This change in method calculation resulted in additional non-interest income despite the elimination of per check charges and lowering of tiered fees on most consumer deposit accounts. Other non-interest income, net of gains on sales of investment securities, increased $46,574 in quarterly comparison and $105,695 in year-to-date comparison, with significant increases recorded in lease income from a third party investment company and in VISA merchant and debit card income. Although increases have been recorded in VISA merchant and debit card income, expenses associated with these programs have also increased, offsetting the income. Decreases were realized in income from the sale of credit life insurance of $9,707 for the quarter and $33,184 for the six months period ended June 30, 1998 as compared to the same periods ended June 30, 1997. Sales of credit life insurance were higher in the first six months of 1997 due to a retail loan promotion held during the first quarter. Non-interest Expense Non-interest expense increased $260,633 for the three months and $584,722 for the six months ended June 30, 1998 compared to the three and six months ended June 30, 1997. Increases were recorded primarily in the categories of salaries and employee benefits, occupancy expenses, VISA programs, ATM processing fees, and accounting and professional fees. Salaries and employee benefits increased primarily due to additional staff. The number of full-time equivalent ("FTE") employees increased by 17, from 133 in June 1997 to 150 in June 1998. Six of the seventeen FTE employees were added in administrative positions, five in retail staffing positions and four were added for the Lake Charles office that began offering full service banking in June 1998. Occupancy expense increased in the three and six month periods ended June 30, 1998 compared to the same period of 1997 due to increases in building lease expense, depreciation and maintenance expenses associated with furniture and equipment and fuel and maintenance of bank autos. The increase in depreciation expense resulted primarily from the addition of the Morgan City Office in March 1997, expansion of MidSouth's ATM cash machine network and upgrading of computer equipment throughout 1997 to bring additional MidSouth offices into an existing computer network. Management expects depreciation expense to continue to increase as additional fixed assets are added with the completion of the Lake Charles and Ambassador Caffery offices. 11 Balance Sheet Analysis MidSouth ended the second quarter of 1998 with consolidated assets of $235,816,742, an increase of $18.7 million or 9% from the $217,112,415 reported for December 31, 1997. Deposits increased over the six months ended June 30, 1998 by $16.9 million. Of the $16.9 million increase, $5.0 million was in public fund deposits, $4.2 million in commercial deposits and $7.7 million in retail deposits. The introduction of a money market account indexed to the 90 day Treasury bill resulted in an increase in interest-bearing retail deposits of $1.8 million in the first quarter of 1998 and $3.4 million in the second quarter of 1998. Loans grew $14.3 million in the first six months of 1998, with the majority of the increase in real estate and construction loans recorded during the second quarter. Due to a decrease in loan fundings in the first three months of 1998, excess funds were used to purchase additional securities and federal funds sold. Securities available-for-sale increased $3.4 million, from $36.9 million at December 31, 1997 to $40.3 million at June 30, 1998. The increase reflects purchases of $8.2 million and maturities and principal paydowns of $5.0 million. Unrealized gains in the securities available-for-sale portfolio, net of unrealized losses and tax effect, were $194,275 at June 30, 1998, compared to a net unrealized gain of $81,966 at December 31, 1997. These amounts result from interest rate fluctuations and do not necessarily represent permanent increase of value. Moreover, classification of securities as available-for-sale does not necessarily indicate that the securities will be sold prior to maturity. Capital As of June 30, 1998, MidSouth's leverage ratio was 6.06% as compared to 6.00% at December 31, 1997. Tier 1 capital to risk-weighted assets was 9.24% and total capital to risk-weighted assets was 10.36% at the end of the second quarter of 1998. At year-end 1997, Tier 1 capital to risk- weighted assets was 9.19% and total capital to risk-weighted assets was 10.22%. The introduction of a dividend reinvestment and direct stock purchase plan late in the fourth quarter of 1997 yielded common stock purchases of $301,353 in the first six months of 1998. 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 its examination approach. To maintain safe and sound banking practices, institutions are required to take appropriate measures to insure efficient 12 operations of computer systems beyond the year 2000. Institutions should commence testing for critical systems by September 1, 1998 and should be substantially completed by December 31, 1998. MidSouth's Board of Directors established a Year 2000 compliance committee in June of 1997. The committee has inventoried MidSouth's hardware and software programs and has forwarded letters to the providers regarding Year 2000 compliance. Testing and updating has been performed on approximately 90% of MidSouth's computer hardware and approximately 10% of computer software, with the exception of the primary data processing hardware and software. Testing on the primary processing system is scheduled for the third quarter of 1998. In addition, the OCC has already performed a review of MidSouth's primary processing software vendor, Jack Henry and Associates ("JHA") and have found JHA's year 2000 project management effort "satisfactory". Furthermore, MidSouth has received a warranty from JHA as to completion of internal testing and readiness. To further reduce the risks associated with the year 2000, MidSouth held seminars for commercial customers and community businesses during the first week of May 1998. MidSouth provided seminar participants with software designed to help them identify year 2000 issues within their organizations. The software guides the user through the vendor identification and tracking process and provides assistance in other year 2000 issues such as contingency planning. As part of its own contingency plan, MidSouth has agreements with two vendors to provide short-term and long-term processing capabilities. In compliance with Year 2000 disclosure requirements, the committee has analyzed the impact that compliance with the Year 2000 may have on earnings. Costs totaling approximately $60,000 have been identified for testing and other expenses associated with the Year 2000. Additional costs are expected, but it is management's opinion that the costs will not be material to MidSouth's earnings. 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 ============================================================= June December June 30, 31, 30, 1998 1997 1997 ============================================================= Nonperforming loans Nonaccrual loans $341,419 $260,875 $518,672 Restructured loans - - - __________________________________ Total nonperforming loans 341,419 260,875 518,672 Other real estate owned, net 39,100 45,100 146,552 Other assets repossessed 5,845 13,234 26,040 __________________________________ Total nonperforming assets $386,364 $319,209 $691,264 ================================== Loans past due 90 days or more and still accruing $322,080 $245,232 $59,675 Nonperforming loans as a % of total loans .24% 0.20% 0.45% Nonperforming assets as a % of total loans, other real estate owned and other assets repossessed 0.27% 0.24% 0.60% ALL as a % of nonperforming loans 493.73% 542.30% 256.80%
14 Nonperforming assets were $386,364 as of June 30, 1998, an increase of $67,155 from the $319,209 reported for December 31, 1997 and a decrease of $304,900 from the $691,264 reported for June 30, 1998. Loans past due 90 days or more increased from $59,675 in June 1997 to $245,232 in December 1997 and to $322,080 as of June 30, 1998. Of the $322,080 in loans past due 90 days or more, $116,490 were funded by the Finance Company. Specific reserves have been established in the ALL to cover potential losses on nonperforming assets. The ALL is analyzed quarterly and additional reserves, if needed, are allocated at that time. Management believes the $1,685,688 in the reserve as of June 30, 1998 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. 15 Page 16 Item 4. Submission of Matters to a Vote of Security Holders At the annual meeting of shareholders of MidSouth Bancorp, Inc. held May 13, 1998 two Class II Directors were elected. The following provides information as to the votes:
Election of Directors For Withheld Abstentions Broker Non-Votes Will G. Charbonnet, Sr. 1,351,771 2,089 0 0 Clayton Paul Hilliard 1,351,771 2,089 0 0
Item 6. Exhibits and Reports on Form 8-K Page 17 (a) Exhibits Exihibit Number Document Description 3.1 Amended and Restated Articles of Incorporation of MidSouth Bancorp, Inc. is included as Exhibit 3.1 to the MidSouth's Report on Form 10-K for the year ended December 31, 1993, and is incorporated herein by reference. 3.2 Articles of Amendment to Amended and Restated Articles of Incorporation dated July 19, 1995 are included as Exhibit 4.2 to MidSouth's Registration Statement on Form S-8 filed September 20, 1995 and is incorporated herein by reference. 3.3 Amended and Restated By-laws adopted by the Board of Directors on April 12, 1995 are included as Exhibit 3.2 to Amendment No. 1 to MidSouth's Registration Statement on Form S-4 (Reg. No. 33-58499) filed on June 1, 1995, and are incorporated herein by reference. 10.1 MidSouth National Bank Lease Agreement with Southwest Bank Building Limited Partnership is included as Exhibit 10.7 to the Company's annual report on Form 10-K for the Year Ended December 31, 1992, and is incorporated herein by reference. 10.2 First Amendment to Lease between MBL Life Assurance Corporation, successor in interest to Southwest Bank Building Limited Partnership in Commendam, and MidSouth National Bank is included as Exhibit 10.1 to Report on the Company's annual report on Form 10-KSB for the year ended December 31, 1994, and is incorporated herein by reference. 10.3 Amended and Restated Deferred Compensation Plan and Trust is included as Exhibit 10.3 to the Company's annual report on Form 10-K for the year ended December 31, 1992 and is incorporated herein by reference. 10.4 Employment Agreements with C. R. Cloutier and Karen L. Hail are included as Exhibit 5(c) to MidSouth's Form 1-A and are incorporated herein by reference. 10.6 MidSouth Bancorp, Inc.'s 1997 Stock Incentive Plan is included as Exhibit 4.5 to MidSouth's definitive Proxy Statement filed April 11, 1997, and is incorporated herein by reference. Page 18 10.7 The MidSouth Bancorp, Inc. Dividend Reinvestment and Stock Purchase Plan is included as Exhibit 4.6 to MidSouth Bancorp, Inc.'s Form S-3D filed on July 25, 1997 and is incorporated herein by reference. 10.8 Loan Agreements and Master Notes for lines of credit established for MidSouth Bancorp, Inc. and Financial Services of the South, Inc. are included as Exhibit 10.7 of MidSouth's Form 10-QSB filed on August 14, 1997 and is incorporated herein by reference. 11 Computation of earnings per share 27 Financial Data Schedule (b) Reports Filed on Form 8-K (none) Signatures In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. MidSouth Bancorp, Inc. (Registrant) Date: August 14, 1998 _______________ _______________________________ C. R. Cloutier, President & CEO _______________________________________ Karen L. Hail, Executive Vice President & CFO _______________________________________ Teri S. Stelly, Senior Vice President & Controller EX-11 2
MIDSOUTH BANCORP, INC. AND SUBSIDIARIES EXHIBIT 11 COMPUTATION OF EARNINGS PER SHARE (Unaudited) FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 1998 AND 1997 Second Quarter Second Quarter Year-to-Date Year-to-Date June 30, June 30, June 30, June 30, BASIC 1998 1997 1998 1997 ______________ ______________ ____________ ____________ Earnings: Income applicable to common stock $641,208 $442,565 $1,156,196 $784,180 ========== ========== =========== ========== Shares: Weighted average number of common shares outstanding 1,597,367 1,559,891 1,592,547 1,551,856 ========== ========== =========== ========== 16593080 Basic earnings per common share: Income applicable to common stock $0.40 $0.28 $0.73 $0.51 ========== ========== =========== ========== DILUTED Earnings: Net income $678,652 $482,511 $1,231,160 $863,933 ========== ========== =========== ========== Weighted average number of common shares outstanding 1,597,367 1,559,891 1,592,547 1,551,856 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 51,304 - 51,415 - Assuming conversion of preferred stock at a conversion rate of 1 to 1.999 shares 317,653 337,704 318,886 334,686 __________ __________ ___________ __________ Weighted average number of common shares outstanding, as adjusted 1,966,324 1,897,595 1,962,848 1,886,542 ========== ========== =========== ========== Diluted earnings per common share $0.35 $0.25 $0.63 $0.46 ========== ========== =========== ==========
EX-27 3
9 6-MOS DEC-31-1997 JUN-30-1998 12,890,224 53,152 11,000,000 0 40,325,095 16,731,169 17,651,135 145,207,201 1,685,688 235,816,742 216,994,125 0 885,230 3,543,973 0 2,262,857 160,176 11,970,381 235,816,742 6,961,806 1,634,679 349,737 8,946,222 3,182,996 3,312,674 5,633,548 496,000 0 5,136,454 1,652,108 0 0 0 1,231,160 .73 .63 5.57 341,419 322,080 0 0 1,414,826 308,267 83,129 1,685,688 80,000 0 1,605,688
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