10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C.  20549

FORM 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2013

OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____ to _____

COMMISSION FILE NUMBER 1-11826

MIDSOUTH BANCORP, INC.

(Exact name of registrant as specified in its charter)

Louisiana	72 –1020809
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

102 Versailles Boulevard, Lafayette, Louisiana 70501

(Address of principal executive offices, including zip code)

(337) 237-8343

(Registrant’s telephone number, including area code)

Indicate by checkmark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

YES   x   NO   ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

YES   x   NO   ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a small reporting company.

Large accelerated filer ¨   Accelerated filer x Non-accelerated filer ¨ Small reporting company ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.)

YES¨   NO   x

As of May 10, 2013, there were 11,238,786 shares of the registrant’s Common Stock, par value $0.10 per share, outstanding.

Part I – Financial Information	3
Item 1. Financial Statements.	3
Consolidated Balance Sheets	3
Consolidated Statements of Earnings (unaudited)	4
Consolidated Statements of Comprehensive Income (unaudited)	5
Consolidated Statement of Shareholders’ Equity (unaudited)	6
Consolidated Statements of Cash Flows (unaudited)	7
Notes to Interim Consolidated Financial Statements	8
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operation.	27
Forward-Looking Statements	27
Critical Accounting Policies	28
Results of Operations	29
Analysis of Balance Sheet	32
Liquidity and Capital	34
Asset Quality	35
Item 3. Quantitative and Qualitative Disclosures About Market Risk.	37
Item 4. Controls and Procedures.	37
Part II – Other Information	38
Item 1. Legal Proceedings.	38
Item 1A. Risk Factors.	38
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.	38
Item 3. Defaults Upon Senior Securities.	38
Item 4. Mine Safety Disclosures.	38
Item 5. Other Information.	38
Item 6. Exhibits.	38

Part I – Financial Information

Item 1. Financial Statements.

MidSouth Bancorp, Inc. and Subsidiaries

Consolidated Balance Sheets

(dollars in thousands, except share data)

	March 31, 2013 (unaudited)			December 31, 2012* (audited)
Assets
Cash and due from banks, including required reserves of $22,094 and $14,083, respectively	$	36,428		$	46,297
Interest-bearing deposits in banks		71,206			20,276
Federal funds sold		10,375			7,000
Time deposits held in banks		-			881
Securities available-for-sale, at fair value (cost of $376,554 at March 31, 2013 and $412,065 at December 31, 2012)		387,786			424,617
Securities held-to-maturity (fair value of $170,177 at March 31, 2013 and $156,924 at December 31, 2012)		167,617			153,524
Other investments		10,017			8,310
Loans		1,037,859			1,046,940
Allowance for loan losses		(7,457	)		(7,370	)
Loans, net		1,030,402			1,039,570
Bank premises and equipment, net		66,797			63,461
Accrued interest receivable		6,847			6,691
Goodwill		42,676			42,781
Intangibles		8,771			9,047
Cash surrender value of life insurance		13,242			13,183
Other real estate		7,552			7,496
Other assets		7,340			8,594
Total assets	$	1,867,056		$	1,851,728
Liabilities and Shareholders’ Equity
Liabilities:
Deposits:
Non-interest-bearing	$	390,774		$	380,557
Interest bearing		1,169,352			1,171,347
Total deposits		1,560,126			1,551,904
Securities sold under agreements to repurchase		48,557			41,447
Notes Payable		28,772			29,128
Junior subordinated debentures		29,384			29,384
Other liabilities		9,384			10,624
Total liabilities		1,676,223			1,662,487
Commitments and contingencies
Shareholders’ equity:
Series B Preferred stock, no par value; 5,000,000 shares authorized, 32,000 shares issued and outstanding at March 31, 2013 and December 31, 2012		32,000			32,000
Series C Preferred stock, no par  value; 100,000 shares authorized, 99,971 shares issued and outstanding at March 31, 2013 and December 31, 2012		9,997			9,997
Common stock, $0.10 par value; 30,000,000 shares authorized, 11,389,263 and 11,386,611 issued and  11,238,786 and 11,236,134 outstanding at March 31, 2013 and December 31, 2012, respectively		1,139			1,139
Additional paid-in capital		110,703			110,603
Accumulated other comprehensive income		7,301			8,159
Treasury stock – 150,477 shares at March 31, 2013 and December 31, 2012, at cost		(3,286	)		(3,286	)
Retained earnings		32,979			30,629
Total shareholders’ equity		190,833			189,241
Total liabilities and shareholders’ equity	$	1,867,056		$	1,851,728

See notes to unaudited consolidated financial statements.

* Derived from audited financial statements.

3

MidSouth Bancorp, Inc. and Subsidiaries

Consolidated Statements of Earnings (unaudited)

(in thousands, except per share data)

	Three Months Ended March 31,
	2013		2012
Interest income:
Loans, including fees	$	17,117	$	12,403
Securities and other investments:
Taxable		2,059		2,069
Nontaxable		839		775
Federal funds sold		4		2
Time and interest bearing deposits in other banks		38		39
Other investments		72		45
Total interest income		20,129		15,333
Interest expense:
Deposits		1,078		1,100
Securities sold under agreements to repurchase		179		181
Other borrowings and payable		124		-
Junior subordinated debentures		336		248
Total interest expense		1,717		1,529
Net interest income		18,412		13,804
Provision for loan losses		550		675
Net interest income after provision for loan losses		17,862		13,129
Non-interest income:
Service charges on deposits		2,171		1,824
Gain on securities, net (includes $204,000 accumulated other comprehensive  income reclassifications for net gains on sales of AFS securities)		204		-
ATM and debit card income		1,356		1,126
Other charges and fees		700		578
Total non-interest income		4,431		3,528
Non-interest expenses:
Salaries and employee benefits		8,392		6,086
Occupancy expense		3,597		2,548
FDIC insurance		345		368
Other		5,097		3,666
Total non-interest expenses		17,431		12,668
Income before income taxes		4,862		3,989
Income tax expense (includes $71,000 of  income tax expense for reclassification adjustment for net gains on sales of AFS securities)		1,434		1,103
Net earnings		3,428		2,886
Dividends on preferred stock		292		400
Net earnings available to common shareholders	$	3,136	$	2,486
Earnings per share:
Basic	$	0.28	$	0.24
Diluted	$	0.27	$	0.24
Cash dividends declared per common share	$	0.07	$	0.07

See notes to unaudited consolidated financial statements.

4

MidSouth Bancorp, Inc. and Subsidiaries

Consolidated Statements of Comprehensive Income (unaudited)

(in thousands)

	Three Months Ended March 31,
	2013			2012
Net earnings	$	3,428		$	2,886
Other comprehensive income, net of tax:
Unrealized losses on securities available-for-sale:
Unrealized holding losses arising during the period, net of income tax benefit of $390 for the three months ended March 31, 2013 and net of income tax benefit of $138 for the three months ended March 31, 2012		(725	)		(268	)
Reclassification adjustment for gains on sales of securities available-for-sale, net of income tax expense of $71  for the three months ended March 31, 2013		(133	)		-
Total other comprehensive loss		(858	)		(268	)
Total comprehensive income	$	2,570		$	2,618

See notes to unaudited consolidated financial statements.

5

MidSouth Bancorp, Inc. and Subsidiaries

Consolidated Statement of Shareholders’ Equity (unaudited)

For the Three Months Ended March 31, 2013

(in thousands, except share and per share data)

	Preferred Stock				Common Stock				Additional Paid-in		Accumulated Other Comprehensive			Treasury			Retained
	Shares		Amount		Shares		Amount		Capital		Income			Stock			Earnings			Total
Balance - December 31, 2012		131,971	$	41,997		11,386,611	$	1,139	$	110,603	$	8,159		$	(3,286	)	$	30,629		$	189,241
Net earnings		-		-		-		-		-		-			-			3,428			3,428
Dividends on Series B  and Series C Preferred Stock		-		-		-		-		-		-			-			(292	)		(292	)
Dividends on common stock, $0.07 per share		-		-		-		-		-		-			-			(786	)		(786	)
Exercise of stock options, including tax benefit		-		-		2,652		-		30		-			-			-			30
Stock option and restricted stock compensation expense		-		-		-		-		70		-			-			-			70
Change in accumulated other comprehensive income		-		-		-		-		-		(858	)		-			-			(858	)
Balance – March 31, 2013		131,971	$	41,997		11,389,263	$	1,139	$	110,703	$	7,301		$	(3,286	)	$	32,979		$	190,833

See notes to unaudited consolidated financial statements.

6

MidSouth Bancorp, Inc. and Subsidiaries

Consolidated Statements of Cash Flows (unaudited)

(in thousands)

	For the Three Months Ended March 31,
	2013			2012
Cash flows from operating activities:
Net earnings	$	3,428		$	2,886
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation		1,321			885
Amortization (accretion) of purchase accounting adjustments		(1,914	)		(690	)
Provision for loan losses		550			675
Provision for deferred tax expense		599			229
Amortization of premiums on securities, net		1,299			358
Amortization of other investments		5			4
Stock option expense		62			-
Restricted stock expense		8			12
Net gain on sale of investment securities		(204	)		-
Net loss on sale of other real estate owned		8			94
Net write down of other real estate owned		47			(8	)
Net loss on sale of premises and equipment		6			-
Change in accrued interest receivable		(156	)		(134	)
Change in accrued interest payable		(286	)		(250	)
Change in other assets & other liabilities, net		1,284			335
Net cash provided by operating activities		6,057			4,396
Cash flows from investing activities:
Net decrease in time deposits in other banks		881			-
Proceeds from maturities and calls of securities available-for-sale		23,664			20,529
Proceeds from maturities and calls of securities held-to-maturity		7,620			3,465
Proceeds from sale of securities available-for-sale		41,839			-
Purchases of securities available-for-sale		(35,866	)		(19,871	)
Purchases of securities held-to-maturity		(22,194	)		-
Proceeds from redemptions of other investments		-			-
Purchases of other investments		(1,712	)		(1	)
Net change in loans		15,075			(1,767	)
Purchases of premises and equipment		(4,664	)		(417	)
Proceeds from sale of premises and equipment		1			-
Proceeds from sale of other real estate owned		306			110
Net cash provided by investing activities		24,950			2,048
Cash flows from financing activities:
Change in deposits		8,453			12,734
Change in securities sold under agreements to repurchase		7,110			2,977
Federal Home Loan Bank advances		-			100
Repayments of Federal Home Loan Bank advances		(14	)		(100	)
Repayments of notes payable		(250	)		-
Proceeds and tax benefit from exercise of stock options,		30			-
Payment of dividends on preferred stock		(368	)		(400	)
Payment of dividends on common stock		(1,532	)		(732	)
Net cash provided by financing activities		13,429			14,579
Net increase in cash and cash equivalents		44,436			21,023
Cash and cash equivalents, beginning of period		73,573			83,303
Cash and cash equivalents, end of period	$	118,009		$	104,326
Supplemental information- Noncash items
Transfer of loans to other real estate	$	417		$	97
Accrued preferred stock dividends		292			400

See notes to unaudited consolidated financial statements.

7

MidSouth Bancorp, Inc. and Subsidiaries

Notes to Interim Consolidated Financial Statements

March 31, 2013

(Unaudited)

1.  Basis of Presentation

The accompanying unaudited consolidated financial statements and notes thereto contain all adjustments, consisting only of normal recurring adjustments, necessary to present fairly, in accordance with accounting principles generally accepted in the United States of America (“GAAP”), the financial position of MidSouth Bancorp, Inc. (the “Company”) and its subsidiaries as of March 31, 2013 and the results of their operations and their cash flows for the periods presented. The interim financial information should be read in conjunction with the annual consolidated financial statements and the notes thereto included in the Company’s 2012 Annual Report on Form 10-K.

The results of operations for the three month period ended March 31, 2013 are not necessarily indicative of the results to be expected for the entire year.

Use of Estimates – The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reported period. Actual results could differ from those estimates.

Summary of Significant Accounting Policies — The accounting and reporting policies of the Company conform with GAAP and general practices within the banking industry.  There have been no material changes or developments in the application of accounting principles or in our evaluation of the accounting estimates and the underlying assumptions or methodologies that we believe to be Critical Accounting Policies and Estimates as disclosed in our 2012 Annual Report on Form 10-K.

Recently Adopted Accounting Pronouncements — ASU 2013-01, Balance Sheet (Topic 210):  Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities applies to derivatives accounted for in accordance with ASC 815 (Derivatives and Hedging), including bifurcated embedded derivatives, repurchase agreements and reverse repurchase agreements, and securities lending transactions that are either offset in accordance with ASC 210-20-45 or ASC 815-10-45 or subject to an enforceable master netting arrangement or similar agreement.  The effective date of this Update is for fiscal years beginning on or after January 1, 2013 and interim periods within those annual periods.  Adoption of this Update did not impact the Company’s consolidated financial statements or the interim notes to the consolidated financial statements.

ASU 2013-02, Comprehensive Income (Topic 220):  Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income was issued in the first quarter of 2013 to improve the reporting of reclassifications out of accumulated other comprehensive income (“AOCI”).  The ASU requires information regarding the impact to net income of the reclassification on significant amounts out of AOCI to be presented on either the face of the income statement or in the notes to the financial statements.  The amendments in this Update do not change the current reporting requirements for net income or AOCI.  For public entities, the amendments in this Update are effective prospectively for reporting periods beginning after December 15, 2012.  In compliance with the Update, the information required has been included in the Consolidated Statements of Earnings for the period ended March 31, 2013.

Reclassifications—Certain reclassifications have been made to the prior years’ financial statements in order to conform to the classifications adopted for reporting in 2013.  The reclassifications had no impact on net income or stockholders equity.

8

2.  Investment Securities

The portfolio of investment securities consisted of the following (in thousands):

	March 31, 2013
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Available-for-sale:
U.S. Government sponsored enterprises	$	13,195	$	8	$	17	$	13,186
Obligations of state and political subdivisions		73,186		3,997		4		77,179
GSE mortgage-backed securities		162,299		5,137		116		167,320
Other asset-backed securities		12,174		454		-		12,628
Collateralized mortgage obligations: residential		86,784		629		160		87,253
Collateralized mortgage obligations: commercial		28,452		1,241		-		29,693
Collateralized debt obligation		464		63		-		527
	$	376,554	$	11,529	$	297	$	387,786

	December 31, 2012
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Available-for-sale:
U.S. Government sponsored enterprises	$	13,422	$	2	$	-	$	13,424
Obligations of state and political subdivisions		83,093		4,328		-		87,421
GSE mortgage-backed securities		172,932		5,887		-		178,819
Collateralized mortgage obligations: residential		101,381		652		47		101,986
Collateralized mortgage obligations: commercial		28,528		1,233		-		29,761
Other asset-backed securities		12,245		497		-		12,742
Collateralized debt obligation		464		-		-		464
	$	412,065	$	12,599	$	47	$	424,617

	March 31, 2013
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Held-to-maturity:
Obligations of state and political subdivisions	$	44,443	$	201	$	481	$	44,163
GSE mortgage-backed securities		91,968		2,315		29		94,254
Collateralized mortgage obligations: residential		15,026		-		90		14,936
Collateralized mortgage obligations: commercial		16,180		644		-		16,824
	$	167,617	$	3,160	$	600	$	170,177

9

	December 31, 2012
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Held-to-maturity:
Obligations of state and political subdivisions	$	42,900	$	7	$	7	$	42,900
GSE mortgage-backed securities		89,383		2,819		-		92,202
Collateralized mortgage obligations: residential		5,009		-		-		5,009
Collateralized mortgage obligations: commercial		16,232		581		-		16,813
	$	153,524	$	3,407	$	7	$	156,924

With the exception of 3 private-label collateralized mortgage obligations (“CMOs”) with a combined balance remaining of $83,000 at March 31, 2013, all of the Company’s CMOs are government-sponsored enterprise (“GSE”) securities.

Effective January 1, 2013, an adjustment was made to the premium amortization method of the pass-through mortgage-backed securities (“MBSs”) and the CMOs.  Previously, the premiums were amortized over the average life of the securities which resulted in greater amortization taken in the early years of the bond’s life.  The change provides for the premium amortization to be calculated based on 2 times the average life on MBSs and on final principal window for the CMOs, together with the related premium amortization based on principal pay-downs.  The adjustment was made to more closely reflect the level yield method as required byGAAP and resulted in an increase in interest income on investment securities of approximately $73,000 for the three months ended March 31, 2013, or approximately $0.02 diluted earnings per share on an annualized basis.

The amortized cost and fair value of debt securities at March 31, 2013 by contractual maturity are shown in the following table (in thousands) with the exception of other asset-backed securities, MBSs, CMOs, and the collateralized debt obligation.   Expected maturities may differ from contractual maturities for mortgage-backed securities and CMOs because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

	Amortized Cost		Fair Value
Available-for-sale:
Due in one year or less	$	13,977	$	14,152
Due after one year through five years		44,507		46,369
Due after five years through ten years		22,706		24,462
Due after ten years		5,191		5,382
Other asset-backed securities		12,174		12,628
Mortgage-backed securities and collateralized mortgage obligations:
Residential		249,083		254,573
Commercial		28,452		29,693
Collateralized debt obligation		464		527
	$	376,554	$	387,786

10

	Amortized Cost		Fair Value
Held-to-maturity:
Due in one year or less	$	306	$	307
Due after one year through five years		1,152		1,154
Due after five years through ten years		6,218		6,329
Due after ten years		36,767		36,373
Mortgage-backed securities and collateralized mortgage obligations:
Residential		106,994		109,190
Commercial		16,180		16,824
	$	167,617	$	170,177

Details concerning investment securities with unrealized losses are as follows (in thousands):

	March 31, 2013
	Securities with losses under 12 months				Securities with losses over 12 months				Total
	Fair  Value		Gross Unrealized Loss		Fair Value		Gross Unrealized Loss		Fair Value		Gross Unrealized Loss
Available-for-sale:
U.S. Government sponsored enterprises	$	5,512	$	17	$	-	$	-	$	5,512	$	17
Obligations of state and - political subdivisions		491		4		-		-		491		4
GSE mortgage-backed  securities		34,310		116		-		-		34,310		116
Collateralized mortgage  obligations: residential		19,920		159		82		1		20,002		160
	$	60,233	$	296	$	82	$	1	$	60,315	$	297

	December 31, 2012
	Securities with losses under 12 months				Securities with losses over 12 months				Total
	Fair  Value		Gross Unrealized Loss		Fair Value		Gross Unrealized Loss		Fair Value		Gross Unrealized Loss
Available-for-sale:
Collateralized mortgage obligations: residential	$	10,085	$	45	$	96	$	2	$	10,181	$	47

11

	March 31, 2013
	Securities with losses under 12 months				Securities with losses over 12 months				Total
	Fair  Value		Gross Unrealized Loss		Fair Value		Gross Unrealized Loss		Fair Value		Gross Unrealized Loss
Held-to-maturity:
Obligations of state and political subdivisions	$	29,289	$	481	$	-	$	-	$	29,289	$	481
GSE mortgage-backed securities		9,996		29		-		-		9,996		29
Collateralized mortgage obligations: residential		14,936		90						14,936		90
	$	54,221	$	600	$	-	$	-	$	54,221	$	600

	December 31, 2012
	Securities with losses under 12 months				Securities with losses over 12 months				Total
	Fair  Value		Gross Unrealized Loss		Fair Value		Gross Unrealized Loss		Fair Value		Gross Unrealized Loss
Held-to-maturity:
Obligations of state and political subdivisions	$	1,128	$	7	$	-	$	-	$	1,128	$	7

Management evaluates each quarter whether unrealized losses on securities represent impairment that is other than temporary. For debt securities, the Company considers its intent to sell the securities or if it is more likely than not the Company will be required to sell the securities.  If such impairment is identified, based upon the intent to sell or the more likely than not threshold, the carrying amount of the security is reduced to fair value with a charge to earnings. Upon the result of the aforementioned review, management then reviews for potential other than temporary impairment based upon other qualitative factors.  In making this evaluation, management considers changes in market rates relative to those available when the security was acquired, changes in market expectations about the timing of cash flows from securities that can be prepaid, performance of the debt security, and changes in the market’s perception of the issuer’s financial health and the security’s credit quality.  If determined that a debt security has incurred other than temporary impairment, then the amount of the credit related impairment is determined.  If a credit loss is evident, the amount of the credit loss is charged to earnings and the non-credit related impairment is recognized through other comprehensive income.

The unrealized losses on debt securities at March 31, 2013 resulted from changing market interest rates over the yields available at the time the underlying securities were purchased.  Of the four US government sponsored securities classified as available-for-sale, one contained unrealized losses at March 31, 2013.  Of the 122 obligations of state and political subdivisions classified as available-for-sale, one contained unrealized losses at March 31, 2013.  Of the 82 GSE mortgage-backed securities classified as available-for-sale, eight contained unrealized losses at March 31, 2013.  Of the 36 residential collateralized mortgage obligations classified as available-for-sale, seven contained unrealized losses at March 31, 2013.  Management identified no impairment related to credit quality.  At March 31, 2013, management had the intent and ability to hold impaired securities and no impairment was evaluated as other than temporary.  As a result, no other than temporary impairment losses were recognized during the three months ended March 31, 2013.

During the three months ended March 31, 2013, the Company sold 21 securities classified as available-for-sale at a net gain of $204,000.  Of the 21 securities sold, 18 securities were sold with gains totaling $217,000 and three securities were sold at a loss of $13,000.  During the three months ended March 31, 2012, the Company did not sell any securities.

Securities with an aggregate carrying value of approximately $302.1 million and $226.2 million at March 31, 2013 and December 31, 2012, respectively, were pledged to secure public funds on deposit and for other purposes required or permitted by law.

12

3.  Other Investments

The Company is required to own stock in the Federal Reserve Bank of Atlanta (“FRB-Atlanta”) and as a member of the Federal Home Loan Bank system, owns stock in the Federal Home Loan Bank of Dallas (“FHLB-Dallas”).  The Company accounts for FRB-Atlanta and FHLB-Dallas stock as other investments along with stock ownership in two correspondent banks and a Community Reinvestment Act (“CRA”) investment in a Senior Housing Crime Prevention program in Louisiana. The CRA investment consisted of three government-sponsored agency mortgage-backed securities purchased by the Company and held by the Senior Housing Crime Prevention program.  The majority of the interest earned on the securities provides income to the program.

For impairment analysis, the Company reviews financial statements and regulatory capital ratios for each of the banks in which the Company owns stock to verify financial stability and regulatory compliance with capital requirements.  As of March 31, 2013 and December 31, 2012, based upon quarterly reviews, management determined that there was no impairment in the bank stocks held as other investments.

The aggregate carrying amount of other investments consisted of the following (in thousands):

	March 31, 2013		December 31, 2012
FRB-Atlanta	$	3,789	$	2,258
FHLB-Dallas		1,863		1,862
Other bank stocks		2,063		2,063
Other stocks		187		7
CRA investment		2,115		2,120
	$	10,017	$	8,310

4.  Credit Quality of Loans and Allowance for Loan Losses

The allowance for loan losses and recorded investment in loans as of the dates indicated are as follows:

	As of March 31, 2013
( in thousands)	Collectively Evaluated for Impairment		Individually Evaluated for Impairment		Loans Acquired with Deteriorated Credit Quality		Total
Allowance for loan losses:
Commercial, financial, agriculture	$	1,115	$	467	$	-	$	1,582
Real estate – construction		2,212		51		-		2,263
Commercial real estate		2,252		21		-		2,273
Residential real estate		827		42		-		869
Consumer		319		106		-		425
Financial leases		42		-		-		42
Other		3		-		-		3
Total allowance for loan losses	$	6,770	$	687	$	-	$	7,457

	As of March 31, 2013
( in thousands)	Collectively Evaluated for Impairment		Individually Evaluated for Impairment		Loans Acquired with Deteriorated Credit Quality		Total
Loans:
Commercial, financial, agriculture	$	313,677	$	1,648	$	72	$	315,397
Real estate – construction		81,673		835		-		82,508
Commercial real estate		399,117		2,688		3,900		405,705
Residential real estate		136,797		1,205		282		138,284
Consumer		88,643		255		-		88,898
Financial leases		4,962		-		-		4,962
Other		2,105		-		-		2,105
Total loans	$	1,026,974	$	6,631	$	4,254	$	1,037,859

13

	As of December 31, 2012
( in thousands)	Collectively Evaluated for Impairment		Individually Evaluated for Impairment		Loans Acquired with Deteriorated Credit Quality		Total
Allowance for loan losses:
Commercial, financial, agriculture	$	1,144	$	391	$	-	$	1,535
Real estate – construction		2,090		57		-		2,147
Commercial real estate		2,131		35		-		2,166
Residential real estate		906		30		-		936
Consumer		429		114		-		543
Financial leases		41		-		-		41
Other		2		-		-		2
Total allowance for loan losses	$	6,743	$	627	$	-	$	7,370

	As of December 31, 2012
( in thousands)	Collectively Evaluated for Impairment		Individually Evaluated for Impairment		Loans Acquired with Deteriorated Credit Quality		Total
Loans:
Commercial, financial, agriculture	$	313,937	$	1,636	$	82	$	315,655
Real estate – construction		74,398		936		-		75,334
Commercial real estate		407,489		2,911		3,984		414,384
Residential real estate		140,776		1,627		455		142,858
Consumer		90,231		330		-		90,561
Financial leases		5,769		-		-		5,769
Other		2,379		-		-		2,379
Total loans	$	1,034,979	$	7,440	$	4,521	$	1,046,940

The Company monitors loan concentrations and evaluates individual customer and aggregate industry leverage, profitability, risk rating distributions, and liquidity for each major standard industry classification segment.  At March 31, 2013, one industry segment concentration, the oil and gas industry, constituted more than 10% of the loan portfolio.  The Company’s exposure in the oil and gas industry, including related service and manufacturing industries, totaled approximately $144.1 million, or 13.9% of total loans.  Additionally, the Company’s exposure to loans secured by commercial real estate is monitored.  At March 31, 2013, loans secured by commercial real estate (including commercial construction, farmland and multifamily loans) totaled approximately $470.8 million.  Of the $470.8 million, $348.5 million represent CRE loans, 58.2% of which are secured by owner-occupied commercial properties.  Of the $470.8 million in loans secured by commercial real estate, $3.6 million, or 0.8%, were on nonaccrual status at March 31, 2013.

Modifications by Class of Loans

(in thousands)

	Number of Contracts		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Troubled debt restructurings as of March 31, 2013:
Commercial, financial, and agricultural		4	$	412	$	370
Real Estate - commercial		3		4,983		4,662
			$	5,395	$	5,032

14

	Number of  Contracts		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Troubled debt restructurings as of December 31, 2012:
Commercial, financial, and agricultural		3	$	370	$	353
Real Estate – commercial		3		4,983		4,709
			$	5,353	$	5,062

Trouble Debt Restructurings that Subsequently Defaulted

(in thousands)

	March 31, 2013				March 31, 2012
	Number of Contracts		Recorded Investment		Number of Contracts		Recorded Investment
Commercial, financial, and agricultural		4	$	259		3	$	251

One loan with a pre-modification balance of $27,000 was identified as a TDR and no additional defaults on TDRs were recorded during the three months ended March 31, 2013.  For purposes of the determination of an allowance for loan losses on these TDRs, as an identified TDR, the Company considers a loss probable on the loan and, as a result is reviewed for specific impairment in accordance with the Company’s allowance for loan loss methodology.  If it is determined losses are probable on such TDRs, either because of delinquency or other credit quality indicator, the Company establishes specific reserves for these loans.As of March 31, 2013, there were no commitments to lend additional funds to debtors owing sums to the Company whose terms have been modified in TDRs.

For the Three Months Ended March 31, 2013 (in thousands)
				Real Estate
	Coml, Fin, and Agric			Construction		Commercial			Residential			Consumer			Finance Leases Coml		Other		Total
Allowance for loan losses:
Beginning balance	$	1,535		$	2,147	$	2,166		$	936		$	543		$	41	$	2	$	7,370
Charge-offs		(181	)		-		(18	)		(109	)		(216	)		-		-		(524	)
Recoveries		16			5		10			1			29			-		-		61
Provision		212			111		115			41			69			1		1		550
Ending balance	$	1,582		$	2,263	$	2,273		$	869		$	425		$	42	$	3	$	7,457
Ending balance: individually evaluated for impairment	$	467		$	51	$	21		$	42		$	106		$	-	$	-	$	687
Loans:
Ending balance	$	315,397		$	82,508	$	405,705		$	138,284		$	88,898		$	4,962	$	2,105	$	1,037,859
Ending balance: individually evaluated for impairment	$	1,648		$	835	$	2,688		$	1,205		$	255		$	-	$	-	$	6,631

15

Allowance for Loan Losses and Recorded Investment in Loans
For the Year Ended December 31, 2012 (in thousands)
				Real Estate
	Coml, Fin, and Agric			Construction		Commercial			Residential			Consumer			Finance Leases Coml		Other		Total
Allowance for loan losses:
Beginning balance	$	1,734		$	1,661	$	2,215		$	936		$	710		$	19	$	1	$	7,276
Charge-offs		(1,054	)		-		(550	)		(126	)		(526	)		-		-		(2,256	)
Recoveries		181			18		1			2			98			-		-		300
Provision		674			468		500			124			261			22		1		2,050
Ending balance	$	1,535		$	2,147	$	2,166		$	936		$	543		$	41	$	2	$	7,370
Ending balance: individually evaluated for impairment	$	391		$	57	$	35		$	30		$	114		$	-	$	-	$	627
Loans:
Ending balance	$	315,655		$	75,334	$	414,384		$	142,858		$	90,561		$	5,769	$	2,379	$	1,046,940
Ending balance: individually evaluated for impairment	$	1,636		$	936	$	2,911		$	1,627		$	330		$	-	$	-	$	7,440

 Credit Quality Indicators by Class of Loans

As of March 31, 2013  (in thousands)

Commercial Credit Exposure

Credit Risk Profile by Creditworthiness Category

	Commercial, Financial, and Agricultural		Commercial Real Estate Construction		Commercial Real Estate Other		Commercial Total		% of Total Commercial
Pass	$	308,294	$	62,579	$	380,402	$	751,275		95.55	%
Special mention		2,897		663		13,729		17,289		2.20	%
Substandard		3,887		1,888		6,816		12,591		1.60	%
Doubtful		319		3		4,758		5,080		0.65	%
	$	315,397	$	65,133	$	405,705	$	786,235		100.00	%

Residential Credit Exposure

Credit Risk Profile by Creditworthiness Category

	Residential  Construction		Residential  Prime		Residential  Subprime		Residential Total		% of Total Residential
Pass	$	17,139	$	133,525	$	-	$	150,664		96.79	%
Special mention		-		1,398		-		1,398		0.90	%
Substandard		236		3,361		-		3,597		2.31	%
	$	17,375	$	138,284	$	-	$	155,659		100.00	%

16

Consumer and Commercial Credit Exposure

Credit Risk Profile Based on Payment Activity

	Consumer  Credit Card		Consumer Other		Finance Leases Commercial		Other Loans		Total		% of Total
Performing	$	5,892	$	82,722	$	4,962	$	2,105	$	95,681		99.70	%
Nonperforming		29		255		-		-		284		0.30	%
	$	5,921	$	82,977	$	4,962	$	2,105	$	95,965		100.00	%

Credit Quality Indicators by Class of Loans

As of December 31, 2012  (in thousands)

Commercial Credit Exposure

Credit Risk Profile by Creditworthiness Category

	Commercial, Financial, and Agricultural		Commercial Real Estate Construction		Commercial Real Estate Other		Commercial Total		% of Total Commercial
Pass	$	304,219	$	54,737	$	396,077	$	755,033		95.76	%
Special Mention		5,748		684		6,224		12,656		1.61	%
Substandard		4,503		2,925		7,514		14,942		1.90	%
Doubtful		1,185		4		4,569		5,758		0.73	%
	$	315,655	$	58,350	$	414,384	$	788,389		100.00	%

Residential Credit Exposure

Credit Risk Profile by Creditworthiness Category

	Residential  Construction		Residential  Prime		Residential  Subprime		Residential Total		% of Total Residential
Pass	$	16,785	$	137,681	$	-	$	154,466		96.64	%
Special mention		-		1,612		-		1,612		1.01	%
Substandard		199		3,565		-		3,764		2.35	%
	$	16,984	$	142,858	$	-	$	159,842		100.00	%

Consumer and Commercial Credit Exposure

Credit Risk Profile Based on Payment Activity

	Consumer Credit Card		Consumer Other		Finance Leases Commercial		Other Loans		Total		% of Total
Performing	$	6,792	$	83,347	$	5,769	$	2,379	$	98,287		99.57	%
Nonperforming		15		407		-		-		422		0.43	%
	$	6,807	$	83,754	$	5,769	$	2,379	$	98,709		100.00	%

17

Age Analysis of Past Due Loans by Class of Loans

(in thousands)

	30-59 Days Past Due (1)		60-89 Days Past Due (1)		Greater than 90 Days Past Due (1)		Total Past Due		Current		Total Loans		Recorded Investment > 90 days and Accruing
As of March 31, 2013
Commercial, financial, and agricultural	$	1,011	$	51	$	1,669	$	2,731	$	312,666	$	315,397	$	141
Commercial real estate – construction		229		537		188		954		64,179		65,133		-
Commercial real estate – other		1,663		176		2,449		4,288		401,417		405,705
Consumer - credit card		37		3		-		40		5,881		5,921		-
Consumer - other		361		97		142		600		82,377		82,977		22
Residential – construction		-		-		-		-		17,375		17,375		-
Residential – prime		2,000		124		1,251		3,375		134,909		138,284		-
Residential – subprime		-		-		-		-		-		-		-
Other loans		78		7		-		85		2,020		2,105		-
Finance leases commercial		4		-		-		4		4,958		4,962		-
	$	5,383	$	995	$	5,699	$	12,077	$	1,025,782	$	1,037,859	$	163

	30-59 Days Past Due (1)		60-89 Days Past Due (1)		Greater than 90 Days Past Due (1)		Total Past Due		Current		Total Loans		Recorded Investment > 90 days and Accruing
As of December 31, 2012
Commercial, financial, and agricultural	$	2,220	$	321	$	2,580	$	5,121	$	310,534	$	315,655	$	1,019
Commercial real estate - construction		66		96		101		263		58,087		58,350		-
Commercial real estate - other		4,131		2,108		3,577		9,816		404,568		414,384		952
Consumer - credit card		24		2		15		41		6,766		6,807		15
Consumer - other		421		134		186		741		83,013		83,754		-
Residential - construction		-		-		-		-		16,984		16,984		-
Residential - prime		1,140		317		1,408		2,865		139,993		142,858		-
Residential - subprime		-		-		-		-		-		-		-
Other loans		87		-		-		87		2,292		2,379		-
Finance leases commercial		-		-		-		-		5,769		5,769		-
	$	8,089	$	2,978	$	7,867	$	18,934	$	1,028,006	$	1,046,940	$	1,986

(1) Past due amounts may include loans on nonaccrual status.

18

Impaired Loans by Class of Loans

(in thousands)

	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
As of March 31, 2013
With no related allowance recorded:
Commercial, financial, and agricultural	$	590	$	701	$	-	$	577	$	-
Commercial real estate – construction		676		676		-		723		-
Commercial real estate – other		2,485		3,015		-		2,508		6
Consumer – other		51		59		-		82		-
Residential – prime		909		909		-		1,242		2
Subtotal:	$	4,711	$	5,360	$	-	$	5,132	$	8
With an allowance recorded:
Commercial, financial, and agricultural		1,058		1,058		467		1,065		1
Commercial real estate – construction		159		159		51		162		-
Commercial real estate – other		203		203		21		292		-
Consumer – other		204		204		106		210		-
Residential – prime		296		296		42		174		-
Subtotal:	$	1,920	$	1,920	$	687	$	1,903	$	1
Totals:
Commercial		5,171		5,812		539		5,327		7
Consumer		255		263		106		292		-
Residential		1,205		1,205		42		1,416		2
Grand total:	$	6,631	$	7,280	$	687	$	7,035	$	9

	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
As of December 31, 2012
With no related allowance recorded:
Commercial, financial, and agricultural	$	564	$	675	$	-	$	861	$	5
Commercial real estate – construction		771		770		-		834		1
Commercial real estate – other		2,530		3,059		-		1,780		38
Consumer – other		114		122		-		81		1
Residential – prime		1,575		1,575		-		1,213		26
Finance leases commercial		-		-		-		-		-
Other loans		-		-		-		-		-
Subtotal:	$	5,554	$	6,201	$	-	$	4,769	$	71
With an allowance recorded:
Commercial, financial, and agricultural		1,072		1,072		391		1,128		21
Commercial real estate – construction		165		165		57		85		7
Commercial real estate – other		381		381		35		811		3
Consumer – other		216		216		114		228		6
Residential – prime		52		52		30		172		4
Subtotal:	$	1,886	$	1,886	$	627	$	2,424	$	41
Totals:
Commercial		5,483		6,122		483		5,499		75
Consumer		330		338		114		309		7
Residential		1,627		1,627		30		1,385		30
Other		-		-		-		-		-
Grand total:	$	7,440	$	8,087	$	627	$	7,193	$	112

19

Loans on Nonaccrual Status

(in thousands)

	March 31, 2013		December 31, 2012
Commercial, financial, and agricultural	$	1,856	$	2,015
Commercial real estate – construction		838		941
Commercial real estate - other		2,783		3,017
Consumer - credit card		-		-
Consumer - other		292		409
Residential - construction		-		-
Residential - prime		1,757		2,505
Residential - subprime		-		-
Other loans		-		-
Finance leases commercial		-		-
	$	7,526	$	8,887

The amount of interest that would have been recorded on nonaccrual loans, had the loans not been classified as nonaccrual, totaled approximately $148,000 and $177,000 for the three months ended March 31, 2013 and 2012, respectively.  Interest actually received on nonaccrual loans at March 31, 2013 and 2012 was $36,000 and $20,000, respectively.

5.  Earnings Per Common Share

Following is a summary of the information used in the computation of earnings per common share (in thousands):

	March 31,
	2013		2012
Net earnings available to common shareholders	$	3,136	$	2,486
Dividends on Series C convertible preferred stock		100		-
Net earnings available to common shareholders  -diluted	$	3,236	$	2,486
Weighted average number of common shares outstanding used in computation of basic earnings per common share		11,238		10,465
Effect of dilutive securities:
Stock options		50		8
Restricted stock		13		7
Convertible preferred stock and warrants		565		-
Weighted average number of common shares outstanding plus effect of dilutive securities used in computation of diluted earnings per common share		11,866		10,480

Options to acquire 18,331 shares of common stock were not included in computing diluted earnings per share for both quarters ended March 31, 2013 and 2012, respectively, because the effects of these shares were anti-dilutive as a result of the exercise price of such options.  A total of 104,384 shares subject to an outstanding warrant issued in connection with the Capital Purchase Plan transaction were anti-dilutive as a result of their exercise price and not included in the computation of diluted earnings per share for the quarter ended March 31, 2012.

6.  Declaration of Dividends

A first quarter dividend of $0.07 per share for holders of common stock of record on March 15, 2013 was declared on January 31, 2013, and was paid on April 1, 2013.  On January 31, 2013, the Company also declared a 1.00% dividend for holders of its Series C preferred stock of record on April 1, 2013, which was paid on April 15, 2013.

20

7.  Goodwill and Intangibles

Changes to the carrying amount of goodwill for the three months ended March 31, 2013 are provided in the following table (in thousands):

Balance, December 31, 2012	$	42,781
Adjustment to goodwill		(105	)
Balance, March 31, 2013	$	42,676

The adjustments to goodwill made during the three months ended March 31, 2013 resulted from reclassification of a $415,000 liability assumed through the PSB acquisition and from a $254,000 market value adjustment on two bonds held in the PSB investment portfolio at acquisition.  The adjustments were made as additional information existing at the time of the acquisition was reviewed and affected the amount recorded for the assumed liability and the market value of the two bonds.  Net of deferred taxes, the adjustment resulted in a $105,000 reduction to goodwill recorded in the PSB acquisition.  The adjustments to goodwill had no impact on net income or stockholders’ equity.

A summary of core deposit intangible assets as of March 31, 2013 and December 31, 2012 is as follows (in thousands):

	March 31, 2013			December 31, 2012
Gross carrying amount	$	9,047		$	11,674
Less accumulated amortization		(276	)		(2,627	)
Net carrying amount	$	8,771		$	9,047

8.  Fair Value Measurement

The Company groups assets and liabilities at fair value in three levels, based on the markets in which the assets and liabilities are traded and the reliability of the assumptions used to determine fair value.  These levels are:

Level 1 – Valuation is based upon quoted prices for identical instruments traded in active markets.

Level 2 – Valuation is based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market.

Level 3 – Valuation is generated from model-based techniques that use at least one significant assumption not observable in the market.  These unobservable assumptions reflect estimates of assumptions that market participants would use in pricing the asset or liability.  Valuation techniques include use of option pricing models, discounted cash flow models and similar techniques.

Following is a description of valuation methodologies used for assets and liabilities which are either recorded or disclosed at fair value.

Cash and Cash Equivalents—The carrying value of cash and cash equivalents is a reasonable estimate of fair value.

Time Deposits Held in Banks—Fair values for fixed-rate time deposits are estimated using a discounted cash flow analysis that applies interest rates currently being offered on time deposits of similar terms of maturity.

Securities Available-for-Sale—Securities available-for-sale are recorded at fair value on a recurring basis.  Fair value measurement is based upon quoted prices, if available.  If quoted prices are not available, fair values are measured using independent pricing models or other model-based valuation techniques such as the present value of future cash flows, adjusted for the security’s credit rating, prepayment assumptions and other factors such as credit loss assumptions.  Level 1 securities include those traded on an active exchange, such as the New York Stock Exchange and U.S. Treasury securities that are traded by dealers or brokers in active over-the-counter market funds.  Securities are classified as Level 2 within the valuation hierarchy when the Company obtains fair value measurements from an independent pricing service.  The fair value measurements consider observable data that may include dealer quotes, market spreads, cash flows, the U.S. Treasury yield curve, live trading levels, trade execution data, market consensus prepayment speeds, credit information, and the bond’s terms and conditions, among other things. Level 2 inputs are used to value U.S. Agency securities, mortgage-backed securities, asset-backed securities, municipal securities, single issue trust preferred securities, certain pooled trust preferred securities, collateralized debt obligations and certain equity securities that are not actively traded.

21

Securities Held-to-Maturity—The fair value of securities held-to-maturity is estimated using the same measurement techniques as securities available-for-sale.

Other Investments—The carrying value of other investments is a reasonable estimate of fair value.

Loans—For disclosure purposes, the fair value of fixed rate loans is estimated by discounting the future cash flows using the current rates at which similar loans would be made to borrowers with similar credit ratings.  For variable rate loans, the carrying amount is a reasonable estimate of fair value.  The Company does not record loans at fair value on a recurring basis.  No adjustment to fair value is taken related to illiquidity discounts.  However, from time to time, a loan is considered impaired and an allowance for loan losses is established.  Loans for which it is probable that payment of interest and principal will not be made in accordance with the contractual terms of the loan agreement are considered impaired.  Once a loan is identified as individually impaired, management uses one of three methods to measure impairment, which, include collateral value, market value of similar debt, and discounted cash flows.  Those impaired loans not requiring an allowance represent loans for which the fair value of the expected repayments or collateral exceed the recorded investments in such loans.  Impaired loans where an allowance is established based on the fair value of collateral or where the loan balance has been charged down to fair value require classification in the fair value hierarchy.  When the fair value of the collateral is based on an observable market price or a current appraised value, the Company records the impaired loan as nonrecurring Level 2.  When an appraised value is not available or management determines the fair value of the collateral is further impaired below the appraised value and adjusts the appraisal value by taking an additional discount for market conditions and there is no observable market price, the Company records the impaired loan as nonrecurring Level 3.

For non-performing loans, collateral valuations currently in file are reviewed for acceptability in terms of timeliness and applicability.  Although each determination is made based on the facts and circumstances of each credit, generally valuations are no longer considered acceptable when there has been physical deterioration of the property from when it was last appraised, or there has been a significant change in the underlying assumptions of the appraisal.  If the valuation is deemed to be unacceptable, a new appraisal is ordered.  New appraisals are typically received within 4-6 weeks.  While awaiting new appraisals, the valuation in the file is utilized, net of discounts.  Discounts are derived from available relevant market data, selling costs, taxes, and insurance.  Any perceived collateral deficiency utilizing the discounted value is specifically reserved (as required by ASC Topic 310) until the new appraisal is received or charged off.  Thus, provisions or charge-offs are recognized in the period the credit is identified as non-performing.

The following sources are utilized to set appropriate discounts: market real estate agents, current local sales data, bank history for devaluation of similar property, Sheriff’s valuations and buy/sell contracts.  If a real estate agent is used to market and sell the property, values are discounted 10% for selling costs.  Additional discounts may be applied if research from the above sources indicates a discount is appropriate given devaluation of similar property from the time of the initial valuation.

Other Real Estate—Other real estate (“ORE”) properties are adjusted to fair value upon transfer of the loans to other real estate, and annually thereafter to insure other real estate assets are carried at the lower of carrying value or fair value.  Exceptions to obtaining initial appraisals are properties where a buy/sell agreement exists for the loan value or greater, or where a Sheriff’s valuation has been received for properties liquidated through a Sheriff sale.  Fair value is based upon independent market prices, appraised values of the collateral or management’s estimation of the value of the collateral.  When the fair value of the collateral is based on an observable market price or a current appraised value, the Company records the ORE as nonrecurring Level 2.  When an appraised value is not available or management determines the fair value of the collateral is further impaired below the appraised value and adjusts the appraisal value by taking an additional discount for market conditions and there is no observable market prices, the Company records the ORE asset as nonrecurring Level 3.

Cash Surrender Value of Life Insurance Policies—Fair value for life insurance cash surrender value is based on cash surrender values indicated by the insurance companies.

Deposits—The fair value of demand deposits, savings accounts, NOW accounts, and money market deposits is the amount payable on demand at the reporting date.  The fair value of fixed maturity certificates of deposit is estimated by discounting the future cash flows using the rates currently offered for deposits of similar remaining maturities.  The estimated fair value does not include customer related intangibles.

22

Securities Sold Under Agreements to Repurchase—The fair value approximates the carrying value of securities sold under agreements to repurchase due to their short-term nature.

Notes payable— The fair value of notes payable is estimated using a discounted cash flow analysis that applies interest rates currently being offered on similar types of borrowings with similar terms.

Junior Subordinated Debentures—For junior subordinated debentures that bear interest on a floating basis, the carrying amount approximates fair value.  For junior subordinated debentures that bear interest on a fixed rate basis, the fair value is estimated using a discounted cash flow analysis that applies interest rates currently being offered on similar types of borrowings.

Commitments to Extend Credit, Standby Letters of Credit and Credit Card Guarantees—Because commitments to extend credit and standby letters of credit are generally short-term and made using variable rates, the carrying value and estimated fair value associated with these instruments are immaterial.

23

Assets Recorded at Fair Value

Below is a table that presents information about certain assets and liabilities measured at fair value on a recurring basis (in thousands):

	Assets / Liabilities Measured at Fair Value		Fair Value Measurements at March 31, 2013 using:
Description	at March 31, 2013		Level 1		Level 2		Level 3
Available-for-sale securities:
U.S. Government sponsored enterprises	$	13,186	$	-	$	13,186	$	-
Obligations of state and political subdivisions		77,179		-		77,179		-
GSE mortgage-backed securities		167,320		-		167,320		-
Other asset-backed securities		12,628		-		12,628		-
Collateralized mortgage obligations: residential		87,253				87,253
Collateralized mortgage obligations: commercial		29,693		-		29,693		-
Collateralized debt obligations		527		-		527		-
	$	387,786	$	-	$	387,786	$	-

	Assets / Liabilities Measured at Fair Value		Fair Value Measurements at December 31, 2012 using:
Description	at December 31, 2012		Level 1		Level 2		Level 3
Available-for-sale securities:
U.S. Government sponsored enterprises	$	13,424	$	-	$	13,424	$	-
Obligations of state and political subdivisions		87,421		-		87,421		-
GSE mortgage-backed securities		178,819		-		178,819		-
Collateralized mortgage
obligations: residential		101,986		-		101,986		-
Collateralized mortgage obligations: commercial		29,761				29,761
Other asset-backed securities		12,742		-		12,742		-
Collateralized debt obligations		464		-		464		-
	$	424,617	$	-	$	424,617	$	-

24

Certain assets and liabilities are measured at fair value on a nonrecurring basis and are included in the table below (in thousands).  Impaired loans are Level 2 assets measured using appraisals from external parties of the collateral less any prior liens.  Other real estate properties are also Level 2 assets measured using appraisals from external parties.  Acquired loans are Level 3 assets measured on a nonrecurring basis.

			Fair Value Measurements Using
(dollars in thousands)	March 31, 2013		Level 1		Level 2		Level 3
Assets
Acquired loans with deteriorated credit quality	$	4,254	$	-	$	-	$	4,254
Other real estate		7,552		-		7,552		-
Impaired loans, excluding acquired loans		1,943		-		1,943		-
Total	$	13,749	$	-	$	9,495	$	4,254

			Fair Value Measurements Using
(dollars in thousands)	December 31, 2012		Level 1		Level 2		Level 3
Assets
Acquired loans with deteriorated credit quality	$	4,521	$	-	$	-	$	4,521
Other real estate		7,496		-		7,496		-
Impaired loans, excluding acquired loans		2,245				2,245		-
Total	$	14,262	$	-	$	9,741	$	4,521

Limitations

Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial instrument.  These estimates do not reflect any premium or discount that could result from offering for sale at one time the Company’s holdings of a particular financial instrument.  Because no market exists for a significant portion of the Company’s financial instruments, fair value estimates are based on many judgments.  These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision.  Changes in assumptions could significantly affect the estimates.

Fair value estimates are based on existing on and off-balance sheet financial instruments without attempting to estimate the value of anticipated future business and the value of assets and liabilities that are not considered financial instruments.  Significant assets and liabilities that are not considered financial instruments include deferred income taxes and premises and equipment.  In addition, the tax ramifications related to the realization of the unrealized gains and losses can have a significant effect on fair value estimates and have not been considered in the estimates.

25

The carrying amounts and estimated fair values of the Company’s financial instruments are as follows at March 31, 2013 and December 31, 2012 (in thousands):

	Fair Value Measurements at March 31, 2013 Using:
	Carrying Value		Level 1		Level 2		Level 3
Financial assets:
Cash and cash equivalents	$	118,009	$	118,009	$	-	$	-
Securities available-for-sale		387,786		-		387,786		-
Securities held-to-maturity		167,617		-		170,177		-
Other investments		10,017		10,017		-		-
Loans, net		1,030,402		-		-		1,036,325
Cash surrender value of life insurance policies		13,242		-		13,242		-
Financial liabilities:
Non-interest-bearing deposits		390,774		-		390,774		-
Interest-bearing deposits		1,169,352		-		899,237		271,799
Securities sold under agreements to repurchase		48,557		48,557		-		-
Notes payable		28,772						28,772
Junior subordinated debentures		29,384		-		22,167		7,588

			Fair Value Measurements at December 31, 2012 Using:
Financial assets:	Carrying Value		Level 1		Level 2		Level 3
Cash and cash equivalents	$	73,573	$	73,573	$	-	$	-
Time deposits held in banks		881		-		-		883
Securities available-for-sale		424,617		-		424,617		-
Securities held-to-maturity		153,524		-		156,924		-
Other investments		8,310		8,310		-		-
Loans, net		1,039,570		-		-		1,046,495
Cash surrender value of life insurance policies		13,183		-		13,183		-
Financial liabilities:
Non-interest-bearing deposits		380,577		-		380,557		-
Interest-bearing deposits		1,171,347		-		859,183		314,783
Securities sold under agreements to repurchase		41,447		41,447		-		-
Notes payable		29,128		-		-		29,128
Junior subordinated debentures		29,384		-		22,167		7,776

26

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operation.

MidSouth Bancorp, Inc. (the “Company”) is a financial holding company headquartered in Lafayette, Louisiana that conducts substantially all of its business through its wholly owned subsidiary bank, MidSouth Bank, N.A. (the “Bank”).  We offer complete banking services to commercial and retail customers in Louisiana and south and central Texas with 60 locations and are connected to a worldwide ATM network that provides customers with access to more than 50,000 surcharge-free ATMs.  We are community oriented and focus primarily on offering commercial and consumer loan and deposit services to individuals, small businesses, and middle market businesses.

The following discussion and analysis identifies significant factors that have affected our financial position and operating results during the periods included in the financial statements accompanying this report.  We encourage you to read this discussion in conjunction with our consolidated financial statements and the notes thereto presented herein and with the financial statements, the notes thereto, and related Management’s Discussion and Analysis of Financial Condition and Results of Operation in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012.

Forward-Looking Statements

Certain statements included in this Report, other than statements of historical fact, are forward-looking statements (as such term is defined in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and the regulations thereunder), which are intended to be covered by the safe harbors created thereby. Forward-looking statements include, but are not limited to certain statements under the captions “Business,” “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

 The words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “plan,” “will,” “would,” “could,” “should,” “guidance,” “potential,” “continue,” “project,” “forecast,” “confident,” and similar expressions are typically used to identify forward-looking statements.  These statements are based on assumptions and assessments made by management in light of their experience and their perception of historical trends, current conditions, expected future developments and other factors they believe to be appropriate.  Any forward-looking statements are not guarantees of our future performance and are subject to risks and uncertainties and may be affected by various factors that may cause actual results, developments and business decisions to differ materially from those in the forward-looking statements.  Some of the factors that may cause actual results, developments and business decisions to differ materially from those contemplated by such forward-looking statements include the factors discussed under the caption “Risk Factors” in our 2012 Annual Report on form 10-K and under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this Report and the following:

· changes in interest rates and market prices that could affect the net interest margin, asset valuation, and expense levels;

· changes in local economic and business conditions, including, without limitation, changes related to the oil and gas industries, that could adversely affect customers and their ability to repay borrowings under agreed upon terms, adversely affect the value of the underlying collateral related to their borrowings, and reduce demand for loans;

· increased competition for deposits and loans which could affect compositions, rates and terms;

· changes in the levels of prepayments received on loans and investment securities that adversely affect the yield and value of the earning assets;

· a deviation in actual experience from the underlying assumptions used to determine and establish our allowance for loan losses (“ALL”), which could result in greater than expected loan losses;

· changes in the availability of funds resulting from reduced liquidity or increased costs;

· the timing, ability to complete and the impact of proposed and/or future acquisitions, the success or failure of integrating acquired operations, and the ability to capitalize on growth opportunities upon entering new markets;

· the ability to acquire, operate, and maintain effective and efficient operating systems;

· increased asset levels and changes in the composition of assets that would impact capital levels and regulatory capital ratios;

· loss of critical personnel and the challenge of hiring qualified personnel at reasonable compensation levels;

27

· legislative and regulatory changes, including the changes in the regulatory capital framework proposed by the Federal Reserve Board under its Basel III regulatory capital reforms, the impact of regulations under the Dodd-Frank  Wall Street Reform and Consumer Protection Act of 2010 (the “Dodd-Frank Act”), including the implementation of the Consumer Financial Protection Bureau, and other changes in banking, securities and tax laws and regulations and their application by our regulators, changes in the scope and cost of Federal Deposit Insurance Corporation (“FDIC”) insurance and other coverage;

· regulations and restrictions resulting from our participation in government sponsored programs such as the U.S. Treasury’s Small Business Lending Fund, including potential retroactive changes in such programs;

· changes in accounting principles, policies, and guidelines applicable to financial holding companies and banking;

· acts of war, terrorism, cyber intrusion, weather, or other catastrophic events beyond our control; and

· the ability to manage the risks involved in the foregoing.

We can give no assurance that any of the events anticipated by the forward-looking statements will occur or, if any of them does, what impact they will have on our results of operations and financial condition.  We disclaim any intent or obligation to publicly update or revise any forward-looking statements, regardless of whether new information becomes available, future developments occur or otherwise.

Critical Accounting Policies

Certain critical accounting policies affect the more significant judgments and estimates used in the preparation of the consolidated financial statements.  Our significant accounting policies are described in the notes to the consolidated financial statements included in this report. The accounting principles we follow and the methods of applying these principles conform to accounting principles generally accepted in the United States of America (“GAAP”) and general banking practices.  Our most critical accounting policy relates to the determination of the allowance for loan losses, which reflects the estimated losses resulting from the inability of its borrowers to make loan payments.  The determination of the adequacy of the allowance involves significant judgment and complexity and is based on many factors.  If the financial condition of our borrowers were to deteriorate, resulting in an impairment of their ability to make payments, the estimates would be updated and additional provisions for loan losses may be required.  See Asset Quality – Nonperforming Assets and Allowance for Loan Losses and Note 1 and Note 4 of the footnotes to the consolidated financial statements.

Another of our critical accounting policies relates to the valuation of goodwill, intangible assets and other purchase accounting adjustments.  We account for acquisitions in accordance with ASC Topic No. 805, which requires the use of the purchase method of accounting.  Under this method, we are required to record assets acquired and liabilities assumed at their fair value, including intangible assets.  Determination of fair value involves estimates based on internal valuations of discounted cash flow analyses performed, third party valuations, or other valuation techniques that involve subjective assumptions.  Additionally, the term of the useful lives and appropriate amortization periods of intangible assets is subjective.  Resulting goodwill from an acquisition under the purchase method of accounting represents the excess of the purchase price over the fair value of net assets acquired.  Goodwill is not amortized, but is evaluated for impairment annually or more frequently if deemed necessary.  If the fair value of an asset exceeds the carrying amount of the asset, no charge to goodwill is made.  If the carrying amount exceeds the fair value of the asset, goodwill will be adjusted through a charge to earnings.  Given the instability of the economic environment, it is reasonably possible that the methodology of the assessment of potential loan losses and goodwill impairment could change in the near-term or could result in impairment going forward.

A third critical accounting policy relates to deferred tax assets and liabilities.  We record deferred tax assets and deferred tax liabilities for future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis.  Future tax benefits, such as net operating loss carry forwards, are recognized to the extent that realization of such benefits is more likely than not.  Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which the assets and liabilities are expected to be recovered or settled.  The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income tax expense in the period that includes the enactment date.  In the event the future tax consequences of differences between the financial reporting bases and the tax bases of our assets and liabilities results in deferred tax assets, an evaluation of the probability of being able to realize the future benefits indicated by such assets is required.  A valuation allowance is provided when it is more likely than not that a portion or the full amount of the deferred tax asset will not be realized.  In assessing the ability to realize the deferred tax assets, management considers the scheduled reversals of deferred tax liabilities, projected future taxable income, and tax planning strategies.  A deferred tax liability is not recognized for portions of the allowance for loan losses for income tax purposes in excess of the financial statement balance.  Such a deferred tax liability will only be recognized when it becomes apparent that those temporary differences will reverse in the foreseeable future.  A tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur.  The amount recognized is the largest amount of tax benefit that is greater than 50% more likely of being realized on examination.  For tax positions not meeting the “more likely than not” test, no tax benefit is recorded.

28

Results of Operations

Earnings Analysis

We reported net earnings available to common shareholders of $3.1 million for the first quarter of 2013, compared to net earnings available to common shareholders of $2.5 million reported for the first quarter of 2012.  Diluted earnings for the first quarter of 2013 were $0.27 per common share, compared to $0.24 per common share reported for the first quarter of 2012.  The first quarter of 2013 included after-tax merger and conversion expenses related to the December 28, 2012 acquisition of PSB Financial Corporation (“PSB”) of $0.01 per share.  Excluding these non-operating expenses, operating earnings per share for the first quarter of 2013 were $0.28.

Dividends paid on the Series B Preferred Stock issued to the Treasury as a result of our participation in the Small Business Lending Fund (“SBLF”) totaled $192,000 for the first quarter of 2013 based on a dividend rate of 2.40%.  The Series C Preferred Stock issued in conjunction with the PSB acquisition paid dividends totaling $100,000 for the three months ended March 31, 2013.

The first quarter of 2013 included a full quarter of revenues and expenses from PSB operations.  Revenues from consolidated operations increased $5.5 million in quarterly comparison and included $2.2 million in purchase accounting adjustments on the 2012 and 2011 acquisitions.  Non-interest income increased $903,000 in quarterly comparison, from $3.5 million for the three months ended March 31, 2012 to $4.4 million for the three months ended March 31, 2013.  Increases in noninterest income consisted primarily of $347,000 in service charges on deposit accounts, $230,000 in ATM/debit card income and $204,000 in gain on sales of securities.

Non-interest expenses increased $4.8 million for the first quarter 2013 compared to first quarter 2012 and included operating expenses for the fifteen branches acquired with PSB and for five new branches opened in late 2012 and early 2013.  Additionally, first quarter 2013 included an increase of $94,000 in core deposit intangibles expense and $214,000 of net merger and conversion related expenses.  The increased operating costs consisted primarily of $2.3 million in salaries and benefits costs, $1.0 million in occupancy expense, $260,000 in marketing expense, $223,000 in the cost of printing and supplies and $226,000 in data processing costs.  Expenses on ORE and other assets repossessed decreased $189,000 in prior year quarterly comparison.  The provision for loan losses decreased $125,000 and income tax expense increased $331,000 in quarterly comparison.

Net Interest Income

Our primary source of earnings is net interest income, which is the difference between interest earned on loans and investments and interest paid on deposits and other interest-bearing liabilities.  Changes in the volume and mix of earning assets and interest-bearing liabilities combined with changes in market rates of interest greatly affect net interest income.  Our net interest margin on a taxable equivalent basis, which is net interest income as a percentage of average earning assets, was 4.61% and 4.49% for the three months ended March 31, 2013 and 2012, respectively.   Tables 1 and 2 below analyze the changes in net interest income in the three months ended March 31, 2013 compared to the three months ended March 31, 2012.

Fully taxable-equivalent (“FTE”) net interest income totaled $18.8 million and $14.1 million for the quarters ended March 31, 2013 and 2012, respectively.  The FTE net interest income increased $4.7 million in prior year quarterly comparison primarily due to a $388.3 million increase in the volume of average earning assets as a result of the PSB acquisition.  The average volume of loans increased $301.2 million in quarterly comparison and the average yield on loans decreased 7 basis points, from 6.72% to 6.65%.  Purchase accounting adjustments on acquired loans added 80 basis points to the average yield on loans for the first quarter of 2013 and 32 basis points to the average yield on loans for the first quarter of 2012.  Net of the impact of the purchase accounting adjustments, average loan yields declined 55 basis points in prior year quarterly comparison, from 6.40% to 5.85%.  Loan yields have declined primarily as the result of a sustained low market interest rate environment.

29

Investment securities totaled $555.4 million, or 29.7% of total assets at March 31, 2013, versus $462.8 million, or 32.7% of total assets at March 31, 2012.  The investment portfolio had an effective duration of 3.5 years and an unrealized gain of $11.2 million at March 31, 2013.  The average volume of investment securities increased $81.7 million in quarterly comparison primarily due to $152.7 million in securities acquired with the PSB acquisition at year end December 2012, of which $28.8 million were sold early in the first quarter of 2013.  Additionally, a portion of excess cash from the 2011 acquisitions was used to purchase securities for the investment portfolio in 2012.  The average tax equivalent yield on investment securities decreased 36 basis points, from 2.80% to 2.44% primarily due to lower reinvestment rates.  The average yield on all earning assets increased 5 basis points in prior year quarterly comparison, from 4.98% for the first quarter of 2012 to 5.03% for the first quarter of 2013.   Net of the impact of purchase accounting adjustments, the average yield on total earning assets declined 27 basis points, from 4.80% to 4.53% for the three month periods ended March 31, 2012 and 2013, respectively.

The impact to interest expense of a $233.4 million increase in the average volume of interest bearing deposits was offset by a 10 basis point decrease in the average rate paid on interest-bearing deposits, from 0.49% at March 31, 2012 to 0.39% at March 31, 2013.  Net of purchase accounting adjustments on acquired certificates of deposit, the average rate paid on interest bearing deposits was 0.66% for the first quarter of 2012 compared to 0.47% for the first quarter of 2013.

Included in other interest-bearing liabilities is an average of $28.9 million of borrowed funds assumed from PSB, which included FHLB advances and a notes payable with First National Bankers Bank.  The FHLB advances are fixed rate advances with rates ranging from 1.99% to 5.06% and have a range of maturities from January 2013 to January 2019.  The FHLB advances are collateralized by a blanket lien on first mortgages and other qualifying loans.  The notes payable with First National Bankers Bank requires annual payments of $250,000 and bear an interest rate equal to New York Prime.

The average rate paid on our junior subordinated debentures decreased 175 basis points from first quarter of 2012 to first quarter of 2013 due to the addition of three variable rate debentures acquired from PSB.  The variable rate debentures carry a floating rate tied to the 3-month LIBOR with added rate variances ranging from plus 170 basis points to plus 330 basis points, adjustable and payable quarterly.  We also have outstanding $7.2 million of junior subordinated debenture that carry a fixed interest rate of 10.20%.

As a result of these changes in volume and yield on earning assets and interest bearing liabilities, the FTE net interest margin increased 12 basis points, from 4.49% for the first quarter of 2012 to 4.61% for the first quarter of 2013.  Net of purchase accounting adjustments on loans, deposits and FHLB borrowings, the FTE margin decreased 17 basis points, from 4.20% for the first quarter of 2012 to 4.03% for the first quarter of 2013, primarily due to the addition of the relatively low margin on the earning assets acquired from PSB.

30

Table 1
Consolidated Average Balances, Interest and Rates (in thousands)
	Three Months Ended March 31,
	2013								2012
	Average Volume			Interest		Average Yield/Rate			Average Volume			Interest		Average Yield/Rate
Assets
Investment securities1
Taxable	$	426,017		$	2,059		1.93	%	$	365,302		$	2,069		2.27	%
Tax exempt2		106,982			1,188		4.44	%		85,964			1,093		5.09	%
Total investment securities		532,999			3,247		2.44	%		451,266			3,162		2.80	%
Federal funds sold		8,021			4		0.20	%		4,108			2		0.19	%
Time and interest bearing deposits in other banks		57,829			38		0.26	%		60,045			39		0.26	%
Other investments		9,317			72		3.09	%		5,636			45		3.19	%
Total loans3		1,043,780			17,117		6.65	%		742,595			12,402		6.72	%
Total earning assets		1,651,946			20,478		5.03	%		1,263,650			15,650		4.98	%
Allowance for loan losses		(7,151	)							(7,171	)
Nonearning assets		205,964								139,485
Total assets	$	1,850,759							$	1,395,964
Liabilities and shareholders’ equity
Total interest bearing deposits		1,133,087			1,078		0.39	%		899,646			1,100		0.49	%
Securities sold under repurchase agreements		45,644			179		1.59	%		45,867			181		1.59	%
Federal funds purchased		-			-		-			4			-		-
Other borrowings/payables		30,912			124		1.60	%		2			-		-
Junior subordinated debentures		29,384			336		4.59	%		15,465			248		6.34	%
Total interest bearing liabilities		1,239,027			1,717		0.56	%		960,984			1,529		0.64	%
Demand deposits		409,639								262,110
Other liabilities		11,529								9,393
Shareholders’ equity		190,564								163,477
Total liabilities and shareholders’ equity	$	1,850,759							$	1,395,964
Net interest income and net interest spread				$	18,761		4.47	%				$	14,121		4.34	%
Net yield on interest earning assets							4.61	%							4.49	%

 

1Securities classified as available-for-sale are included in average balances.  Interest income figures reflect interest earned on such securities.

 

2Interest income of $349,000 for 2013 and $317,000 for 2012 is added to interest earned on tax-exempt obligations to reflect tax equivalent yields using a tax rate of 35% and 34% for 2013 and 2012, respectively.

 

3Interest income includes loan fees of $1,081,000 for 2013 and $790,000 for 2012.  Nonaccrual loans are included in average balances and income on such loans is recognized on a cash basis.

31

Table 2 Changes in Taxable-Equivalent Net Interest Income (in thousands)
	Three Months Ended March 31, 2013 compared to March 31, 2012
	Total Increase			Change Attributable To
	(Decrease)			Volume			Rates
Taxable-equivalent earned on:
Investment securities
Taxable	$	(10	)	$	317		$	(327	)
Tax exempt		95			245			(150	)
Federal funds sold		2			2			-
Time and interest bearing deposits in other banks		(1	)		(1	)		-
Other investments		27			28			(1	)
Loans, including fees		4,714			4,941			(227	)
Total		4,827			5,532			(705	)
Interest paid on:
Interest bearing deposits		(22	)		250			(272	)
Securities sold under repurchase agreements		(2	)		(1	)		(1	)
Other borrowings/payable		124			124			-
Junior subordinated debentures		88			174			(86	)
Total		188			547			(359	)
Taxable-equivalent net interest income	$	4,639		$	4,985		$	(346	)

Note: In Table 2, changes due to volume and rate have generally been allocated to volume and rate changes in proportion to the relationship of the absolute dollar amounts to the changes in each.

Non-interest Income

Non-interest income for the three months ended March 31, 2013 totaled $4.4 million, an increase of $903,000 from the $3.5 million earned in the three months ended March 31, 2012.  Increases in non-interest income consisted of $347,000 in service charges on deposit accounts and $230,000 in ATM/debit card income primarily due to the deposit accounts added with the PSB acquisition.  Additionally, we recorded $204,000 in net gains on sale of securities in the first quarter of 2013.

Non-interest Expense

Non-interest expense increased $4.8 million, from $12.6 million in the first quarter of 2012 to $17.4 million in the first quarter of 2013.  Increases in non-interest expenses included the impact of fifteen branches acquired from PSB and five new branches added in late 2012 and in early 2013.  Salaries and benefits costs increased $2.3 million, from $6.1 million for the three months ended March 31, 2012 to $8.4 million for the three months ended March 31, 2013.  The number of full-time equivalent employees increased over the same period by 160, from 442 to 602, respectively.  Occupancy expenses increased $1.1 million, from $2.5 million to $3.6 million in quarterly comparison, as the number of branch locations increased from 40 to 59 from March 31, 2012 to March 31, 2013.  Additional non-interest expense increases included primarily $260,000 in marketing expense, $223,000 in the cost of printing and supplies, $226,000 in data processing expenses and $131,000 in corporate development costs, which were also franchise expansion related expenses.

Analysis of Balance Sheet

Total consolidated assets at March 31, 2013 and December 31, 2012 were $1.9 billion.  Deposits totaled $1.6 billion at March 31, 2013 and December 31, 2012.  Our stable core deposit base, excluding time deposits, accounted for 83% of deposits at March 31, 2013 compared to 80% of deposits at year end 2012.  The low cost of our interest-bearing deposits declined 3 basis points from 0.42% compared to 0.39% over the three months ended March 31, 2013.

32

Securities available-for-sale totaled $387.8 million at March 31, 2013, a decrease of $36.8 million from $424.6 million at December 31, 2012.  The securities available-for-sale portfolio declined primarily due to $41.8 million in sales of securities and $23.7 million in calls, maturities and pay-downs that offset purchases totaling $35.9 million for the first three months of 2013.  The $41.8 million in securities sold were identified as under-performing following a thorough analysis of the investment securities portfolio during the first quarter of 2013.  Securities held-to-maturity increased $14.1 million, from $153.5 million at December 31, 2012 to $167.6 million at March 31, 2013 due to $22.2 million in purchases for the held-to- maturity portfolio.  The investment securities portfolio had an effective duration of 3.5 years and an unrealized gain of $11.2 million at March 31, 2013.

Loans totaled $1.0 billion at March 31, 2013 and December 31, 2012.  Total loans declined $9.1 million in the first quarter of 2013 primarily due to pay-offs related to asset quality improvement in the portfolio.  The loan mix reflected a minimal decrease in commercial and residential real estate loans, which was partially offset by an increase in real estate construction loans.  The composition of the Company’s loan portfolio is reflected in Table 5 below.

Table 3 Composition of Loans (in thousands)
	March 31, 2013			December 31, 2012
Commercial, financial, and agricultural	$	315,397		$	315,655
Lease financing receivable		4,962			5,769
Real estate – construction		82,508			75,334
Real estate – commercial		405,705			414,384
Real estate – residential		138,284			142,858
Installment loans to individuals		88,898			90,561
Other		2,105			2,379
	$	1,037,859		$	1,046,940
Less allowance for loan losses		(7,457	)		(7,370	)
Net loans	$	1,030,402		$	1,039,570

Commercial, financial and agricultural (“C&I”) loans remained flat over the first three months of 2013 and the real estate construction portfolio increased $7.2 million.  Commercial real estate loans decreased $7.7 million, primarily due to pay-offs related to asset quality improvements in the portfolio.  Included in the commercial loan portfolios are qualifying small business loans that may result in a lower dividend rate paid on our Series B Preferred Stock issued in connection with our participation under the U. S. Treasury’s Small Business Lending Fund (“SBLF”).  In connection with our participation in the SBLF, we have placed emphasis on small business loans through training and on-going communications with management and lenders on the types of loans that qualify for SBLF.  We have also developed marketing programs that promote small business lending in our markets.

Within the $405.7 million commercial real estate portfolio, $348.5 million is secured by commercial property, $26.3 million is secured by multi-family property, and $30.9 million is secured by farmland.  Of the $348.5 million secured by commercial property, $203.0 million, or 58.2%, is owner-occupied.  Of the $138.3 million residential real estate portfolio, 87.1% represented loans secured by first liens.  We believe our risk within the real estate and construction portfolios is diversified throughout our markets and that current exposure within the two portfolios is sufficiently provided for within the ALL at March 31, 2013.

Off-Balance Sheet Arrangements

In the normal course of operations, the Company engages in a variety of financial transactions that, in accordance with GAAP, are not recorded in the financial statements.  These transactions involve, to varying degrees, elements of credit, interest rate, and liquidity risk.  Such transactions are used primarily to manage customers’ requests for funding and take the form of loan commitments, letters of credit and lines of credit.  For the period ended March 31, 2013, we did not engage in any off-balance sheet transactions reasonably likely to have a material impact on our financial condition, results of operations or cash flows.

33

Liquidity and Capital

Bank Liquidity

Liquidity is the availability of funds to meet maturing contractual obligations and to fund operations.  The Bank’s primary liquidity needs involve its ability to accommodate customers’ demands for deposit withdrawals as well as customers’ requests for credit.  Liquidity is deemed adequate when sufficient cash to meet these needs can be promptly raised at a reasonable cost to the Bank.

Liquidity is provided primarily by three sources: a stable base of funding sources, an adequate level of assets that can be readily converted into cash, and borrowing lines with correspondent banks.  Our core deposits are our most stable and important source of funding.  Cash deposits at other banks, federal funds sold, and principal payments received on loans and mortgage-backed securities provide additional primary sources of liquidity.  Approximately $73.3 million in projected cash flows from securities repayments for the remainder of 2013 provides an additional source of liquidity.

The Bank also has significant borrowing capacity with the FRB-Atlanta and with the FHLB–Dallas.  As of March 31, 2013, we had no borrowings with the FRB-Atlanta.  FHLB-Dallas advances acquired from PSB totaled $27.0 million at March 31, 2013 and are fixed rate advances with rates ranging from 1.99% to 5.06% and have a range of maturities from January 2013 to January 2019.  The Company has $20.2 million in borrowing capacity at the FRB Discount Window and has the ability to post additional collateral of approximately $253.5 million if necessary to meet liquidity needs.  Additionally, $135.1 million in loan collateral is pledged under a Borrower-in-Custody line with the FRB-Atlanta.  Pending completion of the 2013 FHLB-Dallas collateral review, we anticipate our borrowing capacity under existing agreements to be approximately $149.6 million for the remainder of 2013.  Additional unsecured borrowing lines totaling $48.5 million are available through correspondent banks.  We utilize these contingency funding alternatives to meet deposit volatility, which is more likely in the current environment, given unusual competitive offeringswithin our markets.

Company Liquidity

At the Company level, cash is needed primarily to meet interest payments on the junior subordinated debentures, dividends on our common stock and dividend payments on the Series B and Series C Preferred Stocks.  The dividend rate on the Series B Preferred Stock issued to the U.S. Treasury for participation in the Small Business Lending Fund (“SBLF”) was 2.40% for the three months ended March 31, 2013 and 4.33% for the three months ended December 31, 2012.  For future quarters through the fourth quarter of 2013, the dividend rate may be adjusted to between 1% per annum and 5% per annum to reflect changes to the Bank’s level of “Qualified Small Business Lending” or “QSBL”.  If the level of the Bank’s qualified small business loans declines so that the percentage increase in QSBL as compared to the baseline level of QSBL is less than 10%, then the dividend rate payable on the Series B Preferred Stock would increase.  For the tenth calendar quarter through four and one half years after issuance, the dividend rate will be fixed at between 1% and 7% based upon the increase in QSBL as of the ninth calendar quarter as compared to the baseline. After four and one half years from issuance, the dividend rate will increase to 9% per annum.

On December 28, 2012, the Company issued 756,511 shares of common stock and 99,971 shares of Series C Preferred Stock in connection with the PSB acquisition.  The Series C Preferred Stock is entitled to the payment of noncumulative dividends, if and when declared by the Company’s Board of Directors, at the rate of 4.00% per annum, payable quarterly in arrears on January 15, April 15, July 15 and October 15 of each year, beginning on April 15, 2013.  On January 31, 2013, the Company declared a 1.00% first quarter dividend for holders of its Series C preferred stock of record on April 1, 2013, which was paid on April 15, 2013.

Although no dividends have been paid by the Bank to the Company during the three months ended March 31, 2013, as of December 31, 2012 the Bank had the ability to pay dividends to the Company of approximately $23.0 million without prior approval from its primary regulator.  Additionally, the Bank paid no dividends to the Company for the year ended December 31, 2012.  As a publicly traded company, the Company also has the ability, subject to market conditions, to issue additional shares of common stock and other securities to provide funds as needed for operations and future growth of the Company.

34

Capital

The Company and the Bank are required to maintain certain minimum capital levels.  Risk-based capital requirements are intended to make regulatory capital more sensitive to the risk profile of an institution's assets.  At March 31 2013, the Company and the Bank were in compliance with statutory minimum capital requirements and were classified as “well capitalized.”  Minimum capital requirements include a total risk-based capital ratio of 8.0%, with Tier 1 capital not less than 4.0%, and a Tier 1 leverage ratio (Tier 1 to total average adjusted assets) of 4.0% based upon the regulators latest composite rating of the institution.As of March 31 2013, the Company’s Tier 1 leverage ratio was 8.98%, Tier 1 capital to risk-weighted assets was 13.75% and total capital to risk-weighted assets was 14.41%.  The Bank had a Tier 1 leverage capital ratio of 8.78% at March 31, 2013.  The Bank’s four acquisitions over the past eighteen months reduced capital levels; however, the Company and the Bank continue to be classified as “well capitalized.”

The Federal Reserve Board has proposed a new regulatory capital framework as part of the Basel III regulatory capital reforms.  We currently believe that, if such reforms are implemented as proposed, we would remain in compliance with the revised capital requirements.

Asset Quality

Credit Risk Management

We manage credit risk primarily by observing written, board approved policies that govern all credit underwriting and approval activities.  Our Chief Credit Officer (“CCO”) is responsible for credit underwriting and loan operations for the Bank.  The role of the CCO includes on-going review and development of lending policies, commercial credit analysis, centralized consumer underwriting, loan operations documentation and funding, and overall credit risk management procedures.  The current risk management process requires that each individual loan officer review his or her portfolio on a quarterly basis and assign recommended credit ratings on each loan.  These efforts are supplemented by independent reviews performed by the loan review officer and other validations performed by the internal audit department.  The results of the reviews are reported directly to the Audit Committee of the Board of Directors.  We believe the conservative nature of our underwriting practices has resulted in strong credit quality in our loan portfolio.  Completed loan applications, credit bureau reports, financial statements, and a committee approval process remain a part of credit decisions.  Documentation of the loan decision process is required on each credit application, whether approved or denied, to ensure thorough and consistent procedures.  Additionally, we have historically recognized and disclosed significant problem loans quickly and taken prompt action to address material weaknesses in those credits.

Credit concentrations are monitored and reported quarterly whereby individual customer and aggregate industry leverage, profitability, risk rating distributions, and liquidity are evaluated for each major standard industry classification segment.  At March 31, 2013, one industry segment concentration, the oil and gas industry, aggregated more than 10% of our loan portfolio.  Our exposure in the oil and gas industry, including related service and manufacturing industries, totaled approximately $144.1 million, or 13.9% of total loans.  Additionally, we monitor our exposure to loans secured by commercial real estate.  At March 31, 2013, loans secured by commercial real estate (including commercial construction, farmland and multifamily loans) totaled approximately $470.8 million.  Of the $470.8 million, $348.5 million represent CRE loans, 58.2% of which are secured by owner-occupied commercial properties.  Of the $470.8 million in loans secured by commercial real estate, $3.6 million, or 0.8%, were on nonaccrual status at March 31, 2013. Additional information regarding credit quality by loan classification is provided in Note 4 – Credit Quality of Loans and Allowance for Loan Losses and Note 7 – Fair Value Measurement in the notes to the interim consolidated financial statements.

35

Nonperforming Assets and Allowance for Loan Loss

Table 4 summarizes the Company's nonperforming assets for the quarters ending March 31, 2013 and 2012, and December 31, 2012.

Table 4 Nonperforming Assets and Loans Past Due 90 Days or More and Still Accruing (in thousands)
	March 31, 2013			December 31, 2012			March 31, 2012
Nonaccrual loans	$	7,526		$	8,887		$	7,655
Loans past due 90 days and over and still accruing		163			1,986			418
Total nonperforming loans		7,689			10,873			8,073
Other real estate		7,552			7,496			7,120
Other foreclosed assets		16			151			321
Total nonperforming assets	$	15,257		$	18,520		$	15,514
Troubled debt restructurings	$	5,032		$	5,062		$	421
Nonperforming assets to total assets		0.82	%		1.00	%		1.10	%
Nonperforming assets to total loans + ORE + other foreclosed assets		1.46	%		1.76	%		2.05	%
ALL to nonperforming loans		96.98	%		67.78	%		87.67	%
ALL to total loans		0.72	%		0.70	%		0.95	%
QTD charge-offs	$	523		$	557		$	939
QTD recoveries		60			53			66
QTD net charge-offs	$	463		$	504		$	873
Annualized net charge-offs to total loans		0.18	%		0.19	%		0.47	%

Nonperforming assets totaled $15.3 million at March 31, 2013, a decrease of $3.2 million from the $18.5 million reported at year-end 2012 and a decrease of $257,000 from the $15.5 million reported at March 31, 2012.  The decrease in the first quarter of 2013 resulted from a $1.4 million reduction in nonaccrual loans and a $1.8 million decrease in loans past due 90 days and over.  Allowance coverage for nonperforming loans was 96.98% at March 31, 2013 compared to 67.78% at December 31, 2012 and 87.67% at March 31, 2012.  The ALL/total loans ratio remained relatively constant at 0.72% compared to 0.70% at year-end 2012, down from the 0.95% at March 31, 2012.  The ALL/total loans ratio decreased due to the loans acquired from PSB.   The ratio of annualized net charge-offs to total loans was 0.18% for the three months ended March 31, 2013 compared to 0.19% for the three months ended December 31, 2012, and down from the .47% for the three months ended March 31, 2012.

Total nonperforming assets to total loans plus ORE and other assets repossessed decreased to 1.46% at March 31, 2013 from 1.76% at December 31, 2012 and from 2.05% at March 31, 2012.  Loans classified as troubled debt restructurings (“TDRs”) totaled $5.0 million at March 31, 2013 compared to $5.1 million at December 31, 2012 and $421,000 at March 31, 2012.  A total of $4.8 million in TDRs were acquired with PSB and included four credits, two of which are large commercial credits.  Classified assets, including ORE, decreased $5.2 million, or 15.1% during the three months ended March 31, 2013, from $34.4 million at December 31, 2012 to $29.2 million.  The decrease in classified assets resulted primarily from approximately $2.9 million in pay-offs received on three loan relationships and the upgrade of a $1.0 million loan.  The exposure on other classified loans decreased an additional $1.2 million due to charge-offs and scheduled payments in the first quarter of 2013.   Additional information regarding impaired loans is included in Note 4 – Credit Quality of Loans and Allowance for Loan Losses and Note 7 – Fair Value Measurement in the notes to the interim consolidated financial statements.

36

Quarterly evaluations of the allowance for loan losses are performed in accordance with GAAP and regulatory guidelines.  The ALL is comprised of specific reserves assigned to each impaired loan for which a probable loss has been identified as well as general reserves to maintain the allowance at an acceptable level for other loans in the portfolio where historical loss experience is available that indicates certain probable losses may exist.  Factors considered in determining provisions include estimated losses in significant credits; known deterioration in concentrations of credit; historical loss experience; trends in nonperforming assets; volume, maturity and composition of the loan portfolio; off-balance sheet credit risk; lending policies and control systems; national and local economic conditions; the experience, ability and depth of lending management; and the results of examinations of the loan portfolio by regulatory agencies and others.  The processes by which we determine the appropriate level of the ALL, and the corresponding provision for probable credit losses, involves considerable judgment; therefore, no assurance can be given that future losses will not vary from current estimates. We believe the $7.5 million in the ALL as of March 31, 2013 is sufficient to cover probable losses in the loan portfolio.

Impact of Inflation and Changing Prices

The consolidated financial statements and notes thereto, presented herein, have been prepared in accordance with GAAP, which require the measurement of financial position and operating results in terms of historical dollars without considering the change in the relative purchasing power of money over time due to inflation. The impact of inflation is reflected in the increased cost of the Company’s operations.  Unlike most industrial companies, nearly all the assets and liabilities of the Company are financial.  As a result, interest rates have a greater impact on the Company’s performance than do the effects of general levels of inflation.  Interest rates do not necessarily move in the same direction or to the same extent as the prices of goods and services.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

There have been no significant changes from the information regarding market risk disclosed under the heading “Funding Sources - Interest Rate Sensitivity” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012.

Item 4. Controls and Procedures.

The Company’s Chief Executive Officer and Chief Financial Officer have evaluated the effectiveness of the disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).  As of the end of the period covered by this Quarterly Report on Form 10-Q, the Chief Executive Officer and Chief Financial Officer have concluded that such disclosure controls and procedures are effective to ensure that information required to be disclosed by the Company in reports that it submits under the Exchange

Act is recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Commission rules and forms.

During the first quarter of 2013, there was no change in the Company’s internal controls over financial reporting that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

37

Part II – Other Information

Item 1. Legal Proceedings.

In early June 2012, the Bank was joined in a class action lawsuit filed by Umeki Harding, individually and on behalf of all persons similarly situated, in the United States District Court for the Western District of Louisiana.  Mr. Harding alleges he was a customer and individually and on behalf of a class seeks unspecified monetary damages and other relief from the Bank relating to the collection of overdraft fees on customer accounts.   The Bank filed a motion to compel arbitration and sought dismissal of the complaint.  On October 4, 2012, the Court granted the Bank’s motion to compel arbitration and stayed the referenced matter until arbitration is conducted in accordance with the terms of the Arbitration Agreement.  The federal lawsuit was administratively closed pending the completion of the arbitration proceeding.  As of this date, there has been no request by any customer seeking arbitration.

Also in June 2012, the Bank was joined in a class action lawsuit filed by Elena Hunter, individually and behalf of herself and others similarly situated, in the United States District Court for the Northern District of Texas, Dallas Division.  The lawsuit alleges violations of Title III of the American with Disabilities Act and several other acts against the Bank for failure to design, construct, and/or own or operate banking facilities that are accessible to, and independently usable by, blind people and is seeking unspecified monetary damages and other relief from the Bank.  On July 27, 2012, the Bank filed a motion to dismiss this matter, which motion is currently pending before the court.  The motion to dismiss was granted on February 19, 2013 and plaintiffs were given leave to file amended pleadings within 30 days.  Plaintiffs filed a second amended complaint on March 26, 2013.

A Notice of Charge of Discrimination was filed against the Company in April 2011 with the U.S. Equal Employment Opportunity Commission by Karen L. Hail, a former Director and officer of the Company.  Ms. Hail’s claim alleges gender discrimination and retaliation.  In May 2011, Ms. Hail also filed an action in U.S. District Court for the Western District of Louisiana against the Company and the Bank for discrimination and retaliation in violation of the Family Medical Leave Act and Title VII of the Civil Rights Act seeking unspecified monetary damages.   The Company believes Ms. Hail’s claims are without merit and will strongly defend against the claims.

The Bank has been named as a defendant in various other legal actions arising from normal business activities in which damages of various amounts are claimed.  While the amount, if any, of ultimate liability with respect to such matters cannot be currently determined, management believes, after consulting with legal counsel, that any such liability will not have a material adverse effect on the Company’s consolidated financial position, results of operations, or cash flows.  However, in the event of unexpected future developments in these matters, if the ultimate resolution of any such matter is unfavorable, the result may be material to the Company’s consolidated financial position, consolidated results of operations or consolidated cash flows.

Item 1A. Risk Factors.

There have been no material changes from the risk factors previously disclosed in our Form 10-K for the year ended December 31, 2012.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

The Company did not sell any unregistered equity securities or repurchase any equity securities during the quarter ended March 31, 2013.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

None.

Item 5. Other Information.

None.

Item 6. Exhibits.

38

Exhibit Number	Document Description
3.1	Amended and Restated Articles of Incorporation of MidSouth Bancorp, Inc. (restated solely for purposes of Item 601(b)(3) of Regulation S-K) (filed as Exhibit 3.1 to MidSouth's Annual Report on Form 10-K filed on March 15, 2013 and incorporated herein by reference).
3.2	Amended and Restated By-laws of MidSouth Bancorp, Inc. effective as of September 12, 2012 (restated solely for purposes of Item 601(b)(3) of Regulation S-K (filed as Exhibit 3.3 to MidSouth’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2012 and incorporated herein by reference).
31.1	Certification pursuant to Exchange Act Rules 13(a) – 14(a)
31.2	Certification pursuant to Exchange Act Rules 13(a) – 14(a)
32.1	Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2	Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101	The following financial information from the Registrant’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2013, formatted in Extensible Business Reporting Language (“XBRL”): (i) Consolidated Statements of Operations, (ii) Consolidated Balance Sheets, (iii) Consolidated Statements of Cash Flows and (iv) Notes to Consolidated Financial Statements.*

*  Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not to be “filed” or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, or Section 18 of the Securities Act of 1934, as amended, and otherwise are not subject to liability under these sections.

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: May 10, 2013
	/s/ C. R. Cloutier
	C. R. Cloutier, President /CEO
	(Principal Executive Officer)
	/s/ James R. McLemore
	James R. McLemore, CFO
	(Principal Financial Officer)
	/s/ Teri S. Stelly
	Teri S. Stelly, Controller (Principal Accounting Officer)

39

EX-31.1

Exhibit 31.1

CERTIFICATION

I, C. R. Cloutier, President and CEO, certify that:

1.  I have reviewed this quarterly report on Form 10-Q of MidSouth Bancorp, Inc.;

2.  Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3.  Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4.  The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

b) designed such internal control over financial reporting, or cause such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this quarterly report based on such evaluations; and

d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.  The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: May 10, 2013

/s/ C. R. Cloutier

Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION

I, James R. McLemore, Senior Executive Vice President & CFO, certify that:

1.  I have reviewed this quarterly report on Form 10-Q of MidSouth Bancorp, Inc.;

2.  Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3.  Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4.  The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

b) designed such internal control over financial reporting, or cause such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this quarterly report (the "Evaluation Date"); and

d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.  The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial data; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: May10, 2013

/s/ James R. McLemore

Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of MidSouth Bancorp, Inc. (the “Company”) on Form 10-Q for the period ending March 31, 2013 (the “Report”), I, C.R. Cloutier, Chief Executive Officer of the Company, certify that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ C. R. Cloutier

C.R. Cloutier

Chief Executive Officer

May 10, 2013

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of MidSouth Bancorp, Inc. (the “Company”) on Form 10-Q for the period ending March 31, 2013 (the “Report”), I, James R. McLemore, Chief Financial Officer of the Company, certify that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ James R. McLemore

James R. McLemore

Chief Financial Officer

May 10, 2013

XML

Credit Quality of Loans and Allowance for Loan Losses, Impaired Loans by Class of Loans (Details) (USD $)	3 Months Ended		12 Months Ended
	Mar. 31, 2013	Mar. 31, 2012	Dec. 31, 2012
With no related allowance recorded [Abstract]
Recorded Investment	$ 4,711,000		$ 5,554,000
Unpaid Principal Balance	5,360,000		6,201,000
Related Allowance	0		0
Average Recorded Investment	5,132,000		4,769,000
Interest Income Recognized	8,000		71,000
With an allowance recorded [Abstract]
Recorded Investment	1,920,000		1,886,000
Unpaid Principal Balance	1,920,000		1,886,000
Related Allowance	687,000		627,000
Average Recorded Investment	1,903,000		2,424,000
Interest Income Recognized	1,000		41,000
Totals [Abstract]
Recorded Investment	6,631,000		7,440,000
Unpaid Principal Balance	7,280,000		8,087,000
Related Allowance	687,000		627,000
Average Recorded Investment	7,035,000		7,193,000
Interest Income Recognized	9,000		112,000
Loans on Nonaccrual Status [Abstract]
Loans on Nonaccrual Status	7,526,000		8,887,000
Interest lost on nonaccrual loans	148,000	177,000
Interest received on nonaccrual loans	36,000	20,000
Commercial, Financial and Agricultural [Member]
With no related allowance recorded [Abstract]
Recorded Investment	590,000		564,000
Unpaid Principal Balance	701,000		675,000
Related Allowance	0		0
Average Recorded Investment	577,000		861,000
Interest Income Recognized	0		5,000
With an allowance recorded [Abstract]
Recorded Investment	1,058,000		1,072,000
Unpaid Principal Balance	1,058,000		1,072,000
Related Allowance	467,000		391,000
Average Recorded Investment	1,065,000		1,128,000
Interest Income Recognized	1,000		21,000
Totals [Abstract]
Related Allowance	467,000		391,000
Loans on Nonaccrual Status [Abstract]
Loans on Nonaccrual Status	1,856,000		2,015,000
Commercial Real Estate Construction [Member]
With no related allowance recorded [Abstract]
Recorded Investment	676,000		771,000
Unpaid Principal Balance	676,000		770,000
Related Allowance	0		0
Average Recorded Investment	723,000		834,000
Interest Income Recognized	0		1,000
With an allowance recorded [Abstract]
Recorded Investment	159,000		165,000
Unpaid Principal Balance	159,000		165,000
Related Allowance	51,000		57,000
Average Recorded Investment	162,000		85,000
Interest Income Recognized	0		7,000
Totals [Abstract]
Related Allowance	51,000		57,000
Loans on Nonaccrual Status [Abstract]
Loans on Nonaccrual Status	838,000		941,000
Commercial Real Estate - Other [Member]
With no related allowance recorded [Abstract]
Recorded Investment	2,485,000		2,530,000
Unpaid Principal Balance	3,015,000		3,059,000
Related Allowance	0		0
Average Recorded Investment	2,508,000		1,780,000
Interest Income Recognized	6,000		38,000
With an allowance recorded [Abstract]
Recorded Investment	203,000		381,000
Unpaid Principal Balance	203,000		381,000
Related Allowance	21,000		35,000
Average Recorded Investment	292,000		811,000
Interest Income Recognized	0		3,000
Totals [Abstract]
Related Allowance	21,000		35,000
Loans on Nonaccrual Status [Abstract]
Loans on Nonaccrual Status	2,783,000		3,017,000
Consumer - Other [Member]
With no related allowance recorded [Abstract]
Recorded Investment	51,000		114,000
Unpaid Principal Balance	59,000		122,000
Related Allowance	0		0
Average Recorded Investment	82,000		81,000
Interest Income Recognized	0		1,000
With an allowance recorded [Abstract]
Recorded Investment	204,000		216,000
Unpaid Principal Balance	204,000		216,000
Related Allowance	106,000		114,000
Average Recorded Investment	210,000		228,000
Interest Income Recognized	0		6,000
Totals [Abstract]
Related Allowance	106,000		114,000
Loans on Nonaccrual Status [Abstract]
Loans on Nonaccrual Status	292,000		409,000
Residential - Prime [Member]
With no related allowance recorded [Abstract]
Recorded Investment	909,000		1,575,000
Unpaid Principal Balance	909,000		1,575,000
Related Allowance	0		0
Average Recorded Investment	1,242,000		1,213,000
Interest Income Recognized	2,000		26,000
With an allowance recorded [Abstract]
Recorded Investment	296,000		52,000
Unpaid Principal Balance	296,000		52,000
Related Allowance	42,000		30,000
Average Recorded Investment	174,000		172,000
Interest Income Recognized	0		4,000
Totals [Abstract]
Related Allowance	42,000		30,000
Loans on Nonaccrual Status [Abstract]
Loans on Nonaccrual Status	1,757,000		2,505,000
Finance Leases Commercial [Member]
With no related allowance recorded [Abstract]
Recorded Investment			0
Unpaid Principal Balance			0
Related Allowance			0
Average Recorded Investment			0
Interest Income Recognized			0
Loans on Nonaccrual Status [Abstract]
Loans on Nonaccrual Status	0		0
Other Loans [Member]
With no related allowance recorded [Abstract]
Recorded Investment			0
Unpaid Principal Balance			0
Related Allowance			0
Average Recorded Investment			0
Interest Income Recognized			0
Loans on Nonaccrual Status [Abstract]
Loans on Nonaccrual Status	0		0
Commercial Total [Member]
With an allowance recorded [Abstract]
Related Allowance	539,000		483,000
Totals [Abstract]
Recorded Investment	5,171,000		5,483,000
Unpaid Principal Balance	5,812,000		6,122,000
Related Allowance	539,000		483,000
Average Recorded Investment	5,327,000		5,499,000
Interest Income Recognized	7,000		75,000
Consumer Total [Member]
With an allowance recorded [Abstract]
Related Allowance	106,000		114,000
Totals [Abstract]
Recorded Investment	255,000		330,000
Unpaid Principal Balance	263,000		338,000
Related Allowance	106,000		114,000
Average Recorded Investment	292,000		309,000
Interest Income Recognized	0		7,000
Residential Total [Member]
With an allowance recorded [Abstract]
Related Allowance	42,000		30,000
Totals [Abstract]
Recorded Investment	1,205,000		1,627,000
Unpaid Principal Balance	1,205,000		1,627,000
Related Allowance	42,000		30,000
Average Recorded Investment	1,416,000		1,385,000
Interest Income Recognized	2,000		30,000
Other Total [Member]
With an allowance recorded [Abstract]
Related Allowance			0
Totals [Abstract]
Recorded Investment			0
Unpaid Principal Balance			0
Related Allowance			0
Average Recorded Investment			0
Interest Income Recognized			0
Consumer - Credit Card [Member]
Loans on Nonaccrual Status [Abstract]
Loans on Nonaccrual Status	0		0
Residential Construction [Member]
Loans on Nonaccrual Status [Abstract]
Loans on Nonaccrual Status	0		0
Residential - Subprime [Member]
Loans on Nonaccrual Status [Abstract]
Loans on Nonaccrual Status	$ 0		$ 0

XML

Fair Value Measurement (Tables)

3 Months Ended

Mar. 31, 2013

Fair Value Measurement [Abstract]

Assets and Liabilities Measured at Fair Value on a Recurring Basis

Below is a table that presents information about certain assets and liabilities measured at fair value on a recurring basis (in thousands):

	Assets / Liabilities Measured at Fair Value		Fair Value Measurements at March 31, 2013 using:
Description	at March 31, 2013		Level 1		Level 2		Level 3
Available-for-sale securities:
U.S. Government sponsored enterprises	$	13,186	$	-	$	13,186	$	-
Obligations of state and political subdivisions		77,179		-		77,179		-
GSE mortgage-backed securities		167,320		-		167,320		-
Other asset-backed securities		12,628		-		12,628		-
Collateralized mortgage obligations: residential		87,253				87,253
Collateralized mortgage obligations: commercial		29,693		-		29,693		-
Collateralized debt obligations		527		-		527		-
	$	387,786	$	-	$	387,786	$	-

	Assets / Liabilities Measured at Fair Value		Fair Value Measurements at December 31, 2012 using:
Description	at December 31, 2012		Level 1		Level 2		Level 3
Available-for-sale securities:
U.S. Government sponsored enterprises	$	13,424	$	-	$	13,424	$	-
Obligations of state and political subdivisions		87,421		-		87,421		-
GSE mortgage-backed securities		178,819		-		178,819		-
Collateralized mortgage
obligations: residential		101,986		-		101,986		-
Collateralized mortgage obligations: commercial		29,761				29,761
Other asset-backed securities		12,742		-		12,742		-
Collateralized debt obligations		464		-		464		-
	$	424,617	$	-	$	424,617	$	-

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

Certain assets and liabilities are measured at fair value on a nonrecurring basis and are included in the table below (in thousands).  Impaired loans are Level 2 assets measured using appraisals from external parties of the collateral less any prior liens.  Other real estate properties are also Level 2 assets measured using appraisals from external parties.  Acquired loans are Level 3 assets measured on a nonrecurring basis.

			Fair Value Measurements Using
(dollars in thousands)	March 31, 2013		Level 1		Level 2		Level 3
Assets
Acquired loans with deteriorated credit quality	$	4,254	$	-	$	-	$	4,254
Other real estate		7,552		-		7,552		-
Impaired loans, excluding acquired loans		1,943		-		1,943		-
Total	$	13,749	$	-	$	9,495	$	4,254
			Fair Value Measurements Using
(dollars in thousands)	December 31, 2012		Level 1		Level 2		Level 3
Assets
Acquired loans with deteriorated credit quality	$	4,521	$	-	$	-	$	4,521
Other real estate		7,496		-		7,496		-
Impaired loans, excluding acquired loans		2,245				2,245		-
Total	$	14,262	$	-	$	9,741	$	4,521

Carrying Amounts and Estimated Fair Values of Financial Instruments

The carrying amounts and estimated fair values of the Company's financial instruments are as follows at March 31, 2013 and December 31, 2012 (in thousands):

			Fair Value Measurements at March 31, 2013 Using:
	Carrying Value		Level 1		Level 2		Level 3
Financial assets:
Cash and cash equivalents	$	118,009	$	118,009	$	-	$	-
Securities available-for-sale		387,786		-		387,786		-
Securities held-to-maturity		167,617		-		170,177		-
Other investments		10,017		10,017		-		-
Loans, net		1,030,402		-		-		1,036,325
Cash surrender value of life insurance policies		13,242		-		13,242		-
Financial liabilities:
Non-interest-bearing deposits		390,774		-		390,774		-
Interest-bearing deposits		1,169,352		-		899,237		271,799
Securities sold under agreements to repurchase		48,557		48,557		-		-
Notes payable		28,772						28,772
Junior subordinated debentures		29,384		-		22,167		7,588

			Fair Value Measurements at December 31, 2012 Using:
	Carrying Value		Level 1		Level 2		Level 3
Financial assets:
Cash and cash equivalents	$	73,573	$	73,573	$	-	$	-
Time deposits held in banks		881		-		-		883
Securities available-for-sale		424,617		-		424,617		-
Securities held-to-maturity		153,524		-		156,924		-
Other investments		8,310		8,310		-		-
Loans, net		1,039,570		-		-		1,046,495
Cash surrender value of life insurance policies		13,183		-		13,183		-
Financial liabilities:
Non-interest-bearing deposits		380,577		-		380,557		-
Interest-bearing deposits		1,171,347		-		859,183		314,783
Securities sold under agreements to repurchase		41,447		41,447		-		-
Notes payable		29,128		-		-		29,128
Junior subordinated debentures		29,384		-		22,167		7,776

XML

Fair Value Measurement (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013	Dec. 31, 2012
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Discount for selling costs (in hundredths)	10.00%
Available-for-sale Securities [Abstract]
Available-for-sale securities	$ 387,786	$ 424,617	[1]
Financial Assets [Abstract]
Securities available-for-sale	387,786	424,617	[1]
Carrying Value [Member]
Available-for-sale Securities [Abstract]
Available-for-sale securities	387,786	424,617
Financial Assets [Abstract]
Cash and cash equivalents	118,009	73,573
Time deposits held in banks		881
Securities available-for-sale	387,786	424,617
Securities held-to-maturity	167,617	153,524
Other investments	10,017	8,310
Loans, net	1,030,402	1,039,570
Cash surrender value of life insurance policies	13,242	13,183
Financial liabilities [Abstract]
Non-interest-bearing deposits	390,774	380,577
Interest-bearing deposits	1,169,352	1,171,347
Securities sold under agreements to repurchase	48,557	41,447
Notes payable	28,772	29,128
Junior subordinated debentures	29,384	29,384
Minimum [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Period when new appraisals are received (in weeks)	4
Maximum [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Period when new appraisals are received (in weeks)	6
Level 1 [Member] | Fair Value [Member]
Available-for-sale Securities [Abstract]
Available-for-sale securities	0	0
Financial Assets [Abstract]
Cash and cash equivalents	118,009	73,573
Time deposits held in banks		0
Securities available-for-sale	0	0
Securities held-to-maturity	0	0
Other investments	10,017	8,310
Loans, net	0	0
Cash surrender value of life insurance policies	0	0
Financial liabilities [Abstract]
Non-interest-bearing deposits	0	0
Interest-bearing deposits	0	0
Securities sold under agreements to repurchase	48,557	41,447
Notes payable		0
Junior subordinated debentures	0	0
Level 2 [Member] | Fair Value [Member]
Available-for-sale Securities [Abstract]
Available-for-sale securities	387,786	424,617
Financial Assets [Abstract]
Cash and cash equivalents	0	0
Time deposits held in banks		0
Securities available-for-sale	387,786	424,617
Securities held-to-maturity	170,177	156,924
Other investments	0	0
Loans, net	0	0
Cash surrender value of life insurance policies	13,242	13,183
Financial liabilities [Abstract]
Non-interest-bearing deposits	390,774	380,557
Interest-bearing deposits	899,237	859,183
Securities sold under agreements to repurchase	0	0
Notes payable		0
Junior subordinated debentures	22,167	22,167
Level 3 [Member] | Fair Value [Member]
Available-for-sale Securities [Abstract]
Available-for-sale securities	0	0
Financial Assets [Abstract]
Cash and cash equivalents	0	0
Time deposits held in banks		883
Securities available-for-sale	0	0
Securities held-to-maturity	0	0
Other investments	0	0
Loans, net	1,036,325	1,046,495
Cash surrender value of life insurance policies	0	0
Financial liabilities [Abstract]
Non-interest-bearing deposits	0	0
Interest-bearing deposits	271,799	314,783
Securities sold under agreements to repurchase	0	0
Notes payable	28,772	29,128
Junior subordinated debentures	7,588	7,776
Fair Value, Measurements, Recurring [Member]
Available-for-sale Securities [Abstract]
U.S. Government sponsored enterprises	13,186	13,424
Obligations of state and political subdivisions	77,179	87,421
GSE mortgage-backed securities	167,320	178,819
Other asset-backed securities	12,628
Collateralized mortgage obligations: residential	87,253	101,986
Collateralized mortgage obligations: commercial	29,693	29,761
Other asset-backed securities		12,742
Collateralized debt obligation	527	464
Available-for-sale securities	387,786	424,617
Financial Assets [Abstract]
Securities available-for-sale	387,786	424,617
Fair Value, Measurements, Recurring [Member] | Level 1 [Member]
Available-for-sale Securities [Abstract]
U.S. Government sponsored enterprises	0	0
Obligations of state and political subdivisions	0	0
GSE mortgage-backed securities	0	0
Other asset-backed securities	0
Collateralized mortgage obligations: residential		0
Collateralized mortgage obligations: commercial	0
Other asset-backed securities		0
Collateralized debt obligation	0	0
Available-for-sale securities	0	0
Financial Assets [Abstract]
Securities available-for-sale	0	0
Fair Value, Measurements, Recurring [Member] | Level 2 [Member]
Available-for-sale Securities [Abstract]
U.S. Government sponsored enterprises	13,186	13,424
Obligations of state and political subdivisions	77,179	87,421
GSE mortgage-backed securities	167,320	178,819
Other asset-backed securities	12,628
Collateralized mortgage obligations: residential	87,253	101,986
Collateralized mortgage obligations: commercial	29,693	29,761
Other asset-backed securities		12,742
Collateralized debt obligation	527	464
Available-for-sale securities	387,786	424,617
Financial Assets [Abstract]
Securities available-for-sale	387,786	424,617
Fair Value, Measurements, Recurring [Member] | Level 3 [Member]
Available-for-sale Securities [Abstract]
U.S. Government sponsored enterprises	0	0
Obligations of state and political subdivisions	0	0
GSE mortgage-backed securities	0	0
Other asset-backed securities	0
Collateralized mortgage obligations: residential		0
Collateralized mortgage obligations: commercial	0
Other asset-backed securities		0
Collateralized debt obligation	0	0
Available-for-sale securities	0	0
Financial Assets [Abstract]
Securities available-for-sale	0	0
Fair Value, Measurements, Nonrecurring [Member]
Assets and Liabilities Measured on Nonrecurring Basis
Acquired loans with deteriorated credit quality	4,254	4,521
Other real estate	7,552	7,496
Impaired loans, excluding acquired loans	1,943	2,245
Total	13,749	14,262
Fair Value, Measurements, Nonrecurring [Member] | Level 1 [Member]
Assets and Liabilities Measured on Nonrecurring Basis
Acquired loans with deteriorated credit quality	0	0
Other real estate	0	0
Impaired loans, excluding acquired loans	0
Total	0	0
Fair Value, Measurements, Nonrecurring [Member] | Level 2 [Member]
Assets and Liabilities Measured on Nonrecurring Basis
Acquired loans with deteriorated credit quality	0	0
Other real estate	7,552	7,496
Impaired loans, excluding acquired loans	1,943	2,245
Total	9,495	9,741
Fair Value, Measurements, Nonrecurring [Member] | Level 3 [Member]
Assets and Liabilities Measured on Nonrecurring Basis
Acquired loans with deteriorated credit quality	4,254	4,521
Other real estate	0	0
Impaired loans, excluding acquired loans	0	0
Total	$ 4,254	$ 4,521

[1] Derived from audited financial statements

XML

Consolidated Statement of Shareholders' Equity (unaudited) (Parenthetical) (USD $)	3 Months Ended
	Mar. 31, 2013
Consolidated Statement of Shareholders' Equity (unaudited) [Abstract]
Dividends on common stock (in dollars per share)	$ 0.07

XML

Credit Quality of Loans and Allowance for Loan Losses, Aggregate Allowance for Loan Losses and Related Party Lending (Details) (USD $)	3 Months Ended
	Mar. 31, 2013 Segment	Dec. 31, 2012
Financing Receivable, Allowance for Credit Losses [Line Items]
Number of industry segment concentration above threshold limit	1
Threshold percentage of loan portfolio (in hundredths)	10.00%
Loans exposure in oil and gas industry	$ 144,100,000
Exposure in oil and gas industry specified as percentage of total loans (in hundredths)	13.90%
Loans with exposure in commercial real estate	470,800,000
Loans on nonaccrual status	7,526,000	8,887,000
Commercial Real Estate [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans with exposure in commercial real estate	348,500,000
Percentage of CRE loans secured by owner-occupied commercial properties (in hundredths)	58.20%
Loans on nonaccrual status	$ 3,600,000
Nonaccrual status of loans specified as percentage of total CRE loans (in hundredths)	0.80%

XML

Credit Quality of Loans and Allowance for Loan Losses, Allowance for Loan Losses and Recorded Investment (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2013	Dec. 31, 2012		Dec. 31, 2011
Allowance for loan losses and recorded investment in loans [Abstract]
Collectively Evaluated for Impairment	$ 6,770	$ 6,743
Individually Evaluated for Impairment	687	627
Loans Acquired with Deteriorated Credit Quality	0	0
Total allowance for loan losses	7,457	7,370		7,276
Loans [Abstract]
Collectively Evaluated for Impairment	1,026,974	1,034,979
Individually Evaluated for Impairment	6,631	7,440
Loans Acquired with Deteriorated Credit Quality	4,254	4,521
Total loans	1,037,859	1,046,940	[1]
Commercial, Financial and Agricultural [Member]
Allowance for loan losses and recorded investment in loans [Abstract]
Collectively Evaluated for Impairment	1,115	1,144
Individually Evaluated for Impairment	467	391
Loans Acquired with Deteriorated Credit Quality	0	0
Total allowance for loan losses	1,582	1,535		1,734
Loans [Abstract]
Collectively Evaluated for Impairment	313,677	313,937
Individually Evaluated for Impairment	1,648	1,636
Loans Acquired with Deteriorated Credit Quality	72	82
Total loans	315,397	315,655
Real Estate - Construction [Member]
Allowance for loan losses and recorded investment in loans [Abstract]
Collectively Evaluated for Impairment	2,212	2,090
Individually Evaluated for Impairment	51	57
Loans Acquired with Deteriorated Credit Quality	0	0
Total allowance for loan losses	2,263	2,147		1,661
Loans [Abstract]
Collectively Evaluated for Impairment	81,673	74,398
Individually Evaluated for Impairment	835	936
Loans Acquired with Deteriorated Credit Quality	0	0
Total loans	82,508	75,334
Commercial Real Estate [Member]
Allowance for loan losses and recorded investment in loans [Abstract]
Collectively Evaluated for Impairment	2,252	2,131
Individually Evaluated for Impairment	21	35
Loans Acquired with Deteriorated Credit Quality	0	0
Total allowance for loan losses	2,273	2,166		2,215
Loans [Abstract]
Collectively Evaluated for Impairment	399,117	407,489
Individually Evaluated for Impairment	2,688	2,911
Loans Acquired with Deteriorated Credit Quality	3,900	3,984
Total loans	405,705	414,384
Residential Real Estate [Member]
Allowance for loan losses and recorded investment in loans [Abstract]
Collectively Evaluated for Impairment	827	906
Individually Evaluated for Impairment	42	30
Loans Acquired with Deteriorated Credit Quality	0	0
Total allowance for loan losses	869	936		936
Loans [Abstract]
Collectively Evaluated for Impairment	136,797	140,776
Individually Evaluated for Impairment	1,205	1,627
Loans Acquired with Deteriorated Credit Quality	282	455
Total loans	138,284	142,858
Consumer [Member]
Allowance for loan losses and recorded investment in loans [Abstract]
Collectively Evaluated for Impairment	319	429
Individually Evaluated for Impairment	106	114
Loans Acquired with Deteriorated Credit Quality	0	0
Total allowance for loan losses	425	543		710
Loans [Abstract]
Collectively Evaluated for Impairment	88,643	90,231
Individually Evaluated for Impairment	255	330
Loans Acquired with Deteriorated Credit Quality	0	0
Total loans	88,898	90,561
Financial Leases [Member]
Allowance for loan losses and recorded investment in loans [Abstract]
Collectively Evaluated for Impairment	42	41
Individually Evaluated for Impairment	0	0
Loans Acquired with Deteriorated Credit Quality	0	0
Total allowance for loan losses	42	41		19
Loans [Abstract]
Collectively Evaluated for Impairment	4,962	5,769
Individually Evaluated for Impairment	0	0
Loans Acquired with Deteriorated Credit Quality	0	0
Total loans	4,962	5,769
Other [Member]
Allowance for loan losses and recorded investment in loans [Abstract]
Collectively Evaluated for Impairment	3	2
Individually Evaluated for Impairment	0	0
Loans Acquired with Deteriorated Credit Quality	0	0
Total allowance for loan losses	3	2		1
Loans [Abstract]
Collectively Evaluated for Impairment	2,105	2,379
Individually Evaluated for Impairment	0	0
Loans Acquired with Deteriorated Credit Quality	0	0
Total loans	$ 2,105	$ 2,379

[1] Derived from audited financial statements

XML

Credit Quality of Loans and Allowance for Loan Losses, Troubled Debt Restructuring (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013 Contract	Dec. 31, 2012	Mar. 31, 2013 Commercial, Financial and Agricultural [Member] Contract	Dec. 31, 2012 Commercial, Financial and Agricultural [Member] Contract	Mar. 31, 2012 Commercial, Financial and Agricultural [Member] Contract	Mar. 31, 2013 Real Estate - Commercial [Member] Contract	Dec. 31, 2012 Real Estate - Commercial [Member] Contract
Troubled Debt Restructuring [Abstract]
Number of Contracts			4	3		3	3
Pre-Modification Outstanding Recorded Investment	$ 5,395	$ 5,353	$ 412	$ 370		$ 4,983	$ 4,983
Post-Modification Outstanding Recorded Investment	5,032	5,062	370	353		4,662	4,709
Trouble debt restructurings that Subsequently Defaulted, Number of Contracts			4		3
Trouble debt restructurings that Subsequently Defaulted, Recorded Investment			259		251
Pre-modified contracts identified as TDRs	1
Pre-modification balance identified as TDR	$ 27,000

XML

Credit Quality of Loans and Allowance for Loan Losses, Allowance for Loan Losses by Segment (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended	12 Months Ended
	Mar. 31, 2013	Dec. 31, 2012
Allowance for loan losses by portfolio [Roll Forward]
Beginning balance	$ 7,370	$ 7,276
Charge-offs	(524)	(2,256)
Recoveries	61	300
Provision	550	2,050
Ending balance	7,457	7,370
Ending balance: individually evaluated for impairment	687	627
Loans [Abstract]
Ending balance	1,037,859	1,046,940	[1]
Ending balance: individually evaluated for impairment	6,631	7,440
Commercial, Financial and Agricultural [Member]
Allowance for loan losses by portfolio [Roll Forward]
Beginning balance	1,535	1,734
Charge-offs	(181)	(1,054)
Recoveries	16	181
Provision	212	674
Ending balance	1,582	1,535
Ending balance: individually evaluated for impairment	467	391
Loans [Abstract]
Ending balance	315,397	315,655
Ending balance: individually evaluated for impairment	1,648	1,636
Real Estate - Construction [Member]
Allowance for loan losses by portfolio [Roll Forward]
Beginning balance	2,147	1,661
Charge-offs	0	0
Recoveries	5	18
Provision	111	468
Ending balance	2,263	2,147
Ending balance: individually evaluated for impairment	51	57
Loans [Abstract]
Ending balance	82,508	75,334
Ending balance: individually evaluated for impairment	835	936
Real Estate - Commercial [Member]
Allowance for loan losses by portfolio [Roll Forward]
Beginning balance	2,166	2,215
Charge-offs	(18)	(550)
Recoveries	10	1
Provision	115	500
Ending balance	2,273	2,166
Ending balance: individually evaluated for impairment	21	35
Loans [Abstract]
Ending balance	405,705	414,384
Ending balance: individually evaluated for impairment	2,688	2,911
Real Estate - Residential [Member]
Allowance for loan losses by portfolio [Roll Forward]
Beginning balance	936	936
Charge-offs	(109)	(126)
Recoveries	1	2
Provision	41	124
Ending balance	869	936
Ending balance: individually evaluated for impairment	42	30
Loans [Abstract]
Ending balance	138,284	142,858
Ending balance: individually evaluated for impairment	1,205	1,627
Consumer [Member]
Allowance for loan losses by portfolio [Roll Forward]
Beginning balance	543	710
Charge-offs	(216)	(526)
Recoveries	29	98
Provision	69	261
Ending balance	425	543
Ending balance: individually evaluated for impairment	106	114
Loans [Abstract]
Ending balance	88,898	90,561
Ending balance: individually evaluated for impairment	255	330
Finance Leases Commercial [Member]
Allowance for loan losses by portfolio [Roll Forward]
Beginning balance	41	19
Charge-offs	0	0
Recoveries	0	0
Provision	1	22
Ending balance	42	41
Ending balance: individually evaluated for impairment	0	0
Loans [Abstract]
Ending balance	4,962	5,769
Ending balance: individually evaluated for impairment	0	0
Other [Member]
Allowance for loan losses by portfolio [Roll Forward]
Beginning balance	2	1
Charge-offs	0	0
Recoveries	0	0
Provision	1	1
Ending balance	3	2
Ending balance: individually evaluated for impairment	0	0
Loans [Abstract]
Ending balance	2,105	2,379
Ending balance: individually evaluated for impairment	$ 0	$ 0

[1] Derived from audited financial statements

XML

Consolidated Statement of Shareholders' Equity (unaudited) (USD $) In Thousands, except Share data, unless otherwise specified	Preferred Stock [Member]	Common Stock [Member]	Additional Paid-in Capital [Member]	Accumulated Other Comprehensive Income [Member]	Treasury Stock [Member]	Retained Earnings [Member]	Total
Balance at Dec. 31, 2012	$ 41,997	$ 1,139	$ 110,603	$ 8,159	$ (3,286)	$ 30,629	$ 189,241	[1]
Balance (in shares) at Dec. 31, 2012	131,971	11,386,611
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net earnings	0	0	0	0	0	3,428	3,428
Dividends on Series B and Series C Preferred Stock	0	0	0	0	0	(292)	(292)
Dividends on common stock, $0.07 per share	0	0	0	0	0	(786)	(786)
Exercise of stock options, including tax benefit	0	0	30	0	0	0	30
Exercise of stock options, including tax benefit (in shares)	0	2,652
Stock option and restricted stock compensation expense	0	0	70	0	0	0	70
Change in accumulated other comprehensive income	0	0	0	(858)	0	0	(858)
Balance at Mar. 31, 2013	$ 41,997	$ 1,139	$ 110,703	$ 7,301	$ (3,286)	$ 32,979	$ 190,833
Balance (in shares) at Mar. 31, 2013	131,971	11,389,263

[1] Derived from audited financial statements

XML

Credit Quality of Loans and Allowance for Loan Losses, Credit Quality Indicators and Aging (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2013		Dec. 31, 2012
Credit Risk Profile [Abstract]
Loans	$ 1,037,859		$ 1,046,940	[1]
Age Analysis of Past Due Loans by Class of Loans [Abstract]
30-59 Days Past Due	5,383	[2]	8,089	[2]
60-89 Days Past Due	995	[2]	2,978	[2]
Greater than 90 Days Past Due	5,699	[2]	7,867	[2]
Total Past Due	12,077		18,934
Current	1,025,782		1,028,006
Total Loans	1,037,859		1,046,940
Recorded Investment > 90 days and Accruing	163		1,986
Commercial, Financial and Agricultural [Member]
Credit Risk Profile [Abstract]
Loans	315,397		315,655
Age Analysis of Past Due Loans by Class of Loans [Abstract]
30-59 Days Past Due	1,011	[2]	2,220	[2]
60-89 Days Past Due	51	[2]	321	[2]
Greater than 90 Days Past Due	1,669	[2]	2,580	[2]
Total Past Due	2,731		5,121
Current	312,666		310,534
Total Loans	315,397		315,655
Recorded Investment > 90 days and Accruing	141		1,019
Commercial Real Estate Construction [Member]
Credit Risk Profile [Abstract]
Loans	65,133		58,350
Age Analysis of Past Due Loans by Class of Loans [Abstract]
30-59 Days Past Due	229	[2]	66	[2]
60-89 Days Past Due	537	[2]	96	[2]
Greater than 90 Days Past Due	188	[2]	101	[2]
Total Past Due	954		263
Current	64,179		58,087
Total Loans	65,133		58,350
Recorded Investment > 90 days and Accruing	0		0
Commercial Real Estate - Other [Member]
Credit Risk Profile [Abstract]
Loans	405,705		414,384
Age Analysis of Past Due Loans by Class of Loans [Abstract]
30-59 Days Past Due	1,663	[2]	4,131	[2]
60-89 Days Past Due	176	[2]	2,108	[2]
Greater than 90 Days Past Due	2,449	[2]	3,577	[2]
Total Past Due	4,288		9,816
Current	401,417		404,568
Total Loans	405,705		414,384
Recorded Investment > 90 days and Accruing			952
Commercial Total [Member]
Credit Risk Profile [Abstract]
Loans	786,235		788,389
Percentage of Total Loans (in hundredths)	100.00%		100.00%
Residential - Construction [Member]
Credit Risk Profile [Abstract]
Loans	17,375		16,984
Age Analysis of Past Due Loans by Class of Loans [Abstract]
30-59 Days Past Due	0	[2]	0	[2]
60-89 Days Past Due	0	[2]	0	[2]
Greater than 90 Days Past Due	0	[2]	0	[2]
Total Past Due	0		0
Current	17,375		16,984
Total Loans	17,375		16,984
Recorded Investment > 90 days and Accruing	0		0
Residential - Prime [Member]
Credit Risk Profile [Abstract]
Loans	138,284		142,858
Age Analysis of Past Due Loans by Class of Loans [Abstract]
30-59 Days Past Due	2,000	[2]	1,140	[2]
60-89 Days Past Due	124	[2]	317	[2]
Greater than 90 Days Past Due	1,251	[2]	1,408	[2]
Total Past Due	3,375		2,865
Current	134,909		139,993
Total Loans	138,284		142,858
Recorded Investment > 90 days and Accruing	0		0
Residential - Subprime [Member]
Credit Risk Profile [Abstract]
Loans	0		0
Age Analysis of Past Due Loans by Class of Loans [Abstract]
30-59 Days Past Due	0	[2]	0	[2]
60-89 Days Past Due	0	[2]	0	[2]
Greater than 90 Days Past Due	0	[2]	0	[2]
Total Past Due	0		0
Current	0		0
Total Loans	0		0
Recorded Investment > 90 days and Accruing	0		0
Residential Total [Member]
Credit Risk Profile [Abstract]
Loans	155,659		159,842
Percentage of Total Loans (in hundredths)	100.00%		100.00%
Consumer - Credit Card [Member]
Credit Risk Profile [Abstract]
Loans	5,921		6,807
Age Analysis of Past Due Loans by Class of Loans [Abstract]
30-59 Days Past Due	37	[2]	24	[2]
60-89 Days Past Due	3	[2]	2	[2]
Greater than 90 Days Past Due	0	[2]	15	[2]
Total Past Due	40		41
Current	5,881		6,766
Total Loans	5,921		6,807
Recorded Investment > 90 days and Accruing	0		15
Consumer - Other [Member]
Credit Risk Profile [Abstract]
Loans	82,977		83,754
Age Analysis of Past Due Loans by Class of Loans [Abstract]
30-59 Days Past Due	361	[2]	421	[2]
60-89 Days Past Due	97	[2]	134	[2]
Greater than 90 Days Past Due	142	[2]	186	[2]
Total Past Due	600		741
Current	82,377		83,013
Total Loans	82,977		83,754
Recorded Investment > 90 days and Accruing	22		0
Finance Leases Commercial [Member]
Credit Risk Profile [Abstract]
Loans	4,962		5,769
Age Analysis of Past Due Loans by Class of Loans [Abstract]
30-59 Days Past Due	4	[2]	0	[2]
60-89 Days Past Due	0	[2]	0	[2]
Greater than 90 Days Past Due	0	[2]	0	[2]
Total Past Due	4		0
Current	4,958		5,769
Total Loans	4,962		5,769
Recorded Investment > 90 days and Accruing	0		0
Other Loans [Member]
Credit Risk Profile [Abstract]
Loans	2,105		2,379
Age Analysis of Past Due Loans by Class of Loans [Abstract]
30-59 Days Past Due	78	[2]	87	[2]
60-89 Days Past Due	7	[2]	0	[2]
Greater than 90 Days Past Due	0	[2]	0	[2]
Total Past Due	85		87
Current	2,020		2,292
Total Loans	2,105		2,379
Recorded Investment > 90 days and Accruing	0		0
Consumer Total [Member]
Credit Risk Profile [Abstract]
Loans	95,965		98,709
Percentage of Total Loans (in hundredths)	100.00%		100.00%
Pass [Member] | Commercial, Financial and Agricultural [Member]
Credit Risk Profile [Abstract]
Loans	308,294		304,219
Pass [Member] | Commercial Real Estate Construction [Member]
Credit Risk Profile [Abstract]
Loans	62,579		54,737
Pass [Member] | Commercial Real Estate - Other [Member]
Credit Risk Profile [Abstract]
Loans	380,402		396,077
Pass [Member] | Commercial Total [Member]
Credit Risk Profile [Abstract]
Loans	751,275		755,033
Percentage of Total Loans (in hundredths)	95.55%		95.76%
Pass [Member] | Residential - Construction [Member]
Credit Risk Profile [Abstract]
Loans	17,139		16,785
Pass [Member] | Residential - Prime [Member]
Credit Risk Profile [Abstract]
Loans	133,525		137,681
Pass [Member] | Residential - Subprime [Member]
Credit Risk Profile [Abstract]
Loans	0		0
Pass [Member] | Residential Total [Member]
Credit Risk Profile [Abstract]
Loans	150,664		154,466
Percentage of Total Loans (in hundredths)	96.79%		96.64%
Special Mention [Member] | Commercial, Financial and Agricultural [Member]
Credit Risk Profile [Abstract]
Loans	2,897		5,748
Special Mention [Member] | Commercial Real Estate Construction [Member]
Credit Risk Profile [Abstract]
Loans	663		684
Special Mention [Member] | Commercial Real Estate - Other [Member]
Credit Risk Profile [Abstract]
Loans	13,729		6,224
Special Mention [Member] | Commercial Total [Member]
Credit Risk Profile [Abstract]
Loans	17,289		12,656
Percentage of Total Loans (in hundredths)	2.20%		1.61%
Special Mention [Member] | Residential - Construction [Member]
Credit Risk Profile [Abstract]
Loans	0		0
Special Mention [Member] | Residential - Prime [Member]
Credit Risk Profile [Abstract]
Loans	1,398		1,612
Special Mention [Member] | Residential - Subprime [Member]
Credit Risk Profile [Abstract]
Loans	0		0
Special Mention [Member] | Residential Total [Member]
Credit Risk Profile [Abstract]
Loans	1,398		1,612
Percentage of Total Loans (in hundredths)	0.90%		1.01%
Substandard [Member] | Commercial, Financial and Agricultural [Member]
Credit Risk Profile [Abstract]
Loans	3,887		4,503
Substandard [Member] | Commercial Real Estate Construction [Member]
Credit Risk Profile [Abstract]
Loans	1,888		2,925
Substandard [Member] | Commercial Real Estate - Other [Member]
Credit Risk Profile [Abstract]
Loans	6,816		7,514
Substandard [Member] | Commercial Total [Member]
Credit Risk Profile [Abstract]
Loans	12,591		14,942
Percentage of Total Loans (in hundredths)	1.60%		1.90%
Substandard [Member] | Residential - Construction [Member]
Credit Risk Profile [Abstract]
Loans	236		199
Substandard [Member] | Residential - Prime [Member]
Credit Risk Profile [Abstract]
Loans	3,361		3,565
Substandard [Member] | Residential - Subprime [Member]
Credit Risk Profile [Abstract]
Loans	0		0
Substandard [Member] | Residential Total [Member]
Credit Risk Profile [Abstract]
Loans	3,597		3,764
Percentage of Total Loans (in hundredths)	2.31%		2.35%
Doubtful [Member] | Commercial, Financial and Agricultural [Member]
Credit Risk Profile [Abstract]
Loans	319		1,185
Doubtful [Member] | Commercial Real Estate Construction [Member]
Credit Risk Profile [Abstract]
Loans	3		4
Doubtful [Member] | Commercial Real Estate - Other [Member]
Credit Risk Profile [Abstract]
Loans	4,758		4,569
Doubtful [Member] | Commercial Total [Member]
Credit Risk Profile [Abstract]
Loans	5,080		5,758
Percentage of Total Loans (in hundredths)	0.65%		0.73%
Performing [Member] | Consumer - Credit Card [Member]
Credit Risk Profile [Abstract]
Loans	5,892		6,792
Performing [Member] | Consumer - Other [Member]
Credit Risk Profile [Abstract]
Loans	82,722		83,347
Performing [Member] | Finance Leases Commercial [Member]
Credit Risk Profile [Abstract]
Loans	4,962		5,769
Performing [Member] | Other Loans [Member]
Credit Risk Profile [Abstract]
Loans	2,105		2,379
Performing [Member] | Consumer Total [Member]
Credit Risk Profile [Abstract]
Loans	95,681		98,287
Percentage of Total Loans (in hundredths)	99.70%		99.57%
Nonperforming [Member] | Consumer - Credit Card [Member]
Credit Risk Profile [Abstract]
Loans	29		15
Nonperforming [Member] | Consumer - Other [Member]
Credit Risk Profile [Abstract]
Loans	255		407
Nonperforming [Member] | Finance Leases Commercial [Member]
Credit Risk Profile [Abstract]
Loans	0		0
Nonperforming [Member] | Other Loans [Member]
Credit Risk Profile [Abstract]
Loans	0		0
Nonperforming [Member] | Consumer Total [Member]
Credit Risk Profile [Abstract]
Loans	$ 284		$ 422
Percentage of Total Loans (in hundredths)	0.30%		0.43%

[1] Derived from audited financial statements

[2] Past due amounts may include loans on nonaccrual status.

XML

Consolidated Balance Sheets (unaudited) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2013	Dec. 31, 2012
Assets
Cash and due from banks, including required reserves of $22,094 and $14,083, respectively	$ 36,428	$ 46,297	[1]
Interest-bearing deposits in banks	71,206	20,276	[1]
Federal funds sold	10,375	7,000	[1]
Time deposits held in banks	0	881	[1]
Securities available-for-sale, at fair value (cost of $376,554 at March 31, 2013 and $412,065 at December 31, 2012)	387,786	424,617	[1]
Securities held-to-maturity (fair value of $170,177 at March 31, 2013 and $156,924 at December 31, 2012)	167,617	153,524	[1]
Other investments	10,017	8,310	[1]
Loans	1,037,859	1,046,940	[1]
Allowance for loan losses	(7,457)	(7,370)	[1]
Loans, net	1,030,402	1,039,570	[1]
Bank premises and equipment, net	66,797	63,461	[1]
Accrued interest receivable	6,847	6,691	[1]
Goodwill	42,676	42,781	[1]
Intangibles	8,771	9,047	[1]
Cash surrender value of life insurance	13,242	13,183	[1]
Other real estate	7,552	7,496	[1]
Other assets	7,340	8,594	[1]
Total assets	1,867,056	1,851,728	[1]
Deposits:
Non-interest-bearing	390,774	380,557	[1]
Interest bearing	1,169,352	1,171,347	[1]
Total deposits	1,560,126	1,551,904	[1]
Securities sold under agreements to repurchase	48,557	41,447	[1]
Notes Payable	28,772	29,128	[1]
Junior subordinated debentures	29,384	29,384	[1]
Other liabilities	9,384	10,624	[1]
Total liabilities	1,676,223	1,662,487	[1]
Commitments and contingencies			[1]
Stockholders' equity:
Common stock, $0.10 par value; 30,000,000 shares authorized, 11,389,263 and 11,386,611 issued and 11,238,786 and 11,236,134 outstanding at March 31, 2013 and December 31, 2012, respectively	1,139	1,139	[1]
Additional paid-in capital	110,703	110,603	[1]
Accumulated other comprehensive income	7,301	8,159	[1]
Treasury stock - 150,477 shares at March 31, 2013 and December 31, 2012, at cost	(3,286)	(3,286)	[1]
Retained earnings	32,979	30,629	[1]
Total shareholders' equity	190,833	189,241	[1]
Total liabilities and shareholders' equity	1,867,056	1,851,728	[1]
Preferred Stock Series B [Member]
Stockholders' equity:
Preferred stock	32,000	32,000	[1]
Preferred Stock Series C [Member]
Stockholders' equity:
Preferred stock	$ 9,997	$ 9,997	[1]

[1] Derived from audited financial statements

XML

Consolidated Statements of Comprehensive Income (unaudited) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Consolidated Statements of Comprehensive Income (unaudited) [Abstract]
Net earnings	$ 3,428	$ 2,886
Unrealized losses on securities available-for-sale:
Unrealized holding losses arising during the period, net of income tax benefit of $390 for the three months ended March 31, 2013 and net of income tax benefit of $138 for the three months ended March 31, 2012	(725)	(268)
Reclassification adjustment for gains on sales of securities available-for-sale, net of income tax expense of $71 for the three months ended March 31, 2013	(133)	0
Total other comprehensive loss	(858)	(268)
Total comprehensive income	$ 2,570	$ 2,618

XML

Declaration of Dividends (Details) (USD $)	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Declaration of Dividends [Abstract]
Dividends on common stock (in dollars per share)	$ 0.07	$ 0.07
Dividends payable recorded date	Mar. 15, 2013
Dividends payable declared date	Jan. 31, 2013
Dividends payable, date to be paid	Apr. 01, 2013
Dividends Payable [Line Items]
Dividends payable recorded date	Mar. 15, 2013
Dividends payable, date to be paid	Apr. 01, 2013
Series C Preferred Stock [Member]
Declaration of Dividends [Abstract]
Dividends payable recorded date	Apr. 01, 2013
Dividends payable, date to be paid	Apr. 15, 2013
Dividends Payable [Line Items]
Preferred stock dividend rate (in hundredth)	1.00%
Dividends payable recorded date	Apr. 01, 2013
Dividends payable, date to be paid	Apr. 15, 2013

XML

Credit Quality of Loans and Allowance for Loan Losses (Tables)

3 Months Ended

Mar. 31, 2013

Credit Quality of Loans and Allowance for Loan Losses [Abstract]

Schedule of Allowance for Loan Losses and Recorded Investment in Loans

The allowance for loan losses and recorded investment in loans as of the dates indicated are as follows:

	As of March 31, 2013
(in thousands)	Collectively Evaluated for Impairment		Individually Evaluated for Impairment		Loans Acquired with Deteriorated Credit Quality		Total
Allowance for loan losses:
Commercial, financial, agriculture	$	1,115	$	467	$	-	$	1,582
Real estate – construction		2,212		51		-		2,263
Commercial real estate		2,252		21		-		2,273
Residential real estate		827		42		-		869
Consumer		319		106		-		425
Financial leases		42		-		-		42
Other		3		-		-		3
Total allowance for loan losses	$	6,770	$	687	$	-	$	7,457

	As of March 31, 2013
(in thousands)	Collectively Evaluated for Impairment		Individually Evaluated for Impairment		Loans Acquired with Deteriorated Credit Quality		Total
Loans:
Commercial, financial, agriculture	$	313,677	$	1,648	$	72	$	315,397
Real estate – construction		81,673		835		-		82,508
Commercial real estate		399,117		2,688		3,900		405,705
Residential real estate		136,797		1,205		282		138,284
Consumer		88,643		255		-		88,898
Financial leases		4,962		-		-		4,962
Other		2,105		-		-		2,105
Total loans	$	1,026,974	$	6,631	$	4,254	$	1,037,859

	As of December 31, 2012
(in thousands)	Collectively Evaluated for Impairment		Individually Evaluated for Impairment		Loans Acquired with Deteriorated Credit Quality		Total
Allowance for loan losses:
Commercial, financial, agriculture	$	1,144	$	391	$	-	$	1,535
Real estate – construction		2,090		57		-		2,147
Commercial real estate		2,131		35		-		2,166
Residential real estate		906		30		-		936
Consumer		429		114		-		543
Financial leases		41		-		-		41
Other		2		-		-		2
Total allowance for loan losses	$	6,743	$	627	$	-	$	7,370

	As of December 31, 2012
(in thousands)	Collectively Evaluated for Impairment		Individually Evaluated for Impairment		Loans Acquired with Deteriorated Credit Quality		Total
Loans:
Commercial, financial, agriculture	$	313,937	$	1,636	$	82	$	315,655
Real estate – construction		74,398		936		-		75,334
Commercial real estate		407,489		2,911		3,984		414,384
Residential real estate		140,776		1,627		455		142,858
Consumer		90,231		330		-		90,561
Financial leases		5,769		-		-		5,769
Other		2,379		-		-		2,379
Total loans	$	1,034,979	$	7,440	$	4,521	$	1,046,940

Modifications by Class of Loans

Modifications by Class of Loans (in thousands)
	Number of Contracts		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Troubled debt restructurings as of March 31, 2013:
Commercial, financial, and agricultural		4	$	412	$	370
Real Estate - commercial		3		4,983		4,662
			$	5,395	$	5,032
	Number of Contracts		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Troubled debt restructurings as of December 31, 2012:
Commercial, financial, and agricultural		3	$	370	$	353
Real Estate – commercial		3		4,983		4,709
			$	5,353	$	5,062

Trouble Debt Restructurings that Subsequently Defaulted (in thousands)
	March 31, 2013				March 31, 2012
	Number of Contracts		Recorded Investment		Number of Contracts		Recorded Investment
Commercial, financial, and agricultural		4	$	259		3	$	251

Allowance for Loan Losses and Recorded Investment in Loans

For the Three Months Ended March 31, 2013 (in thousands)
				Real Estate
	Coml, Fin, and Agric			Construction		Commercial			Residential			Consumer			Finance Leases Coml		Other		Total
Allowance for loan losses:
Beginning balance	$	1,535		$	2,147	$	2,166		$	936		$	543		$	41	$	2	$	7,370
Charge-offs		(181	)		-		(18	)		(109	)		(216	)		-		-		(524	)
Recoveries		16			5		10			1			29			-		-		61
Provision		212			111		115			41			69			1		1		550
Ending balance	$	1,582		$	2,263	$	2,273		$	869		$	425		$	42	$	3	$	7,457
Ending balance: individually evaluated for impairment	$	467		$	51	$	21		$	42		$	106		$	-	$	-	$	687
Loans:
Ending balance	$	315,397		$	82,508	$	405,705		$	138,284		$	88,898		$	4,962	$	2,105	$	1,037,859
Ending balance: individually evaluated for impairment,	$	1,648		$	835	$	2,688		$	1,205		$	255		$	-	$	-	$	6,631

Allowance for Loan Losses and Recorded Investment in Loans

For the Year Ended December 31, 2012  (in thousands)

				Real Estate
	Coml, Fin, and Agric			Construction		Commercial			Residential			Consumer			Finance Leases Coml		Other		Total
Allowance for loan losses:
Beginning balance	$	1,734		$	1,661	$	2,215		$	936		$	710		$	19	$	1	$	7,276
Charge-offs		(1,054	)		-		(550	)		(126	)		(526	)		-		-		(2,256	)
Recoveries		181			18		1			2			98			-		-		300
Provision		674			468		500			124			261			22		1		2,050
Ending balance	$	1,535		$	2,147	$	2,166		$	936		$	543		$	41	$	2	$	7,370
Ending balance: individually evaluated for impairment	$	391		$	57	$	35		$	30		$	114		$	-	$	-	$	627
Loans:
Ending balance	$	315,655		$	75,334	$	414,384		$	142,858		$	90,561		$	5,769	$	2,379	$	1,046,940
Ending balance: individually evaluated for impairment	$	1,636		$	936	$	2,911		$	1,627		$	330		$	-	$	-	$	7,440

Credit Quality Indicators by Class of Loans

As of March 31, 2013  (in thousands)

Commercial Credit Exposure

Credit Risk Profile by Creditworthiness Category

	Commercial, Financial, and Agricultural		Commercial Real Estate Construction		Commercial Real Estate Other		Commercial Total		% of Total Commercial
Pass	$	308,294	$	62,579	$	380,402	$	751,275		95.55	%
Special mention		2,897		663		13,729		17,289		2.20	%
Substandard		3,887		1,888		6,816		12,591		1.60	%
Doubtful		319		3		4,758		5,080		0.65	%
	$	315,397	$	65,133	$	405,705	$	786,235		100.00	%

Residential Credit Exposure
Credit Risk Profile by Creditworthiness Category
	Residential Construction		Residential Prime		Residential Subprime		Residential Total		% of Total Residential
Pass	$	17,139	$	133,525	$	-	$	150,664		96.79	%
Special mention		-		1,398		-		1,398		0.90	%
Substandard		236		3,361		-		3,597		2.31	%
	$	17,375	$	138,284	$	-	$	155,659		100.00	%

Consumer and Commercial Credit Exposure
Credit Risk Profile Based on Payment Activity
	Consumer Credit Card		Consumer Other		Finance Leases Commercial		Other Loans		Total		% of Total
Performing	$	5,892	$	82,722	$	4,962	$	2,105	$	95,681		99.70	%
Nonperforming		29		255		-		-		284		0.30	%
	$	5,921	$	82,977	$	4,962	$	2,105	$	95,965		100.00	%

Credit Quality Indicators by Class of Loans
As of December 31, 2012 (in thousands)
Commercial Credit Exposure
Credit Risk Profile by Creditworthiness Category
	Commercial, Financial, and Agricultural		Commercial Real Estate Construction		Commercial Real Estate Other		Commercial Total		% of Total Commercial
Pass	$	304,219	$	54,737	$	396,077	$	755,033		95.76	%
Special Mention		5,748		684		6,224		12,656		1.61	%
Substandard		4,503		2,925		7,514		14,942		1.90	%
Doubtful		1,185		4		4,569		5,758		0.73	%
	$	315,655	$	58,350	$	414,384	$	788,389		100.00	%

Residential Credit Exposure
Credit Risk Profile by Creditworthiness Category
	Residential Construction		Residential Prime		Residential Subprime		Residential Total		% of Total Residential
Pass	$	16,785	$	137,681	$	-	$	154,466		96.64	%
Special mention		-		1,612		-		1,612		1.01	%
Substandard		199		3,565		-		3,764		2.35	%
	$	16,984	$	142,858	$	-	$	159,842		100.00	%

Consumer and Commercial Credit Exposure
Credit Risk Profile Based on Payment Activity
	Consumer Credit Card		Consumer Other		Finance Leases Commercial		Other Loans		Total		% of Total
Performing	$	6,792	$	83,347	$	5,769	$	2,379	$	98,287		99.57	%
Nonperforming		15		407		-		-		422		0.43	%
	$	6,807	$	83,754	$	5,769	$	2,379	$	98,709		100.00	%

Age Analysis of Past Due Loans by Class of Loans

Age Analysis of Past Due Loans by Class of Loans (in thousands)
	30-59 Days Past Due (1)		60-89 Days Past Due (1)		Greater than 90 Days Past Due (1)		Total Past Due		Current		Total Loans		Recorded Investment > 90 days and Accruing
As of March 31, 2013
Commercial, financial, and agricultural	$	1,011	$	51	$	1,669	$	2,731	$	312,666	$	315,397	$	141
Commercial real estate – construction		229		537		188		954		64,179		65,133		-
Commercial real estate – other		1,663		176		2,449		4,288		401,417		405,705
Consumer - credit card		37		3		-		40		5,881		5,921		-
Consumer - other		361		97		142		600		82,377		82,977		22
Residential – construction		-		-		-		-		17,375		17,375		-
Residential – prime		2,000		124		1,251		3,375		134,909		138,284		-
Residential – subprime		-		-		-		-		-		-		-
Other loans		78		7		-		85		2,020		2,105		-
Finance leases commercial		4		-		-		4		4,958		4,962		-
	$	5,383	$	995	$	5,699	$	12,077	$	1,025,782	$	1,037,859	$	163
	30-59 Days Past Due (1)		60-89 Days Past Due (1)		Greater than 90 Days Past Due (1)		Total Past Due		Current		Total Loans		Recorded Investment > 90 days and Accruing
As of December 31, 2012
Commercial, financial, and agricultural	$	2,220	$	321	$	2,580	$	5,121	$	310,534	$	315,655	$	1,019
Commercial real estate - construction		66		96		101		263		58,087		58,350		-
Commercial real estate - other		4,131		2,108		3,577		9,816		404,568		414,384		952
Consumer - credit card		24		2		15		41		6,766		6,807		15
Consumer - other		421		134		186		741		83,013		83,754		-
Residential - construction		-		-		-		-		16,984		16,984		-
Residential - prime		1,140		317		1,408		2,865		139,993		142,858		-
Residential - subprime		-		-		-		-		-		-		-
Other loans		87		-		-		87		2,292		2,379		-
Finance leases commercial		-		-		-		-		5,769		5,769		-
	$	8,089	$	2,978	$	7,867	$	18,934	$	1,028,006	$	1,046,940	$	1,986

(1)   Past due amounts may include loans on nonaccrual status.

Impaired Loans by Class of Loans

Impaired Loans by Class of Loans (in thousands)
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
As of March 31, 2013
With no related allowance recorded:
Commercial, financial, and agricultural	$	590	$	701	$	-	$	577	$	-
Commercial real estate – construction		676		676		-		723		-
Commercial real estate – other		2,485		3,015		-		2,508		6
Consumer – other		51		59		-		82		-
Residential – prime		909		909		-		1,242		2
Subtotal:	$	4,711	$	5,360	$	-	$	5,132	$	8
With an allowance recorded:
Commercial, financial, and agricultural		1,058		1,058		467		1,065		1
Commercial real estate – construction		159		159		51		162		-
Commercial real estate – other		203		203		21		292		-
Consumer – other		204		204		106		210		-
Residential – prime		296		296		42		174		-
Subtotal:	$	1,920	$	1,920	$	687	$	1,903	$	1
Totals:
Commercial		5,171		5,812		539		5,327		7
Consumer		255		263		106		292		-
Residential		1,205		1,205		42		1,416		2
Grand total:	$	6,631	$	7,280	$	687	$	7,035	$	9
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
As of December 31, 2012
With no related allowance recorded:
Commercial, financial, and agricultural	$	564	$	675	$	-	$	861	$	5
Commercial real estate – construction		771		770		-		834		1
Commercial real estate – other		2,530		3,059		-		1,780		38
Consumer – other		114		122		-		81		1
Residential – prime		1,575		1,575		-		1,213		26
Finance leases commercial		-		-		-		-		-
Other loans		-		-		-		-		-
Subtotal:	$	5,554	$	6,201	$	-	$	4,769	$	71
With an allowance recorded:
Commercial, financial, and agricultural		1,072		1,072		391		1,128		21
Commercial real estate – construction		165		165		57		85		7
Commercial real estate – other		381		381		35		811		3
Consumer – other		216		216		114		228		6
Residential – prime		52		52		30		172		4
Subtotal:	$	1,886	$	1,886	$	627	$	2,424	$	41
Totals:
Commercial		5,483		6,122		483		5,499		75
Consumer		330		338		114		309		7
Residential		1,627		1,627		30		1,385		30
Other		-		-		-		-		-
Grand total:	$	7,440	$	8,087	$	627	$	7,193	$	112

Loans on Nonaccrual Status

Loans on Nonaccrual Status (in thousands)
	March 31, 2013		December 31, 2012
Commercial, financial, and agricultural	$	1,856	$	2,015
Commercial real estate – construction		838		941
Commercial real estate - other		2,783		3,017
Consumer - credit card		-		-
Consumer - other		292		409
Residential - construction		-		-
Residential - prime		1,757		2,505
Residential - subprime		-		-
Other loans		-		-
Finance leases commercial		-		-
	$	7,526	$	8,887

XML

Goodwill and Intangibles (Details) (USD $)	3 Months Ended
	Mar. 31, 2013 Bonds		Mar. 31, 2013 Core Deposit Intangible Assets [Member]	Dec. 31, 2012 Core Deposit Intangible Assets [Member]
Changes to carrying amount of goodwill [Roll Forward]
Goodwill, beginning of period	$ 42,781,000	[1]
Adjustment to goodwill	(105,000)
Goodwill, end of period	42,676,000
Goodwill acquired during the year	415,000
Goodwill market value adjustment	254,000
Number of bonds held in investment portfolio at acquisition	2
Net of deferred taxes adjustment resulted in reduction to goodwill	105,000
Finite-Lived Intangible Assets [Line Items]
Gross carrying amount			9,047,000	11,674,000
Less accumulated amortization			(276,000)	(2,627,000)
Net carrying amount			$ 8,771,000	$ 9,047,000

[1] Derived from audited financial statements

XML

Goodwill and Intangibles (Tables)

3 Months Ended

Mar. 31, 2013

Goodwill and Intangibles [Abstract]

Changes to carrying amount of goodwill

Changes to the carrying amount of goodwill for the three months ended March 31, 2013 are provided in the following table (in thousands):

Balance, December 31, 2012	$	42,781
Adjustment to goodwill		(105	)
Balance, March 31, 2013	$	42,676

Summary of core deposit intangible assets

A summary of core deposit intangible assets as of March 31, 2013 and December 31, 2012 is as follows (in thousands):

	March 31, 2013			December 31, 2012
Gross carrying amount	$	9,047		$	11,674
Less accumulated amortization		(276	)		(2,627	)
Net carrying amount	$	8,771		$	9,047

XML

Consolidated Statements of Comprehensive Income (unaudited) (Parenthetical) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Unrealized losses on securities available-for-sale:
Unrealized holding gains (losses) arising during the year, income tax expense	$ 390	$ 138
Reclassification adjustment for gain on liquidation of equity security included in securities available-for-sale, income tax expense	$ 71

XML

Consolidated Balance Sheets (unaudited) (Parenthetical) (USD $) In Thousands, except Share data, unless otherwise specified	Mar. 31, 2013	Dec. 31, 2012
Assets
Cash and due from banks, reserves	$ 22,094	$ 14,083
Securities available-for-sale, at cost	376,554	412,065
Securities held-to-maturity, at fair value	$ 170,177	$ 156,924
Stockholders' equity:
Common stock, par value (in dollars per share)	$ 0.10	$ 0.10
Common stock, authorized (in shares)	30,000,000	30,000,000
Common stock, issued (in shares)	11,389,263	11,386,611
Common stock, outstanding (in shares)	11,238,786	11,236,134
Treasury stock (in shares)	150,477	150,477
Preferred Stock Series B [Member]
Stockholders' equity:
Preferred stock, par value (in dollars per share)	$ 0	$ 0
Preferred stock, authorized (in shares)	5,000,000	5,000,000
Preferred stock, issued (in shares)	32,000	32,000
Preferred stock, outstanding (in shares)	32,000	32,000
Preferred Stock Series C [Member]
Stockholders' equity:
Preferred stock, par value (in dollars per share)	$ 0	$ 0
Preferred stock, authorized (in shares)	100,000	100,000
Preferred stock, issued (in shares)	99,971	99,971
Preferred stock, outstanding (in shares)	99,971	99,971

XML

Goodwill and Intangibles

3 Months Ended

Mar. 31, 2013

Goodwill and Intangibles [Abstract]

Goodwill and Intangibles

7.  Goodwill and Intangibles

Changes to the carrying amount of goodwill for the three months ended March 31, 2013 are provided in the following table (in thousands):

Balance, December 31, 2012	$	42,781
Adjustment to goodwill		(105	)
Balance, March 31, 2013	$	42,676

The adjustments to goodwill made during the three months ended March 31, 2013 resulted from reclassification of a $415,000 liability assumed through the PSB acquisition and from a $254,000 market value adjustment on two bonds held in the PSB investment portfolio at acquisition.  The adjustments were made as additional information existing at the time of the acquisition was reviewed and affected the amount recorded for the assumed liability and the market value of the two bonds.  Net of deferred taxes, the adjustment resulted in a $105,000 reduction to goodwill recorded in the PSB acquisition.  The adjustments to goodwill had no impact on net income or stockholders' equity.

A summary of core deposit intangible assets as of March 31, 2013 and December 31, 2012 is as follows (in thousands):

	March 31, 2013			December 31, 2012
Gross carrying amount	$	9,047		$	11,674
Less accumulated amortization		(276	)		(2,627	)
Net carrying amount	$	8,771		$	9,047

XML

Document and Entity Information	3 Months Ended
	Mar. 31, 2013	May 10, 2013
Document and Entity Information [Abstract]
Entity Registrant Name	MIDSOUTH BANCORP INC
Entity Central Index Key	0000745981
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		11,238,786
Document Fiscal Year Focus	2013
Document Fiscal Period Focus	Q1
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Mar. 31, 2013

XML

Fair Value Measurement

3 Months Ended

Mar. 31, 2013

Fair Value Measurement [Abstract]

Fair Value Measurement

8.     Fair Value Measurement

The Company groups assets and liabilities at fair value in three levels, based on the markets in which the assets and liabilities are traded and the reliability of the assumptions used to determine fair value.  These levels are:

Level 1 – Valuation is based upon quoted prices for identical instruments traded in active markets.

Level 2 – Valuation is based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market.

Level 3 – Valuation is generated from model-based techniques that use at least one significant assumption not observable in the market.  These unobservable assumptions reflect estimates of assumptions that market participants would use in pricing the asset or liability.  Valuation techniques include use of option pricing models, discounted cash flow models and similar techniques.

Following is a description of valuation methodologies used for assets and liabilities which are either recorded or disclosed at fair value.

Cash and Cash Equivalents—The carrying value of cash and cash equivalents is a reasonable estimate of fair value.

Time Deposits Held in Banks—Fair values for fixed-rate time deposits are estimated using a discounted cash flow analysis that applies interest rates currently being offered on time deposits of similar terms of maturity.

Securities Available-for-Sale—Securities available-for-sale are recorded at fair value on a recurring basis.  Fair value measurement is based upon quoted prices, if available.  If quoted prices are not available, fair values are measured using

independent pricing models or other model-based valuation techniques such as the present value of future cash flows, adjusted for the security's credit rating, prepayment assumptions and other factors such as credit loss assumptions.  Level 1 securities include those traded on an active exchange, such as the New York Stock Exchange and U.S. Treasury securities that are traded by dealers or brokers in active over-the-counter market funds.  Securities are classified as Level 2 within the valuation hierarchy when the Company obtains fair value measurements from an independent pricing service.  The fair value measurements consider observable data that may include dealer quotes, market spreads, cash flows, the U.S. Treasury yield curve, live trading levels, trade execution data, market consensus prepayment speeds, credit information, and the bond's terms and conditions, among other things. Level 2 inputs are used to value U.S. Agency securities, mortgage-backed securities, asset-backed securities, municipal securities, single issue trust preferred securities, certain pooled trust preferred securities, collateralized debt obligations and certain equity securities that are not actively traded.

Securities Held-to-Maturity—The fair value of securities held-to-maturity is estimated using the same measurement techniques as securities available-for-sale.

Other Investments—The carrying value of other investments is a reasonable estimate of fair value.

Loans—For disclosure purposes, the fair value of fixed rate loans is estimated by discounting the future cash flows using the current rates at which similar loans would be made to borrowers with similar credit ratings.  For variable rate loans, the carrying amount is a reasonable estimate of fair value.  The Company does not record loans at fair value on a recurring basis.  No adjustment to fair value is taken related to illiquidity discounts.  However, from time to time, a loan is considered impaired and an allowance for loan losses is established.  Loans for which it is probable that payment of interest and principal will not be made in accordance with the contractual terms of the loan agreement are considered impaired.  Once a loan is identified as individually impaired, management uses one of three methods to measure impairment, which, include collateral value, market value of similar debt, and discounted cash flows.  Those impaired loans not requiring an allowance represent loans for which the fair value of the expected repayments or collateral exceed the recorded investments in such loans.  Impaired loans where an allowance is established based on the fair value of collateral or where the loan balance has been charged down to fair value require classification in the fair value hierarchy.  When the fair value of the collateral is based on an observable market price or a current appraised value, the Company records the impaired loan as nonrecurring Level 2.  When an appraised value is not available or management determines the fair value of the collateral is further impaired below the appraised value and adjusts the appraisal value by taking an additional discount for market conditions and there is no observable market price, the Company records the impaired loan as nonrecurring Level 3.

For non-performing loans, collateral valuations currently in file are reviewed for acceptability in terms of timeliness and applicability.  Although each determination is made based on the facts and circumstances of each credit, generally valuations are no longer considered acceptable when there has been physical deterioration of the property from when it was last appraised, or there has been a significant change in the underlying assumptions of the appraisal.  If the valuation is deemed to be unacceptable, a new appraisal is ordered.  New appraisals are typically received within 4-6 weeks.  While awaiting new appraisals, the valuation in the file is utilized, net of discounts.  Discounts are derived from available relevant market data, selling costs, taxes, and insurance.  Any perceived collateral deficiency utilizing the discounted value is specifically reserved (as required by ASC Topic 310) until the new appraisal is received or charged off.  Thus, provisions or charge-offs are recognized in the period the credit is identified as non-performing.

The following sources are utilized to set appropriate discounts: market real estate agents, current local sales data, bank history for devaluation of similar property, Sheriff's valuations and buy/sell contracts.  If a real estate agent is used to market and sell the property, values are discounted 10% for selling costs.  Additional discounts may be applied if research from the above sources indicates a discount is appropriate given devaluation of similar property from the time of the initial valuation.

Other Real Estate—Other real estate ("ORE") properties are adjusted to fair value upon transfer of the loans to other real estate, and annually thereafter to insure other real estate assets are carried at the lower of carrying value or fair value.  Exceptions to obtaining initial appraisals are properties where a buy/sell agreement exists for the loan value or greater, or where a Sheriff's valuation has been received for properties liquidated through a Sheriff sale.  Fair value is based upon independent market prices, appraised values of the collateral or management's estimation of the value of the collateral.  When the fair value of the collateral is based on an observable market price or a current appraised value, the Company records the ORE as nonrecurring Level 2.  When an appraised value is not available or management determines the fair value of the collateral is further impaired below the appraised value and adjusts the appraisal value by taking an additional discount for market conditions and there is no observable market prices, the Company records the ORE asset as nonrecurring Level 3.

Cash Surrender Value of Life Insurance Policies—Fair value for life insurance cash surrender value is based on cash surrender values indicated by the insurance companies.

Deposits—The fair value of demand deposits, savings accounts, NOW accounts, and money market deposits is the amount payable on demand at the reporting date.  The fair value of fixed maturity certificates of deposit is estimated by discounting the future cash flows using the rates currently offered for deposits of similar remaining maturities.  The estimated fair value does not include customer related intangibles.

Securities Sold Under Agreements to Repurchase—The fair value approximates the carrying value of securities sold under agreements to repurchase due to their short-term nature.

Notes Payable— The fair value of notes payable is estimated using a discounted cash flow analysis that applies interest rates currently being offered on similar types of borrowings with similar terms.

Junior Subordinated Debentures—For junior subordinated debentures that bear interest on a floating basis, the carrying amount approximates fair value.  For junior subordinated debentures that bear interest on a fixed rate basis, the fair value is estimated using a discounted cash flow analysis that applies interest rates currently being offered on similar types of borrowings.

Commitments to Extend Credit, Standby Letters of Credit and Credit Card Guarantees—Because commitments to extend credit and standby letters of credit are generally short-term and made using variable rates, the carrying value and estimated fair value associated with these instruments are immaterial.

Assets Recorded at Fair Value

Below is a table that presents information about certain assets and liabilities measured at fair value on a recurring basis (in thousands):

	Assets / Liabilities Measured at Fair Value		Fair Value Measurements at March 31, 2013 using:
Description	at March 31, 2013		Level 1		Level 2		Level 3
Available-for-sale securities:
U.S. Government sponsored enterprises	$	13,186	$	-	$	13,186	$	-
Obligations of state and political subdivisions		77,179		-		77,179		-
GSE mortgage-backed securities		167,320		-		167,320		-
Other asset-backed securities		12,628		-		12,628		-
Collateralized mortgage obligations: residential		87,253				87,253
Collateralized mortgage obligations: commercial		29,693		-		29,693		-
Collateralized debt obligations		527		-		527		-
	$	387,786	$	-	$	387,786	$	-

	Assets / Liabilities Measured at Fair Value		Fair Value Measurements at December 31, 2012 using:
Description	at December 31, 2012		Level 1		Level 2		Level 3
Available-for-sale securities:
U.S. Government sponsored enterprises	$	13,424	$	-	$	13,424	$	-
Obligations of state and political subdivisions		87,421		-		87,421		-
GSE mortgage-backed securities		178,819		-		178,819		-
Collateralized mortgage
obligations: residential		101,986		-		101,986		-
Collateralized mortgage obligations: commercial		29,761				29,761
Other asset-backed securities		12,742		-		12,742		-
Collateralized debt obligations		464		-		464		-
	$	424,617	$	-	$	424,617	$	-

Certain assets and liabilities are measured at fair value on a nonrecurring basis and are included in the table below (in thousands).  Impaired loans are Level 2 assets measured using appraisals from external parties of the collateral less any prior liens.  Other real estate properties are also Level 2 assets measured using appraisals from external parties.  Acquired loans are Level 3 assets measured on a nonrecurring basis.

			Fair Value Measurements Using
(dollars in thousands)	March 31, 2013		Level 1		Level 2		Level 3
Assets
Acquired loans with deteriorated credit quality	$	4,254	$	-	$	-	$	4,254
Other real estate		7,552		-		7,552		-
Impaired loans, excluding acquired loans		1,943		-		1,943		-
Total	$	13,749	$	-	$	9,495	$	4,254
			Fair Value Measurements Using
(dollars in thousands)	December 31, 2012		Level 1		Level 2		Level 3
Assets
Acquired loans with deteriorated credit quality	$	4,521	$	-	$	-	$	4,521
Other real estate		7,496		-		7,496		-
Impaired loans, excluding acquired loans		2,245				2,245		-
Total	$	14,262	$	-	$	9,741	$	4,521

Limitations

Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial instrument.  These estimates do not reflect any premium or discount that could result from offering for sale at one time the Company's holdings of a particular financial instrument.  Because no market exists for a significant portion of the Company's financial instruments, fair value estimates are based on many judgments.  These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision.  Changes in assumptions could significantly affect the estimates.

Fair value estimates are based on existing on and off-balance sheet financial instruments without attempting to estimate the value of anticipated future business and the value of assets and liabilities that are not considered financial instruments.  Significant assets and liabilities that are not considered financial instruments include deferred income taxes and premises and equipment.  In addition, the tax ramifications related to the realization of the unrealized gains and losses can have a significant effect on fair value estimates and have not been considered in the estimates.

The carrying amounts and estimated fair values of the Company's financial instruments are as follows at March 31, 2013 and December 31, 2012 (in thousands):

			Fair Value Measurements at March 31, 2013 Using:
	Carrying Value		Level 1		Level 2		Level 3
Financial assets:
Cash and cash equivalents	$	118,009	$	118,009	$	-	$	-
Securities available-for-sale		387,786		-		387,786		-
Securities held-to-maturity		167,617		-		170,177		-
Other investments		10,017		10,017		-		-
Loans, net		1,030,402		-		-		1,036,325
Cash surrender value of life insurance policies		13,242		-		13,242		-
Financial liabilities:
Non-interest-bearing deposits		390,774		-		390,774		-
Interest-bearing deposits		1,169,352		-		899,237		271,799
Securities sold under agreements to repurchase		48,557		48,557		-		-
Notes payable		28,772						28,772
Junior subordinated debentures		29,384		-		22,167		7,588

			Fair Value Measurements at December 31, 2012 Using:
	Carrying Value		Level 1		Level 2		Level 3
Financial assets:
Cash and cash equivalents	$	73,573	$	73,573	$	-	$	-
Time deposits held in banks		881		-		-		883
Securities available-for-sale		424,617		-		424,617		-
Securities held-to-maturity		153,524		-		156,924		-
Other investments		8,310		8,310		-		-
Loans, net		1,039,570		-		-		1,046,495
Cash surrender value of life insurance policies		13,183		-		13,183		-
Financial liabilities:
Non-interest-bearing deposits		380,577		-		380,557		-
Interest-bearing deposits		1,171,347		-		859,183		314,783
Securities sold under agreements to repurchase		41,447		41,447		-		-
Notes payable		29,128		-		-		29,128
Junior subordinated debentures		29,384		-		22,167		7,776

XML

Consolidated Statements of Earnings (unaudited) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Interest income:
Loans, including fees	$ 17,117	$ 12,403
Securities and other investments:
Taxable	2,059	2,069
Nontaxable	839	775
Federal funds sold	4	2
Time and interest bearing deposits in other banks	38	39
Other investments	72	45
Total interest income	20,129	15,333
Interest expense:
Deposits	1,078	1,100
Securities sold under agreements to repurchase	179	181
Other borrowings and payable	124	0
Junior subordinated debentures	336	248
Total interest expense	1,717	1,529
Net interest income	18,412	13,804
Provision for loan losses	550	675
Net interest income after provision for loan losses	17,862	13,129
Non-interest income:
Service charges on deposit accounts	2,171	1,824
Gain on securities, net (includes $204,000 accumulated other comprehensive income reclassifications for net gains on sales of AFS securities)	204	0
ATM and debit card income	1,356	1,126
Other charges and fees	700	578
Total non-interest income	4,431	3,528
Non-interest expenses:
Salaries and employee benefits	8,392	6,086
Occupancy expense	3,597	2,548
FDIC insurance	345	368
Other	5,097	3,666
Total non-interest expense	17,431	12,668
Income before income taxes	4,862	3,989
Income tax expense (includes $71,000 of income tax expense for reclassification adjustment for net gains on sales of AFS securities)	1,434	1,103
Net earnings	3,428	2,886
Dividends on preferred stock	292	400
Net earnings available to common shareholders	$ 3,136	$ 2,486
Earnings per common share:
Basic (in dollars per share)	$ 0.28	$ 0.24
Diluted (in dollars per share)	$ 0.27	$ 0.24
Cash dividends declared per common share (in dollars per share)	$ 0.07	$ 0.07

XML

Investment Securities

3 Months Ended

Mar. 31, 2013

Investment Securities [Abstract]

Investment Securities

2.  Investment Securities

The portfolio of investment securities consisted of the following (in thousands):

	March 31, 2013
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Available-for-sale:
U.S. Government sponsored enterprises	$	13,195	$	8	$	17	$	13,186
Obligations of state and political subdivisions		73,186		3,997		4		77,179
GSE mortgage-backed securities		162,299		5,137		116		167,320
Asset-backed securities		12,174		454		-		12,628
Collateralized mortgage obligations: residential		86,784		629		160		87,253
Collateralized mortgage obligations: commercial		28,452		1,241		-		29,693
Collateralized debt obligation		464		63		-		527
	$	376,554	$	11,529	$	297	$	387,786

	December 31, 2012
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Available-for-sale:
U.S. Government sponsored enterprises	$	13,422	$	2	$	-	$	13,424
Obligations of state and political subdivisions		83,093		4,328		-		87,421
GSE mortgage-backed securities		172,932		5,887		-		178,819
Collateralized mortgage obligations: residential		101,381		652		47		101,986
Collateralized mortgage obligations: commercial		28,528		1,233		-		29,761
Other asset-backed securities		12,245		497		-		12,742
Collateralized debt obligation		464		-		-		464
	$	412,065	$	12,599	$	47	$	424,617

	March 31, 2013
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Held-to-maturity:
Obligations of state and political subdivisions	$	44,443	$	201	$	481	$	44,163
GSE mortgage-backed securities		91,968		2,315		29		94,254
Collateralized mortgage obligations: residential		15,026		-		90		14,936
Collateralized mortgage obligations: commercial		16,180		644		-		16,824
	$	167,617	$	3,160	$	600	$	170,177

	December 31, 2012
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Held-to-maturity:
Obligations of state and political subdivisions	$	42,900	$	7	$	7	$	42,900
GSE mortgage-backed securities		89,383		2,819		-		92,202
Collateralized mortgage obligations: residential		5,009		-		-		5,009
Collateralized mortgage obligations: commercial		16,232		581		-		16,813
	$	153,524	$	3,407	$	7	$	156,924

With the exception of 3 private-label collateralized mortgage obligations ("CMOs") with a combined balance remaining of $83,000 at March 31, 2013, all of the Company's CMOs are government-sponsored enterprise ("GSE") securities.

Effective January 1, 2013, an adjustment was made to the premium amortization method of the pass-through mortgage-backed securities ("MBSs") and the CMOs.  Previously, the premiums were amortized over the average life of the securities which resulted in greater amortization taken in the early years of the bond's life.  The change provides for the premium amortization to be calculated based on 2 times the average life on MBSs and on final principal window for the CMOs, together with the related premium amortization based on principal pay-downs.  The adjustment was made to more closely reflect the level yield method as required by GAAP and resulted in an increase in interest income on investment securities of approximately $73,000 for the three months ended March 31, 2013, or approximately $0.02 diluted earnings per share on an annualized basis.

The amortized cost and fair value of debt securities at March 31, 2013 by contractual maturity are shown in the following table (in thousands) with the exception of other asset-backed securities, MBS, CMOs, and the collateralized debt obligation.   Expected maturities may differ from contractual maturities for mortgage-backed securities and CMOs because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

	Amortized Cost		Fair Value
Available-for-sale:
Due in one year or less	$	13,977	$	14,152
Due after one year through five years		44,507		46,369
Due after five years through ten years		22,706		24,462
Due after ten years		5,191		5,382
Other asset-backed securities		12,174		12,628
Mortgage-backed securities and collateralized mortgage obligations:
Residential		249,083		254,573
Commercial		28,452		29,693
Collateralized debt obligation		464		527
	$	376,554	$	387,786

	Amortized Cost		Fair Value
Held-to-maturity:
Due in one year or less	$	306	$	307
Due after one year through five years		1,152		1,154
Due after five years through ten years		6,218		6,329
Due after ten years		36,767		36,373
Mortgage-backed securities and collateralized mortgage obligations:
Residential		106,994		109,190
Commercial		16,180		16,824
	$	167,617	$	170,177

Details concerning investment securities with unrealized losses are as follows (in thousands):

	March 31, 2013
	Securities with losses under 12 months				Securities with losses over 12 months				Total
	Fair  Value		Gross Unrealized Loss		Fair Value		Gross Unrealized Loss		Fair Value		Gross Unrealized Loss
Available-for-sale:
U.S. Government sponsored enterprises	$	5,512	$	17	$	-	$	-	$	5,512	$	17
Obligations of state and political subdivisions		491		4		-		-		491		4
GSE mortgage-backed securities		34,310		116		-		-		34,310		116
Collateralized mortgage obligations: residential		19,920		159		82		1		20,002		160
	$	60,233	$	296	$	82	$	1	$	60,315	$	297

	December 31, 2012
	Securities with losses under 12 months				Securities with losses over 12 months				Total
	Fair  Value		Gross Unrealized Loss		Fair Value		Gross Unrealized Loss		Fair Value		Gross Unrealized Loss
Available-for-sale: Collateralized mortgage obligations: residential	$	10,085	$	45	$	96	$	2	$	10,181	$	47

	March 31, 2013
	Securities with losses under 12 months				Securities with losses over 12 months				Total
	Fair  Value		Gross Unrealized Loss		Fair Value		Gross Unrealized Loss		Fair Value		Gross Unrealized Loss
Held-to-maturity:
Obligations of state and political subdivisions	$	29,289	$	481	$	-	$	-	$	29,289	$	481
GSE mortgage-backed securities		9,996		29		-		-		9,996		29
Collateralized mortgage obligations: residential		14,936		90						14,936		90
	$	54,221	$	600	$	-	$	-	$	54,221	$	600

	December 31, 2012
	Securities with losses under 12 months				Securities with losses over 12 months				Total
	Fair  Value		Gross Unrealized Loss		Fair Value		Gross Unrealized Loss		Fair Value		Gross Unrealized Loss
Held-to-maturity: Obligations of state and political subdivisions	$	1,128	$	7	$	-	$	-	$	1,128	$	7

Management evaluates each quarter whether unrealized losses on securities represent impairment that is other than temporary. For debt securities, the Company considers its intent to sell the securities or if it is more likely than not the Company will be required to sell the securities.  If such impairment is identified, based upon the intent to sell or the more likely than not threshold, the carrying amount of the security is reduced to fair value with a charge to earnings. Upon the result of the aforementioned review, management then reviews for potential other than temporary impairment based upon other qualitative factors.  In making this evaluation, management considers changes in market rates relative to those available when the security was acquired, changes in market expectations about the timing of cash flows from securities that can be prepaid, performance of the debt security, and changes in the market's perception of the issuer's financial health and the security's credit quality.  If determined that a debt security has incurred other than temporary impairment, then the amount of the credit related impairment is determined.  If a credit loss is evident, the amount of the credit loss is charged to earnings and the non-credit related impairment is recognized through other comprehensive income.

The unrealized losses on debt securities at March 31, 2013 resulted from changing market interest rates over the yields available at the time the underlying securities were purchased.  Of the four US government sponsored securities classified as available-for-sale, one contained unrealized losses at March 31, 2013.  Of the 122 obligations of state and political subdivisions classified as available-for-sale, one contained unrealized losses at March 31, 2013.  Of the 82 GSE mortgage-backed securities classified as available-for-sale, eight contained unrealized losses at March 31, 2013.  Of the 36 residential collateralized mortgage obligations classified as available-for-sale, seven contained unrealized losses at March 31, 2013.  Management identified no impairment related to credit quality.  At March 31, 2013, management had the intent and ability to hold impaired securities and no impairment was evaluated as other than temporary.  As a result, no other than temporary impairment losses were recognized during the three months ended March 31, 2013.

During the three months ended March 31, 2013, the Company sold 21 securities classified as available-for-sale at a net gain of $204,000.  Of the 21 securities sold, 18 securities were sold with gains totaling $217,000 and three securities were sold at a loss of $13,000.  During the three months ended March 31, 2012, the Company did not sell any securities.

Securities with an aggregate carrying value of approximately $302.1 million and $226.2 million at March 31, 2013 and December 31, 2012, respectively, were pledged to secure public funds on deposit and for other purposes required or permitted by law.

XML

Basis of Presentation

3 Months Ended

Mar. 31, 2013

Basis of Presentation [Abstract]

Basis of Presentation

1.     Basis of Presentation

The accompanying unaudited consolidated financial statements and notes thereto contain all adjustments, consisting only of normal recurring adjustments, necessary to present fairly, in accordance with accounting principles generally accepted in the United States of America ("GAAP"), the financial position of MidSouth Bancorp, Inc. (the "Company") and its subsidiaries as of March 31, 2013 and the results of their operations and their cash flows for the periods presented. The interim financial information should be read in conjunction with the annual consolidated financial statements and the notes thereto included in the Company's 2012 Annual Report on Form 10-K.

The results of operations for the three month period ended March 31, 2013 are not necessarily indicative of the results to be expected for the entire year.

Use of Estimates – The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reported period. Actual results could differ from those estimates.

Summary of Significant Accounting Policies — The accounting and reporting policies of the Company conform with GAAP and general practices within the banking industry.  There have been no material changes or developments in the application of accounting principles or in our evaluation of the accounting estimates and the underlying assumptions or methodologies that we believe to be Critical Accounting Policies and Estimates as disclosed in our 2012 Annual Report on Form 10-K.

Recently Adopted Accounting Pronouncements — ASU 2013-01. Balance Sheet (Topic 210):  Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities applies to derivatives accounted for in accordance with ASC 815 (Derivatives and Hedging), including bifurcated embedded derivatives, repurchase agreements and reverse repurchase agreements, and securities lending transactions that are either offset in accordance with ASC 210-20-45 or ASC 815-10-45 or subject to an enforceable master netting arrangement or similar agreement.  The effective date of this Update is for fiscal years beginning on or after January 1, 2013 and interim periods within those annual periods.  Adoption of this Update did not impact the Company's consolidated financial statements or the interim notes to the consolidated financial statements.

ASU 2013-02, Comprehensive Income (Topic 220):  Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income was issued in the first quarter of 2013 to improve the reporting of reclassifications out of accumulated other comprehensive income ("AOCI").  The ASU requires information regarding the impact to net income of the reclassification on significant amounts out of AOCI to be presented on either the face of the income statement or in the notes to the financial statements.  The amendments in this Update do not change the current reporting requirements for net income or AOCI.  For public entities, the amendments in this Update are effective prospectively for reporting periods beginning after December 15, 2012.  In compliance with the Update, the information required has been included in the Consolidated Statements of Earnings for the period ended March 31, 2013.

Reclassifications—Certain reclassifications have been made to the prior years' financial statements in order to conform to the classifications adopted for reporting in 2013.  The reclassifications had no impact on net income or stockholders equity.

XML

Earnings Per Common Share (Tables)

3 Months Ended

Mar. 31, 2013

Earnings Per Common Share [Abstract]

Information Used in the Computation of Earnings per Common Share

Following is a summary of the information used in the computation of earnings per common share (in thousands):

	March 31,
	2013		2012
Net earnings available to common shareholders	$	3,136	$	2,486
Dividends on Series C convertible preferred stock		100		-
Net earnings available to common shareholders -diluted	$	3,236	$	2,486
Weighted average number of common shares outstanding used in computation of basic earnings per common share		11,238		10,465
Effect of dilutive securities:
Stock options		50		8
Restricted stock		13		7
Convertible preferred stock and warrants		565		-
Weighted average number of common shares outstanding plus effect of dilutive securities used in computation of diluted earnings per common share	$	11,866	$	10,480

XML

Basis of Presentation (Policies)

3 Months Ended

Mar. 31, 2013

Basis of Presentation [Abstract]

Use of Estimates

Use of Estimates – The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reported period. Actual results could differ from those estimates.

Recently Adopted Accounting Pronouncements

Recently Adopted Accounting Pronouncements — ASU 2013-01. Balance Sheet (Topic 210):  Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities applies to derivatives accounted for in accordance with ASC 815 (Derivatives and Hedging), including bifurcated embedded derivatives, repurchase agreements and reverse repurchase agreements, and securities lending transactions that are either offset in accordance with ASC 210-20-45 or ASC 815-10-45 or subject to an enforceable master netting arrangement or similar agreement.  The effective date of this Update is for fiscal years beginning on or after January 1, 2013 and interim periods within those annual periods.  Adoption of this Update did not impact the Company's consolidated financial statements or the interim notes to the consolidated financial statements.

ASU 2013-02, Comprehensive Income (Topic 220):  Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income was issued in the first quarter of 2013 to improve the reporting of reclassifications out of accumulated other comprehensive income ("AOCI").  The ASU requires information regarding the impact to net income of the reclassification on significant amounts out of AOCI to be presented on either the face of the income statement or in the notes to the financial statements.  The amendments in this Update do not change the current reporting requirements for net income or AOCI.  For public entities, the amendments in this Update are effective prospectively for reporting periods beginning after December 15, 2012.  In compliance with the Update, the information required has been included in the Consolidated Statements of Earnings for the period ended March 31, 2013.

Reclassifications

Reclassifications—Certain reclassifications have been made to the prior years' financial statements in order to conform to the classifications adopted for reporting in 2013.  The reclassifications had no impact on net income or stockholders equity.

XML

Earnings Per Common Share

3 Months Ended

Mar. 31, 2013

Earnings Per Common Share [Abstract]

Earnings Per Common Share

5.  Earnings Per Common Share

Following is a summary of the information used in the computation of earnings per common share (in thousands):

	March 31,
	2013		2012
Net earnings available to common shareholders	$	3,136	$	2,486
Dividends on Series C convertible preferred stock		100		-
Net earnings available to common shareholders -diluted	$	3,236	$	2,486
Weighted average number of common shares outstanding used in computation of basic earnings per common share		11,238		10,465
Effect of dilutive securities:
Stock options		50		8
Restricted stock		13		7
Convertible preferred stock and warrants		565		-
Weighted average number of common shares outstanding plus effect of dilutive securities used in computation of diluted earnings per common share	$	11,866	$	10,480

Options to acquire 18,331 shares of common stock were not included in computing diluted earnings per share for both quarters ended March 31, 2013 and 2012, respectively, because the effects of these shares were anti-dilutive as a result of the exercise price of such options.  A total of 104,384 shares subject to an outstanding warrant issued in connection with the Capital Purchase Plan transaction were anti-dilutive as a result of their exercise price and not included in the computation of diluted earnings per share for the quarter ended March 31, 2012.

XML

Other Investments

3 Months Ended

Mar. 31, 2013

Other Investments [Abstract]

Other Investments

3.  Other Investments

The Company is required to own stock in the Federal Reserve Bank of Atlanta ("FRB-Atlanta") and as a member of the Federal Home Loan Bank system, owns stock in the Federal Home Loan Bank of Dallas ("FHLB-Dallas").  The Company accounts for FRB-Atlanta and FHLB-Dallas stock as other investments along with stock ownership in two correspondent banks and a Community Reinvestment Act ("CRA") investment in a Senior Housing Crime Prevention program in Louisiana. The CRA investment consisted of three government-sponsored agency mortgage-backed securities purchased by the Company and held by the Senior Housing Crime Prevention program.  The majority of the interest earned on the securities provides income to the program.

For impairment analysis, the Company reviews financial statements and regulatory capital ratios for each of the banks in which the Company owns stock to verify financial stability and regulatory compliance with capital requirements.  As of March 31, 2013 and December 31, 2012, based upon quarterly reviews, management determined that there was no impairment in the bank stocks held as other investments.

The aggregate carrying amount of other investments consisted of the following (in thousands):

	March 31, 2013		December 31, 2012
FRB-Atlanta	$	3,789	$	2,258
FHLB-Dallas		1,863		1,862
Other bank stocks		2,063		2063
Other stocks		187		7
CRA investment		2,115		2,120
	$	10,017	$	8,310

XML

Credit Quality of Loans and Allowance for Loan Losses

3 Months Ended

Mar. 31, 2013

Credit Quality of Loans and Allowance for Loan Losses [Abstract]

Credit Quality of Loans and Allowance for Loan Losses

4.   Credit Quality of Loans and Allowance for Loan Losses

The allowance for loan losses and recorded investment in loans as of the dates indicated are as follows:

	As of March 31, 2013
(in thousands)	Collectively Evaluated for Impairment		Individually Evaluated for Impairment		Loans Acquired with Deteriorated Credit Quality		Total
Allowance for loan losses:
Commercial, financial, agriculture	$	1,115	$	467	$	-	$	1,582
Real estate – construction		2,212		51		-		2,263
Commercial real estate		2,252		21		-		2,273
Residential real estate		827		42		-		869
Consumer		319		106		-		425
Financial leases		42		-		-		42
Other		3		-		-		3
Total allowance for loan losses	$	6,770	$	687	$	-	$	7,457

	As of March 31, 2013
(in thousands)	Collectively Evaluated for Impairment		Individually Evaluated for Impairment		Loans Acquired with Deteriorated Credit Quality		Total
Loans:
Commercial, financial, agriculture	$	313,677	$	1,648	$	72	$	315,397
Real estate – construction		81,673		835		-		82,508
Commercial real estate		399,117		2,688		3,900		405,705
Residential real estate		136,797		1,205		282		138,284
Consumer		88,643		255		-		88,898
Financial leases		4,962		-		-		4,962
Other		2,105		-		-		2,105
Total loans	$	1,026,974	$	6,631	$	4,254	$	1,037,859

	As of December 31, 2012
(in thousands)	Collectively Evaluated for Impairment		Individually Evaluated for Impairment		Loans Acquired with Deteriorated Credit Quality		Total
Allowance for loan losses:
Commercial, financial, agriculture	$	1,144	$	391	$	-	$	1,535
Real estate – construction		2,090		57		-		2,147
Commercial real estate		2,131		35		-		2,166
Residential real estate		906		30		-		936
Consumer		429		114		-		543
Financial leases		41		-		-		41
Other		2		-		-		2
Total allowance for loan losses	$	6,743	$	627	$	-	$	7,370

	As of December 31, 2012
(in thousands)	Collectively Evaluated for Impairment		Individually Evaluated for Impairment		Loans Acquired with Deteriorated Credit Quality		Total
Loans:
Commercial, financial, agriculture	$	313,937	$	1,636	$	82	$	315,655
Real estate – construction		74,398		936		-		75,334
Commercial real estate		407,489		2,911		3,984		414,384
Residential real estate		140,776		1,627		455		142,858
Consumer		90,231		330		-		90,561
Financial leases		5,769		-		-		5,769
Other		2,379		-		-		2,379
Total loans	$	1,034,979	$	7,440	$	4,521	$	1,046,940

The Company monitors loan concentrations and evaluates individual customer and aggregate industry leverage, profitability, risk rating distributions, and liquidity for each major standard industry classification segment.  At March 31, 2013, one industry segment concentration, the oil and gas industry, constituted more than 10% of the loan portfolio.  The Company's exposure in the oil and gas industry, including related service and manufacturing industries, totaled approximately $144.1 million, or 13.9% of total loans.  Additionally, the Company's exposure to loans secured by commercial real estate is monitored.  At March 31, 2013, loans secured by commercial real estate (including commercial construction, farmland and multifamily loans) totaled approximately $470.8 million.  Of the $470.8 million, $348.5 million represent CRE loans, 58.2% of which are secured by owner-occupied commercial properties.  Of the $470.8 million in loans secured by commercial real estate, $3.6 million, or 0.8%, were on nonaccrual status at March 31, 2013.

Modifications by Class of Loans (in thousands)
	Number of Contracts		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Troubled debt restructurings as of March 31, 2013:
Commercial, financial, and agricultural		4	$	412	$	370
Real Estate - commercial		3		4,983		4,662
			$	5,395	$	5,032
	Number of Contracts		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Troubled debt restructurings as of December 31, 2012:
Commercial, financial, and agricultural		3	$	370	$	353
Real Estate – commercial		3		4,983		4,709
			$	5,353	$	5,062

Trouble Debt Restructurings that Subsequently Defaulted (in thousands)
	March 31, 2013				March 31, 2012
	Number of Contracts		Recorded Investment		Number of Contracts		Recorded Investment
Commercial, financial, and agricultural		4	$	259		3	$	251

One loan with a pre-modification balance of $27,000 was identified as a TDR and no additional defaults on TDRs were recorded during the three months ended March 31, 2013.  For purposes of the determination of an allowance for loan losses on these TDRs, as an identified TDR, the Company considers a loss probable on the loan and, as a result is reviewed for specific impairment in accordance with the Company's allowance for loan loss methodology.  If it is determined losses are probable on such TDRs, either because of delinquency or other credit quality indicator, the Company establishes specific reserves for these loans.As of March 31, 2013, there were no commitments to lend additional funds to debtors owing sums to the Company whose terms have been modified in TDRs.

For the Three Months Ended March 31, 2013 (in thousands)
				Real Estate
	Coml, Fin, and Agric			Construction		Commercial			Residential			Consumer			Finance Leases Coml		Other		Total
Allowance for loan losses:
Beginning balance	$	1,535		$	2,147	$	2,166		$	936		$	543		$	41	$	2	$	7,370
Charge-offs		(181	)		-		(18	)		(109	)		(216	)		-		-		(524	)
Recoveries		16			5		10			1			29			-		-		61
Provision		212			111		115			41			69			1		1		550
Ending balance	$	1,582		$	2,263	$	2,273		$	869		$	425		$	42	$	3	$	7,457
Ending balance: individually evaluated for impairment	$	467		$	51	$	21		$	42		$	106		$	-	$	-	$	687
Loans:
Ending balance	$	315,397		$	82,508	$	405,705		$	138,284		$	88,898		$	4,962	$	2,105	$	1,037,859
Ending balance: individually evaluated for impairment,	$	1,648		$	835	$	2,688		$	1,205		$	255		$	-	$	-	$	6,631

Allowance for Loan Losses and Recorded Investment in Loans

For the Year Ended December 31, 2012  (in thousands)

				Real Estate
	Coml, Fin, and Agric			Construction		Commercial			Residential			Consumer			Finance Leases Coml		Other		Total
Allowance for loan losses:
Beginning balance	$	1,734		$	1,661	$	2,215		$	936		$	710		$	19	$	1	$	7,276
Charge-offs		(1,054	)		-		(550	)		(126	)		(526	)		-		-		(2,256	)
Recoveries		181			18		1			2			98			-		-		300
Provision		674			468		500			124			261			22		1		2,050
Ending balance	$	1,535		$	2,147	$	2,166		$	936		$	543		$	41	$	2	$	7,370
Ending balance: individually evaluated for impairment	$	391		$	57	$	35		$	30		$	114		$	-	$	-	$	627
Loans:
Ending balance	$	315,655		$	75,334	$	414,384		$	142,858		$	90,561		$	5,769	$	2,379	$	1,046,940
Ending balance: individually evaluated for impairment	$	1,636		$	936	$	2,911		$	1,627		$	330		$	-	$	-	$	7,440

As of March 31, 2013  (in thousands)

Commercial Credit Exposure

Credit Risk Profile by Creditworthiness Category

	Commercial, Financial, and Agricultural		Commercial Real Estate Construction		Commercial Real Estate Other		Commercial Total		% of Total Commercial
Pass	$	308,294	$	62,579	$	380,402	$	751,275		95.55	%
Special mention		2,897		663		13,729		17,289		2.20	%
Substandard		3,887		1,888		6,816		12,591		1.60	%
Doubtful		319		3		4,758		5,080		0.65	%
	$	315,397	$	65,133	$	405,705	$	786,235		100.00	%

Residential Credit Exposure
Credit Risk Profile by Creditworthiness Category
	Residential Construction		Residential Prime		Residential Subprime		Residential Total		% of Total Residential
Pass	$	17,139	$	133,525	$	-	$	150,664		96.79	%
Special mention		-		1,398		-		1,398		0.90	%
Substandard		236		3,361		-		3,597		2.31	%
	$	17,375	$	138,284	$	-	$	155,659		100.00	%

Consumer and Commercial Credit Exposure
Credit Risk Profile Based on Payment Activity
	Consumer Credit Card		Consumer Other		Finance Leases Commercial		Other Loans		Total		% of Total
Performing	$	5,892	$	82,722	$	4,962	$	2,105	$	95,681		99.70	%
Nonperforming		29		255		-		-		284		0.30	%
	$	5,921	$	82,977	$	4,962	$	2,105	$	95,965		100.00	%

Credit Quality Indicators by Class of Loans
As of December 31, 2012 (in thousands)
Commercial Credit Exposure
Credit Risk Profile by Creditworthiness Category
	Commercial, Financial, and Agricultural		Commercial Real Estate Construction		Commercial Real Estate Other		Commercial Total		% of Total Commercial
Pass	$	304,219	$	54,737	$	396,077	$	755,033		95.76	%
Special Mention		5,748		684		6,224		12,656		1.61	%
Substandard		4,503		2,925		7,514		14,942		1.90	%
Doubtful		1,185		4		4,569		5,758		0.73	%
	$	315,655	$	58,350	$	414,384	$	788,389		100.00	%

Residential Credit Exposure
Credit Risk Profile by Creditworthiness Category
	Residential Construction		Residential Prime		Residential Subprime		Residential Total		% of Total Residential
Pass	$	16,785	$	137,681	$	-	$	154,466		96.64	%
Special mention		-		1,612		-		1,612		1.01	%
Substandard		199		3,565		-		3,764		2.35	%
	$	16,984	$	142,858	$	-	$	159,842		100.00	%

Consumer and Commercial Credit Exposure
Credit Risk Profile Based on Payment Activity
	Consumer Credit Card		Consumer Other		Finance Leases Commercial		Other Loans		Total		% of Total
Performing	$	6,792	$	83,347	$	5,769	$	2,379	$	98,287		99.57	%
Nonperforming		15		407		-		-		422		0.43	%
	$	6,807	$	83,754	$	5,769	$	2,379	$	98,709		100.00	%

Age Analysis of Past Due Loans by Class of Loans (in thousands)
	30-59 Days Past Due (1)		60-89 Days Past Due (1)		Greater than 90 Days Past Due (1)		Total Past Due		Current		Total Loans		Recorded Investment > 90 days and Accruing
As of March 31, 2013
Commercial, financial, and agricultural	$	1,011	$	51	$	1,669	$	2,731	$	312,666	$	315,397	$	141
Commercial real estate – construction		229		537		188		954		64,179		65,133		-
Commercial real estate – other		1,663		176		2,449		4,288		401,417		405,705
Consumer - credit card		37		3		-		40		5,881		5,921		-
Consumer - other		361		97		142		600		82,377		82,977		22
Residential – construction		-		-		-		-		17,375		17,375		-
Residential – prime		2,000		124		1,251		3,375		134,909		138,284		-
Residential – subprime		-		-		-		-		-		-		-
Other loans		78		7		-		85		2,020		2,105		-
Finance leases commercial		4		-		-		4		4,958		4,962		-
	$	5,383	$	995	$	5,699	$	12,077	$	1,025,782	$	1,037,859	$	163
	30-59 Days Past Due (1)		60-89 Days Past Due (1)		Greater than 90 Days Past Due (1)		Total Past Due		Current		Total Loans		Recorded Investment > 90 days and Accruing
As of December 31, 2012
Commercial, financial, and agricultural	$	2,220	$	321	$	2,580	$	5,121	$	310,534	$	315,655	$	1,019
Commercial real estate - construction		66		96		101		263		58,087		58,350		-
Commercial real estate - other		4,131		2,108		3,577		9,816		404,568		414,384		952
Consumer - credit card		24		2		15		41		6,766		6,807		15
Consumer - other		421		134		186		741		83,013		83,754		-
Residential - construction		-		-		-		-		16,984		16,984		-
Residential - prime		1,140		317		1,408		2,865		139,993		142,858		-
Residential - subprime		-		-		-		-		-		-		-
Other loans		87		-		-		87		2,292		2,379		-
Finance leases commercial		-		-		-		-		5,769		5,769		-
	$	8,089	$	2,978	$	7,867	$	18,934	$	1,028,006	$	1,046,940	$	1,986

(1)   Past due amounts may include loans on nonaccrual status.

Impaired Loans by Class of Loans (in thousands)
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
As of March 31, 2013
With no related allowance recorded:
Commercial, financial, and agricultural	$	590	$	701	$	-	$	577	$	-
Commercial real estate – construction		676		676		-		723		-
Commercial real estate – other		2,485		3,015		-		2,508		6
Consumer – other		51		59		-		82		-
Residential – prime		909		909		-		1,242		2
Subtotal:	$	4,711	$	5,360	$	-	$	5,132	$	8
With an allowance recorded:
Commercial, financial, and agricultural		1,058		1,058		467		1,065		1
Commercial real estate – construction		159		159		51		162		-
Commercial real estate – other		203		203		21		292		-
Consumer – other		204		204		106		210		-
Residential – prime		296		296		42		174		-
Subtotal:	$	1,920	$	1,920	$	687	$	1,903	$	1
Totals:
Commercial		5,171		5,812		539		5,327		7
Consumer		255		263		106		292		-
Residential		1,205		1,205		42		1,416		2
Grand total:	$	6,631	$	7,280	$	687	$	7,035	$	9
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
As of December 31, 2012
With no related allowance recorded:
Commercial, financial, and agricultural	$	564	$	675	$	-	$	861	$	5
Commercial real estate – construction		771		770		-		834		1
Commercial real estate – other		2,530		3,059		-		1,780		38
Consumer – other		114		122		-		81		1
Residential – prime		1,575		1,575		-		1,213		26
Finance leases commercial		-		-		-		-		-
Other loans		-		-		-		-		-
Subtotal:	$	5,554	$	6,201	$	-	$	4,769	$	71
With an allowance recorded:
Commercial, financial, and agricultural		1,072		1,072		391		1,128		21
Commercial real estate – construction		165		165		57		85		7
Commercial real estate – other		381		381		35		811		3
Consumer – other		216		216		114		228		6
Residential – prime		52		52		30		172		4
Subtotal:	$	1,886	$	1,886	$	627	$	2,424	$	41
Totals:
Commercial		5,483		6,122		483		5,499		75
Consumer		330		338		114		309		7
Residential		1,627		1,627		30		1,385		30
Other		-		-		-		-		-
Grand total:	$	7,440	$	8,087	$	627	$	7,193	$	112

Loans on Nonaccrual Status (in thousands)
	March 31, 2013		December 31, 2012
Commercial, financial, and agricultural	$	1,856	$	2,015
Commercial real estate – construction		838		941
Commercial real estate - other		2,783		3,017
Consumer - credit card		-		-
Consumer - other		292		409
Residential - construction		-		-
Residential - prime		1,757		2,505
Residential - subprime		-		-
Other loans		-		-
Finance leases commercial		-		-
	$	7,526	$	8,887

The amount of interest that would have been recorded on nonaccrual loans, had the loans not been classified as nonaccrual, totaled approximately $148,000 and $177,000 for the three months ended March 31, 2013 and 2012, respectively.  Interest actually received on nonaccrual loans at March 31, 2013 and 2012 was $36,000 and $20,000, respectively.

XML

Declaration of Dividends

3 Months Ended

Mar. 31, 2013

Declaration of Dividends [Abstract]

Declaration of Dividends

6.     Declaration of Dividends

A first quarter dividend of $0.07 per share for holders of common stock of record on March 15, 2013 was declared on January 31, 2013, and was paid on April 1, 2013.  On January 31, 2013, the Company also declared a 1.00% dividend for holders of its Series C preferred stock of record on April 1, 2013, which was paid on April 15, 2013.

XML

Earnings Per Common Share (Details) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Earnings Per Common Share [Abstract]
Net earnings available to common shareholders	$ 3,136	$ 2,486
Dividends on Series C convertible preferred stock	100	0
Net earnings available to common shareholders -diluted	$ 3,236	$ 2,486
Weighted average number of common shares outstanding used in computation of basic earnings per common share (in shares)	11,238,000	10,465,000
Effect of dilutive securities [Abstract]
Stock options (in shares)	50,000	8,000
Restricted stock (in shares)	13,000	7,000
Convertible preferred stock and warrants	565,000	0
Weighted average number of common shares outstanding plus effect of dilutive securities used in computation of diluted earnings per common share (in shares)	11,866,000	10,480,000
Stock Options [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive shares excluded from computing diluted earnings per share (in shares)	18,331	18,331
Warrant [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive shares excluded from computing diluted earnings per share (in shares)		104,384

XML

Other Investments (Tables)

3 Months Ended

Mar. 31, 2013

Other Investments [Abstract]

Components of Other Investments

The aggregate carrying amount of other investments consisted of the following (in thousands):

	March 31, 2013		December 31, 2012
FRB-Atlanta	$	3,789	$	2,258
FHLB-Dallas		1,863		1,862
Other bank stocks		2,063		2063
Other stocks		187		7
CRA investment		2,115		2,120
	$	10,017	$	8,310

XML

Investment Securities (Details) (USD $)	3 Months Ended
	Mar. 31, 2013 Label Security	Dec. 31, 2012
Available-for-sale Securities [Abstract]
Amortized Cost	$ 376,554,000	$ 412,065,000
Gross Unrealized Gains	11,529,000	12,599,000
Gross Unrealized Losses	297,000	47,000
Fair Value	387,786,000	424,617,000
Held-to-maturity [Abstract]
Amortized Cost	167,617,000	153,524,000
Gross Unrealized Gains	3,160,000	3,407,000
Gross Unrealized Losses	600,000	7,000
Fair Value	170,177,000	156,924,000
Number of Private label Collateralized Mortgage Obligations	3
Combined balance of private-label collateralized mortgage obligations	83,000
Interest income on investment securities	73,000
Increase in diluted earnings per share on an annualized basis (in dollars per share)	$ 0.02
Available-for-sale, Amortized Cost [Abstract]
Due in one year or less	13,977,000
Due after one year through five years	44,507,000
Due after five years through ten years	22,706,000
Due after ten years	5,191,000
Other asset-backed securities	12,174,000
Mortgage-backed securities and collateralized mortgage obligations: Residential, Amortized Cost	249,083,000
Mortgage-backed securities and collateralized mortgage obligations: Commercial, Amortized Cost	28,452,000
Collateralized debt obligation	464,000
Available-for-sale securities, Amortized Cost	376,554,000
Available-for-sale, Fair Value [Abstract]
Due in one year or less	14,152,000
Due after one year through five years	46,369,000
Due after five years through ten years	24,462,000
Due after ten years	5,382,000
Other asset-backed securities	12,628,000
Mortgage-backed securities and collateralized mortgage obligations: Residential, Fair Value	254,573,000
Mortgage-backed securities and collateralized mortgage obligations: Commercial, Fair Value	29,693,000
Collateralized debt obligation, at fair Value	527,000
Available-for-sale securities, Fair Value	387,786,000
Held-to-maturity, Amortized Cost [Abstract]
Due in one year or less	306,000
Due after one year through five years	1,152,000
Due after five years through ten years	6,218,000
Due after ten years	36,767,000
Mortgage-backed securities and collateralized mortgage obligations: Residential, Amortized Cost	106,994,000
Mortgage-backed securities and collateralized mortgage obligations: Commercial, Amortized Cost	16,180,000
Held-to-maturity securities, Amortized Cost	167,617,000
Held-to-maturity, Fair Value [Abstract]
Due in one year or less	307,000
Due after one year through five years	1,154,000
Due after five years through ten years	6,329,000
Due after ten years	36,373,000
Mortgage-backed securities and collateralized mortgage obligations: Residential, Fair Value	109,190,000
Mortgage-backed securities and collateralized mortgage obligations: Commercial, Fair Value	16,824,000
Held-to-maturity securities, Fair Value	170,177,000
Available-for-sale Securities, Continuous Unrealized Loss Position [Abstract]
Securities with Losses Under 12 Months, Fair Value, Available-for-sale	60,233,000
Securities with Losses under 12 Months, Gross Unrealized Loss, Available-for-sale	296,000
Securities with Losses over 12 Months, Fair Value, Available-for-sale	82,000
Securities with Losses over 12 Months, Gross Unrealized Loss, Available-for-sale	1,000
Total, Fair Value, Available-for-sale	60,315,000
Total, Gross Unrealized Loss, Available-for-sale	297,000
Held-to-maturity Securities, Continuous Unrealized Loss Position [Abstract]
Securities with Losses Under 12 Months, Fair Value, Held-to-maturity	54,221,000
Securities with Losses under 12 Months, Gross Unrealized Loss, Held-to-maturity	600,000
Securities with Losses over 12 Months, Fair Value, Held-to-maturity	0
Securities with Losses over 12 Months, Gross Unrealized Loss, Held-to-maturity	0
Total securities, Fair Value, Held-to-maturity	54,221,000
Total securities, Gross Unrealized Loss, Held-to-maturity	600,000
Number of impairment related to credit quality	0
Number of impaired securities evaluated as other temporary	0
Impairment losses were recognized on debt securities	0
Number of available-for-sale securities sold	21
Available-for-sale securities, net gain	204,000
Number of available-for-sale securities sold with gains	18
Available-for-sale securities, gross realized gains	217,000
Number of available-for-sale securities sold with loss	3
Available-for-sale securities, gross realized losses	13,000
Securities pledged to secure public funds on deposits and for other purposes required or permitted by law	302,100,000	226,200,000
U.S. Government Sponsored Enterprises [Member]
Available-for-sale Securities [Abstract]
Amortized Cost	13,195,000	13,422,000
Gross Unrealized Gains	8,000	2,000
Gross Unrealized Losses	17,000	0
Fair Value	13,186,000	13,424,000
Available-for-sale Securities, Continuous Unrealized Loss Position [Abstract]
Securities with Losses Under 12 Months, Fair Value, Available-for-sale	5,512,000
Securities with Losses under 12 Months, Gross Unrealized Loss, Available-for-sale	17,000
Securities with Losses over 12 Months, Fair Value, Available-for-sale	0
Securities with Losses over 12 Months, Gross Unrealized Loss, Available-for-sale	0
Total, Fair Value, Available-for-sale	5,512,000
Total, Gross Unrealized Loss, Available-for-sale	17,000
Held-to-maturity Securities, Continuous Unrealized Loss Position [Abstract]
Number of available-for-sale securities	4
Number of available-for-sale securities in unrealized loss positions	1
Obligation of State and Political Subdivisions [Member]
Available-for-sale Securities [Abstract]
Amortized Cost	73,186,000	83,093,000
Gross Unrealized Gains	3,997,000	4,328,000
Gross Unrealized Losses	4,000	0
Fair Value	77,179,000	87,421,000
Held-to-maturity [Abstract]
Amortized Cost	44,443,000	42,900,000
Gross Unrealized Gains	201,000	7,000
Gross Unrealized Losses	481,000	7,000
Fair Value	44,163,000	42,900,000
Available-for-sale Securities, Continuous Unrealized Loss Position [Abstract]
Securities with Losses Under 12 Months, Fair Value, Available-for-sale	491,000
Securities with Losses under 12 Months, Gross Unrealized Loss, Available-for-sale	4,000
Securities with Losses over 12 Months, Fair Value, Available-for-sale	0
Securities with Losses over 12 Months, Gross Unrealized Loss, Available-for-sale	0
Total, Fair Value, Available-for-sale	491,000
Total, Gross Unrealized Loss, Available-for-sale	4,000
Held-to-maturity Securities, Continuous Unrealized Loss Position [Abstract]
Securities with Losses Under 12 Months, Fair Value, Held-to-maturity	29,289,000	1,128,000
Securities with Losses under 12 Months, Gross Unrealized Loss, Held-to-maturity	481,000	7,000
Securities with Losses over 12 Months, Fair Value, Held-to-maturity	0	0
Securities with Losses over 12 Months, Gross Unrealized Loss, Held-to-maturity	0	0
Total securities, Fair Value, Held-to-maturity	29,289,000	1,128,000
Total securities, Gross Unrealized Loss, Held-to-maturity	481,000	7,000
Number of available-for-sale securities	122
Number of available-for-sale securities in unrealized loss positions	1
GSE Mortgage-Backed Securities [Member]
Available-for-sale Securities [Abstract]
Amortized Cost	162,299,000	172,932,000
Gross Unrealized Gains	5,137,000	5,887,000
Gross Unrealized Losses	116,000	0
Fair Value	167,320,000	178,819,000
Held-to-maturity [Abstract]
Amortized Cost	91,968,000	89,383,000
Gross Unrealized Gains	2,315,000	2,819,000
Gross Unrealized Losses	29,000	0
Fair Value	94,254,000	92,202,000
Available-for-sale Securities, Continuous Unrealized Loss Position [Abstract]
Securities with Losses Under 12 Months, Fair Value, Available-for-sale	34,310,000
Securities with Losses under 12 Months, Gross Unrealized Loss, Available-for-sale	116,000
Securities with Losses over 12 Months, Fair Value, Available-for-sale	0
Securities with Losses over 12 Months, Gross Unrealized Loss, Available-for-sale	0
Total, Fair Value, Available-for-sale	34,310,000
Total, Gross Unrealized Loss, Available-for-sale	116,000
Held-to-maturity Securities, Continuous Unrealized Loss Position [Abstract]
Securities with Losses Under 12 Months, Fair Value, Held-to-maturity	9,996,000
Securities with Losses under 12 Months, Gross Unrealized Loss, Held-to-maturity	29,000
Securities with Losses over 12 Months, Fair Value, Held-to-maturity	0
Securities with Losses over 12 Months, Gross Unrealized Loss, Held-to-maturity	0
Total securities, Fair Value, Held-to-maturity	9,996,000
Total securities, Gross Unrealized Loss, Held-to-maturity	29,000
Number of available-for-sale securities	82
Number of available-for-sale securities in unrealized loss positions	8
Other Asset-Backed Securities [Member]
Available-for-sale Securities [Abstract]
Amortized Cost	12,174,000	12,245,000
Gross Unrealized Gains	454,000	497,000
Gross Unrealized Losses	0	0
Fair Value	12,628,000	12,742,000
Collateralized Mortgage Obligations: Residential [Member]
Available-for-sale Securities [Abstract]
Amortized Cost	86,784,000	101,381,000
Gross Unrealized Gains	629,000	652,000
Gross Unrealized Losses	160,000	47,000
Fair Value	87,253,000	101,986,000
Held-to-maturity [Abstract]
Amortized Cost	15,026,000	5,009,000
Gross Unrealized Gains	0	0
Gross Unrealized Losses	90,000	0
Fair Value	14,936,000	5,009,000
Available-for-sale Securities, Continuous Unrealized Loss Position [Abstract]
Securities with Losses Under 12 Months, Fair Value, Available-for-sale	19,920,000	10,085,000
Securities with Losses under 12 Months, Gross Unrealized Loss, Available-for-sale	159,000	45,000
Securities with Losses over 12 Months, Fair Value, Available-for-sale	82,000	96,000
Securities with Losses over 12 Months, Gross Unrealized Loss, Available-for-sale	1,000	2,000
Total, Fair Value, Available-for-sale	20,002,000	10,181,000
Total, Gross Unrealized Loss, Available-for-sale	160,000	47,000
Held-to-maturity Securities, Continuous Unrealized Loss Position [Abstract]
Securities with Losses Under 12 Months, Fair Value, Held-to-maturity	14,936,000
Securities with Losses under 12 Months, Gross Unrealized Loss, Held-to-maturity	90,000
Total securities, Fair Value, Held-to-maturity	14,936,000
Total securities, Gross Unrealized Loss, Held-to-maturity	90,000
Number of available-for-sale securities	36
Number of available-for-sale securities in unrealized loss positions	7
Collateralized Mortgage Obligations: Commercial [Member]
Available-for-sale Securities [Abstract]
Amortized Cost	28,452,000	28,528,000
Gross Unrealized Gains	1,241,000	1,233,000
Gross Unrealized Losses	0	0
Fair Value	29,693,000	29,761,000
Held-to-maturity [Abstract]
Amortized Cost	16,180,000	16,232,000
Gross Unrealized Gains	644,000	581,000
Gross Unrealized Losses	0	0
Fair Value	16,824,000	16,813,000
Collateralized Debt Obligations [Member]
Available-for-sale Securities [Abstract]
Amortized Cost	464,000	464,000
Gross Unrealized Gains	63,000	0
Gross Unrealized Losses	0	0
Fair Value	$ 527,000	$ 464,000

XML

Consolidated Statements of Earnings (unaudited) (Parenthetical) (USD $)	3 Months Ended
	Mar. 31, 2013
Non-interest income:
Other accumulated other comprehensive reclassifications for unrealized gains on AFS securities	$ 204,000
Income tax expense for reclassification adjustment for net gains on sales of AFS securities	$ 71,000

XML

Consolidated Statements of Cash Flows (unaudited) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Cash flows from operating activities:
Net earnings	$ 3,428	$ 2,886
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation	1,321	885
Amortization (accretion) of purchase accounting adjustments	(1,914)	(690)
Provision for loan losses	550	675
Provision for deferred tax expense	599	229
Amortization of premiums on securities, net	1,299	358
Amortization of other investments	5	4
Stock option expense	62	0
Restricted stock expense	8	12
Net gain on sale of investment securities	(204)	0
Net loss on sale of other real estate owned	8	94
Net write down of other real estate owned	47	(8)
Net loss on sale of premises and equipment	6	0
Change in accrued interest receivable	(156)	(134)
Change in accrued interest payable	(286)	(250)
Change in other assets & other liabilities, net	1,284	335
Net cash provided by operating activities	6,057	4,396
Cash flows from investing activities:
Net decrease in time deposits in other banks	881	0
Proceeds from maturities and calls of securities available-for-sale	23,664	20,529
Proceeds from maturities and calls of securities held-to-maturity	7,620	3,465
Proceeds from sale of securities available-for-sale	41,839	0
Purchases of securities available-for-sale	(35,866)	(19,871)
Purchases of securities held-to-maturity	(22,194)	0
Proceeds from redemption of other investments	0	0
Purchases of other investments	(1,712)	(1)
Net change in loans	15,075	(1,767)
Purchases of premises and equipment	(4,664)	(417)
Proceeds from sale of premises and equipment	1	0
Proceeds from sale of other real estate owned	306	110
Net cash provided by investing activities	24,950	2,048
Cash flows from financing activities:
Change in deposits	8,453	12,734
Change in securities sold under agreements to repurchase	7,110	2,977
Federal Home Loan Bank advances	0	100
Repayments of Federal Home Loan Bank advances	(14)	(100)
Repayments of notes payable	(250)	0
Proceeds and tax benefit from exercise of stock options	30	0
Payment of dividends on preferred stock	(368)	(400)
Payment of dividends on common stock	(1,532)	(732)
Net cash provided by financing activities	13,429	14,579
Net (decrease) increase in cash and cash equivalents	44,436	21,023
Cash and cash equivalents, beginning of period	73,573	83,303
Cash and cash equivalents, end of period	118,009	104,326
Supplemental information- Noncash items
Transfer of loans to other real estate	417	97
Accrued preferred stock dividends	$ 292	$ 400

XML

Other Investments (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2013 Security Bank	Dec. 31, 2012
Other Investments [Abstract]
Number of correspondent banks with stock ownership by Company	2
Number of government-sponsored agency mortgage-backed securities purchased by Company for CRA investment	3
Components Of Other Investments [Abstract]
FRB - Atlanta	$ 3,789	$ 2,258
FHLB - Dallas	1,863	1,862
Other bank stocks	2,063	2,063
Other stocks	187	7
CRA investment	2,115	2,120
Total other investments	$ 10,017	$ 8,310	[1]

[1] Derived from audited financial statements

XML

Investment Securities (Tables)

3 Months Ended

Mar. 31, 2013

Investment Securities [Abstract]

Available-for-sale Investment Securities

The portfolio of investment securities consisted of the following (in thousands):

	March 31, 2013
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Available-for-sale:
U.S. Government sponsored enterprises	$	13,195	$	8	$	17	$	13,186
Obligations of state and political subdivisions		73,186		3,997		4		77,179
GSE mortgage-backed securities		162,299		5,137		116		167,320
Asset-backed securities		12,174		454		-		12,628
Collateralized mortgage obligations: residential		86,784		629		160		87,253
Collateralized mortgage obligations: commercial		28,452		1,241		-		29,693
Collateralized debt obligation		464		63		-		527
	$	376,554	$	11,529	$	297	$	387,786

	December 31, 2012
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Available-for-sale:
U.S. Government sponsored enterprises	$	13,422	$	2	$	-	$	13,424
Obligations of state and political subdivisions		83,093		4,328		-		87,421
GSE mortgage-backed securities		172,932		5,887		-		178,819
Collateralized mortgage obligations: residential		101,381		652		47		101,986
Collateralized mortgage obligations: commercial		28,528		1,233		-		29,761
Other asset-backed securities		12,245		497		-		12,742
Collateralized debt obligation		464		-		-		464
	$	412,065	$	12,599	$	47	$	424,617

Held-to-maturity Securities

	March 31, 2013
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Held-to-maturity:
Obligations of state and political subdivisions	$	44,443	$	201	$	481	$	44,163
GSE mortgage-backed securities		91,968		2,315		29		94,254
Collateralized mortgage obligations: residential		15,026		-		90		14,936
Collateralized mortgage obligations: commercial		16,180		644		-		16,824
	$	167,617	$	3,160	$	600	$	170,177

	December 31, 2012
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Held-to-maturity:
Obligations of state and political subdivisions	$	42,900	$	7	$	7	$	42,900
GSE mortgage-backed securities		89,383		2,819		-		92,202
Collateralized mortgage obligations: residential		5,009		-		-		5,009
Collateralized mortgage obligations: commercial		16,232		581		-		16,813
	$	153,524	$	3,407	$	7	$	156,924

Amortized Cost and Fair Value of Debt Securities by Contractual Maturity

The amortized cost and fair value of debt securities at March 31, 2013 by contractual maturity are shown in the following table (in thousands) with the exception of other asset-backed securities, MBS, CMOs, and the collateralized debt obligation.   Expected maturities may differ from contractual maturities for mortgage-backed securities and CMOs because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

	Amortized Cost		Fair Value
Available-for-sale:
Due in one year or less	$	13,977	$	14,152
Due after one year through five years		44,507		46,369
Due after five years through ten years		22,706		24,462
Due after ten years		5,191		5,382
Other asset-backed securities		12,174		12,628
Mortgage-backed securities and collateralized mortgage obligations:
Residential		249,083		254,573
Commercial		28,452		29,693
Collateralized debt obligation		464		527
	$	376,554	$	387,786

	Amortized Cost		Fair Value
Held-to-maturity:
Due in one year or less	$	306	$	307
Due after one year through five years		1,152		1,154
Due after five years through ten years		6,218		6,329
Due after ten years		36,767		36,373
Mortgage-backed securities and collateralized mortgage obligations:
Residential		106,994		109,190
Commercial		16,180		16,824
	$	167,617	$	170,177

Investment Securities with Unrealized Losses

Details concerning investment securities with unrealized losses are as follows (in thousands):

	March 31, 2013
	Securities with losses under 12 months				Securities with losses over 12 months				Total
	Fair  Value		Gross Unrealized Loss		Fair Value		Gross Unrealized Loss		Fair Value		Gross Unrealized Loss
Available-for-sale:
U.S. Government sponsored enterprises	$	5,512	$	17	$	-	$	-	$	5,512	$	17
Obligations of state and political subdivisions		491		4		-		-		491		4
GSE mortgage-backed securities		34,310		116		-		-		34,310		116
Collateralized mortgage obligations: residential		19,920		159		82		1		20,002		160
	$	60,233	$	296	$	82	$	1	$	60,315	$	297

	December 31, 2012
	Securities with losses under 12 months				Securities with losses over 12 months				Total
	Fair  Value		Gross Unrealized Loss		Fair Value		Gross Unrealized Loss		Fair Value		Gross Unrealized Loss
Available-for-sale: Collateralized mortgage obligations: residential	$	10,085	$	45	$	96	$	2	$	10,181	$	47

	March 31, 2013
	Securities with losses under 12 months				Securities with losses over 12 months				Total
	Fair  Value		Gross Unrealized Loss		Fair Value		Gross Unrealized Loss		Fair Value		Gross Unrealized Loss
Held-to-maturity:
Obligations of state and political subdivisions	$	29,289	$	481	$	-	$	-	$	29,289	$	481
GSE mortgage-backed securities		9,996		29		-		-		9,996		29
Collateralized mortgage obligations: residential		14,936		90						14,936		90
	$	54,221	$	600	$	-	$	-	$	54,221	$	600

	December 31, 2012
	Securities with losses under 12 months				Securities with losses over 12 months				Total
	Fair  Value		Gross Unrealized Loss		Fair Value		Gross Unrealized Loss		Fair Value		Gross Unrealized Loss
Held-to-maturity: Obligations of state and political subdivisions	$	1,128	$	7	$	-	$	-	$	1,128	$	7