July 27, 2016 - 4:15 PM EDT
Print Email Article Font Down Font Up Charts

MidSouth Bancorp, Inc. Reports Second Quarter 2016 Results and Declares Quarterly Dividends

Quarterly Highlights - Diluted operating EPS $0.15 versus $0.17 for 1Q2016 and $0.35 for 2Q2015 - Loan loss reserve to total loans increased to 1.69% with $2.3 million provision - Annualized sequential loan growth of 6% excluding energy loans - Total energy loans declined $2.7 million to 19.8% of loans at period end - Direct C&I energy exposure 15.9% of loans with 3.8% reserve at period end - Total net charge-offs for the quarter were $1.3 million versus $1.5 million for 1Q16 - One energy-related charge-off totaling $400,000 during the quarter

LAFAYETTE, La., July 27, 2016 /PRNewswire/ -- MidSouth Bancorp, Inc. ("MidSouth") (NYSE:MSL) today reported quarterly net earnings available to common shareholders of $1.7 million for the second quarter of 2016, compared to net earnings available to common shareholders of $4.9 million reported for the second quarter of 2015 and $1.9 million in net earnings available to common shareholders for the first quarter of 2016.  Diluted earnings for the second quarter of 2016 were $0.15 per common share, compared to $0.42 per common share reported for the second quarter of 2015 and $0.17 per common share reported for the first quarter of 2016.  The second quarter of 2015 included approximately $1.1 million of securities gains, or approximately $0.06 per share after tax.

MidSouth Bancorp, Inc. Logo.

C. R. Cloutier, President and CEO, commenting on second quarter earnings remarked, "Our energy portfolio continues to show signs of stabilizing.  There were no new energy-related impairments identified during the quarter and our loss content since the beginning of this cycle in late 2014 has been modest with cycle-to-date charge-offs of 1.08% of energy loans.  Furthermore, our commercial real estate loan concentration is low at 148% of our risk based capital, well below the regulatory guidance of 300%."

Cloutier added, "Given the current environment, we continue to believe it is prudent to conserve capital and to delay our original plans to repay our SBLF capital.  During the quarter we continued to build capital, and we remain well capitalized."

Energy Lending Update

MidSouth Bank defines an energy loan as any loan where the borrower's ability to repay is disproportionately impacted by a prolonged downturn in energy prices.  Under this definition, the Bank includes direct Commercial and Industrial (C&I) loans to energy borrowers, as well as Commercial Real Estate (CRE) loans, Residential Real Estate loans and loans to energy-related borrowers where the loan's primary collateral is cash and marketable securities.  Although this definition has resulted in a lack of comparability with some other energy-related banks, management believes it to be the prudent approach to monitoring and managing the Bank's energy exposure.

Other comments on the Bank's energy lending:

  • Total energy loans, as defined above, decreased $2.7 million during 2Q16 to $249.8 million, or 19.8% of total loans, from 20.2% at March 31, 2016.
  • Direct C&I energy loans were $200.5 million or 15.9% of total loans and had a weighted average maturity of 3.7 years at June 30, 2016.
  • Energy-related CRE and residential real estate loans were $48.8 million or 3.9% of total loans at June 30, 2016.
  • Unfunded commitments on energy-related lines totaled $79 million at June 30, 2016.
    • Utilization rate on energy-related lines was 42.3% at June 30, 2016, compared to 42.1% at March 31, 2016.
  • Nine energy loan relationships had rating changes during the quarter.
    • Seven loan relationships totaling $17.2 million were downgraded to Special Mention
    • Two loan relationships totaling $5.1 million were downgraded to Substandard
  • Total criticized energy-related loans increased $16.0 million during 2Q16 to $92.9 million and represented 37.2% of energy loans at June 30, 2016, versus 30.4% at March 31, 2016.
  • Energy-related past due loans were $42.6 million, or 17.0%, with 11.7% of energy-related loans on nonaccrual status at June 30, 2016.
  • One energy-related charge-off totaled $400,000 during 2Q16 and YTD energy-related charge-offs totaled $1.2 million, or approximately 47 basis points of average energy loans.
  • Cycle to date net charge-offs totaled $2.9 million, or 1.08% of December 31, 2014 energy loans, which was when the effects of declining oil prices began to surface.
  • No new energy-related impairments identified during 2Q16.
  • The energy reserve as a percentage of total energy loans, as defined, was 3.3% at June 30, 2016. The reserve attributable to C&I energy loans was approximately 3.8%. The reserve on all other energy loans was 1.5%.
  • One energy relationship totaling $8.5 million is the only Shared National Credit (SNC) in the energy portfolio at June 30, 2016.
  • The Bank has no reserve-based energy loans and therefore does not conduct periodic borrowing base redeterminations associated with reserve based loans.
  • The Bank has determined its loan loss reserves using a pre-defined methodology consistently applied, which takes into account historical losses, migrations of credits using its internal loan grading system and other qualitative factors.
  • To date, during the month of July 2016, the Bank had 2 rating related changes to its energy portfolio:
    • One credit in the amount of $3.4 million was upgraded from Special Mention to Pass
    • One credit in the amount of $941,000 was downgraded from Pass to Special Mention

More information on our energy loan portfolio can be found on our website at MidSouthBank.com under Investor Relations/Presentations.

Balance Sheet

Total consolidated assets remained constant at $1.9 billion for the quarters ended June 30, 2016 and 2015 and December 31, 2015.  Our stable core deposit base, which excludes time deposits, totaled $1.4 billion at June 30, 2016 and March 31, 2016 and accounted for 89.5% of deposits compared to 89.3% of deposits, respectively.  Net loans totaled $1.2 billion at June 30, 2016 and March 31, 2016, compared to $1.3 billion at June 30, 2015.

MidSouth's Tier 1 leverage capital ratio was 10.25% at June 30, 2016, compared to 10.17% at March 31, 2016.  Tier 1 risk-based capital and total risk-based capital ratios were 13.14% and 14.39% at June 30, 2016, compared to 13.28% and 14.53% at March 31, 2016, respectively.  Tier 1 common equity to total risk-weighted assets at June 30, 2016 was 8.86%, compared to 8.90% at March 31, 2016.  Tangible common equity totaled $129.5 million at June 30, 2016, compared to $127.1 million at March 31, 2016.  Tangible book value per share at June 30, 2016 was $11.40 versus $11.19 at March 31, 2016.

Asset Quality

Nonperforming assets totaled $62.9 million at June 30, 2016, an increase of $4.8 million compared to $58.1 million reported at March 31, 2016.  The increase resulted primarily from a $6.5 million energy-related credit that was placed on nonaccrual status during the quarter, which was partially offset by a $1.2 million decrease in other real estate owned.  Allowance coverage for nonperforming loans was 35.68% at June 30, 2016, compared to 37.70% at March 31, 2016.  The ALLL/total loans ratio was 1.69% at June 30, 2016 and 1.63% at March 31, 2016.  Including valuation accounting adjustments on acquired loans, the total valuation accounting adjustment plus ALLL was 1.92% of loans at June 30, 2016.  The ratio of annualized net charge-offs to total loans decreased to 0.40% for the three months ended June 30, 2016 compared to 0.47% for the three months ended March 31, 2016.

Total nonperforming assets to total loans plus ORE and other assets repossessed was 4.97% at June 30, 2016 compared to 4.64% at March 31, 2016.  Loans classified as troubled debt restructurings, accruing ("TDRs, accruing") decreased to $154,000 at June 30, 2016 compared to $5.7 million at March 31, 2016.  The $5.5 million decrease resulted from a single, energy-related relationship that was placed on non-accrual status during the second quarter of 2016.  Classified assets, including ORE, increased $2.6 million, or 2.8%, to $95.5 million at June 30, 2016 compared to $92.9 million at March 31, 2016.  The increase in classified assets during the quarter ended June 30, 2016 is primarily due to the downgrade of one energy-related credit totaling $2.8 million.

Second Quarter 2016 vs. Second Quarter 2015 Earnings Comparison

Second quarter 2016 net earnings available to common shareholders totaled $1.7 million compared to $4.9 million for the second quarter of 2015.  The second quarter of 2016 included $20,000 of gain on sales of securities, and the second quarter of 2015 included $1.1 million of gain on sales of securities and $160,000 of income from a death benefit on bank owned life insurance.  Excluding these non-operating revenues, revenues from consolidated operations decreased $1.4 million in quarterly comparison, from $24.2 million for the three months ended June 30, 2015 to $22.8 million for the three months ended June 30, 2016.  Net interest income decreased $1.4 million in quarterly comparison primarily due to a $1.4 million decrease in interest income earned on loans.  Excluding non-operating income of $20,000 for the second quarter of 2016 and $1.3 million for the second quarter of 2015, noninterest income increased $4,000 in quarterly comparison.

Noninterest expenses increased $65,000 in quarterly comparison and consisted primarily of a $99,000 increase in ATM and debit card processing fees, an $89,000 increase in FDIC premiums and a $54,000 increase in legal and professional fees, which were partially offset by a $198,000 decrease in occupancy expense.  The provision for loan losses increased $1.2 million in quarterly comparison, from $1.1 million for the three months ended June 30, 2015 to $2.3 million for the three months ended June 30, 2016.  Income tax expense decreased $1.3 million in quarterly comparison.

Dividends on the Series B Preferred Stock issued to the Treasury as a result of our participation in the Small Business Lending Fund ("SBLF") totaled $720,000 for the second quarter of 2016 based on a dividend rate of 9%.  The dividend rate increased to 9% on February 25, 2016.  Dividends on the Series C Preferred Stock issued with the December 28, 2012 acquisition of PSB Financial Corporation ("PSB") totaled $91,000 for the three months ended June 30, 2016.

Fully taxable-equivalent ("FTE") net interest income totaled $18.2 million and $19.7 million for the quarters ended June 30, 2016 and 2015, respectively.  The FTE net interest income decreased $1.5 million in prior year quarterly comparison primarily due to a $1.4 million decrease in interest income on loans.  Interest income on loans decreased due to a $56.2 million decrease in the average balance of loans, as well a decrease in the average yield on loans of 19 basis points, from 5.58% to 5.39%.  The purchase accounting adjustments added 9 basis points to the average yield on loans for the second quarter of 2016 and 19 basis points to the average yield on loans for the second quarter of 2015.  Excluding the impact of the purchase accounting adjustments, average loan yields declined 9 basis points in prior year quarterly comparison, from 5.39% to 5.30%.  Loan yields have declined primarily as the result of a sustained low interest rate environment and a higher volume of loans on nonaccrual status.

Investment securities totaled $427.7 million, or 22.2% of total assets at June 30, 2016, versus $426.9 million, or 21.9% of total assets at June 30, 2015.  The investment portfolio had an effective duration of 2.9 years and a net unrealized gain of $5.6 million at June 30, 2016.  The average volume of investment securities decreased $11.1 million in prior year quarterly comparison.  The average tax equivalent yield on investment securities decreased 5 basis points, from 2.57% to 2.52%.

The average yield on all earning assets decreased 20 basis points in prior year quarterly comparison, from 4.69% for the second quarter of 2015 to 4.49% for the second quarter of 2016.  Excluding the impact of purchase accounting adjustments, the average yield on total earning assets decreased 12 basis points, from 4.55% to 4.43% for the three month periods ended June 30, 2015 and 2016, respectively.

Interest expense decreased $20,000 in prior year quarterly comparison.  Decreases in interest expenses included an $18,000 decrease in interest expense on deposits, a $13,000 increase in short-term FHLB advances and a $9,000 decrease in securities sold under agreements to repurchase.  These decreases were partially offset by a $19,000 increase in interest expense on junior subordinated debentures.  Excluding purchase accounting adjustments on acquired certificates of deposit and FHLB borrowings, the average rate paid on interest-bearing liabilities was 0.46% for the three months ended June 30, 2016 and 2015.

As a result of these changes in volume and yield on earning assets and interest-bearing liabilities, the FTE net interest margin decreased 21 basis points, from 4.38% for the second quarter of 2015 to 4.17% for the second quarter of 2016.  Excluding purchase accounting adjustments on loans, deposits and FHLB borrowings, the FTE margin decreased 13 basis points, from 4.21% for the second quarter of 2015 to 4.08% for the second quarter of 2016.

Second Quarter 2016 vs. First Quarter 2016 Earnings Comparison

In sequential-quarter comparison, net earnings available to common shareholders decreased $240,000, from $1.9 million for the three months ended March 31, 2016 to $1.7 million for the three months ended June 30, 2016.  Net interest income decreased $393,000 in sequential-quarter comparison, primarily due to a $222,000 decrease in purchase accounting adjustments on acquired loans and a $134,000 reduction in interest income on investment securities.  The second quarter of 2016 included $20,000 of gain on sales of securities.  Excluding this noninterest income, noninterest income increased $366,000 in sequential-quarter comparison and consisted primarily of increase of $165,000 of safe deposit box income, $78,000 of services charges on deposit accounts and $59,000 of ATM and debit card income.

Noninterest expense increased $282,000 in sequential-quarter comparison.  The increase in noninterest expense consisted primarily of increases of $192,000 in salaries and benefits costs,  $84,000 in corporate development expense, $70,000 in occupancy expense and $53,000 in legal and professional fees, which were partially offset by a $158,000 decrease in net expenses on ORE.  The provision for loan losses decreased $500,000 in sequential-quarter comparison.

An increase in the dividend rate paid on the Series B Preferred Stock issued in connection with SBLF resulted in a $384,000 increase in dividends on preferred stock in sequential-quarter comparison.

FTE net interest income decreased $413,000 in sequential-quarter comparison primarily due to a $285,000 decrease in interest income on loans.  The decrease in interest income on loans resulted from a decrease in the average yield on loans of 11 basis points, from 5.50% for the first quarter of 2016 to 5.39% for the second quarter of 2016.  The average volume of loans increased $3.4 million in sequential-quarter comparison.  Excluding purchase accounting adjustments, the loan yield increased 4 basis points, from 5.26% to 5.30% during the same period.  The average yield on total earning assets decreased 8 basis points for the same period, from 4.57% to 4.49%, respectively.  As a result of these changes in volume and yield on earning assets, the FTE net interest margin decreased 7 basis points, from 4.24% to 4.17%.  Excluding purchase accounting adjustments, the FTE net interest margin decreased 3 basis points, from 4.11% for the first quarter of 2016 to 4.08% for the second quarter of 2016.

Year-To-Date Earnings Comparison

In year-to-date comparison, net earnings available to common shareholders decreased $2.6 million, from $6.2 million at June 30, 2015 to $3.6 million at June 30, 2016.  The first six months of 2016 included $20,000 in gain on sales of securities.  The first six months of 2015 included $1.2 million in gain on sales of securities and $160,000 of income from a death benefit on bank owned life insurance.  Excluding these non-operating revenues, net earnings available to common shareholders decreased $1.3 million in year-to-date comparison.  The $1.3 million decrease in operating earnings in year-to-date comparison resulted primarily from a $2.3 million decrease in net interest income.  A decrease of $235,000 in operating noninterest income, an increase of $663,000 of noninterest expense and an increase of $893,000 in dividends on preferred stock also contributed to the decrease in operating earnings.  These were partially offset by a $2.0 million decrease in the provision for loan losses and a $796,000 million decrease in income tax expense.

Excluding non-operating income, decreases in noninterest income consisted primarily of $66,000 in mortgage banking fees and $88,000 in letter of credit income.  Increases in noninterest expense primarily included $221,000 in ATM and debit card processing fees, $237,000 in FDIC premiums, $92,000 in legal and professional fees and $132,000 in net expenses on ORE.

In year-to-date comparison, FTE net interest income decreased $2.4 million primarily due to a $2.4 million decrease in interest income on loans.  The average volume of loans decreased $50.9 million in year-over-year comparison, and the average yield on loans decreased 17 basis points, from 5.61% to 5.44%.  The average volume of investment securities decreased $1.4 million in year-over-year comparison, and the average yield on investment securities decreased 9 basis points for the same period.  The average yield on earning assets decreased in year-over-year comparison, from 4.73% at June 30, 2015 to 4.53% at June 30, 2016.  The purchase accounting adjustments added 16 basis points to the average yield on loans for the six months ended June 30, 2015 and 12 basis points for the six months ended June 30, 2016.  Net of purchase accounting adjustments, the average yield on earning assets decreased 17 basis points, from 4.61% at June 30, 2015 to 4.44% at June 30, 2016.

Interest expense decreased $24,000 in year-over-year comparison.  A $58,000 decrease in interest expense on deposits was partially offset by a $36,000 increase in interest expense on junior subordinated debentures.  The average rate paid on interest-bearing liabilities remained unchanged at 0.43% for the six months ended June 30, 2016 and 2015.  Net of purchase accounting adjustments, the average rate paid on interest-bearing liabilities remained unchanged at 0.46% for the same period.  The FTE net interest margin decreased 20 basis points, from 4.41% for the six months ended June 30, 2015 to 4.21% for the six months ended June 30, 2016.  Net of purchase accounting adjustments, the FTE net interest margin decreased 18 basis points, from 4.27% to 4.09% for the six months ended June 30, 2015 and 2016, respectively, primarily due to a decline in the average rate earned on loans.

Dividends

MidSouth's Board of Directors announced a cash dividend was declared in the amount of $0.09 per share to be paid on its common stock on October 3, 2016 to shareholders of record as of the close of business on September 15, 2016.  Additionally, a quarterly cash dividend of 1.00% per preferred share on its 4.00% Non-Cumulative Perpetual Convertible Preferred Stock, Series C was declared payable on October 17, 2016 to shareholders of record as of the close of business on October 3, 2016.

About MidSouth Bancorp, Inc.

MidSouth Bancorp, Inc. is a financial holding company headquartered in Lafayette, Louisiana, with assets of $1.9 billion as of June 30, 2016. MidSouth Bancorp, Inc. trades on the NYSE under the symbol "MSL." Through its wholly owned subsidiary, MidSouth Bank, N.A., MidSouth offers a full range of banking services to commercial and retail customers in Louisiana and Texas. MidSouth Bank currently has 57 locations in Louisiana and Texas and is connected to a worldwide ATM network that provides customers with access to more than 55,000 surcharge-free ATMs. Additional corporate information is available at MidSouthBank.com.

Forward-Looking Statements

Certain statements contained herein are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 and subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, which involve risks and uncertainties.  These statements include, among others, the expected loan loss provision and future operating results.  Actual results may differ materially from the results anticipated in these forward-looking statements.  Factors that might cause such a difference include, among other matters, 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; the timing and ability to reach any agreement to restructure nonaccrual loans;  increased competition for deposits and loans which could affect compositions, rates and terms; the timing and impact of future acquisitions, the success or failure of integrating operations, and the ability to capitalize on growth opportunities upon entering new markets; loss of critical personnel and the challenge of hiring qualified personnel at reasonable compensation levels; legislative and regulatory changes, including changes in banking, securities and tax laws and regulations and their application by our regulators, changes in the scope and cost of FDIC insurance and other coverage; and other factors discussed under the heading "Risk Factors" in MidSouth's Annual Report on Form 10-K for the year ended December 31, 2015 filed with the SEC on March 15, 2016 and in its other filings with the SEC.  MidSouth does not undertake any obligation to publicly update or revise any of these forward-looking statements, whether to reflect new information, future events or otherwise, except as required by law.

 


MIDSOUTH BANCORP, INC. and SUBSIDIARIES          

Condensed Consolidated Financial Information (unaudited)          

(in thousands except per share data)               









Quarter


Quarter


Quarter


Quarter


Quarter



Ended


Ended


Ended


Ended


Ended

EARNINGS DATA


6/30/2016


3/31/2016


12/31/2015


9/30/2015


6/30/2015

     Total interest income


$       19,388


$       19,804


$       19,886


$       20,532


$       20,798

     Total interest expense


1,397


1,420


1,349


1,391


1,417

          Net interest income


17,991


18,384


18,537


19,141


19,381

     FTE net interest income


18,212


18,625


18,806


19,423


19,676

     Provision for loan losses


2,300


2,800


3,000


3,800


1,100

     Non-interest income


4,873


4,487


4,575


4,768


6,137

     Non-interest expense


17,041


16,759


17,508


16,492


16,976

          Earnings before income taxes


3,523


3,312


2,604


3,617


7,442

     Income tax expense


1,030


963


766


1,028


2,343

          Net earnings


2,493


2,349


1,838


2,589


5,099

     Dividends on preferred stock


811


427


171


172


172

          Net earnings available to common shareholders


$         1,682


$         1,922


$         1,667


$         2,417


$         4,927












PER COMMON SHARE DATA











     Basic earnings per share


$           0.15


$           0.17


$           0.15


$           0.21


$           0.43

     Diluted earnings per share


0.15


0.17


0.15


0.21


0.42

     Diluted earnings per share, operating (Non-GAAP)(*)


0.15


0.17


0.15


0.21


0.35

     Quarterly dividends per share


0.09


0.09


0.09


0.09


0.09

     Book value at end of period


15.56


15.38


15.14


15.21


15.04

     Tangible book value at period end (Non-GAAP)(*)


11.40


11.19


10.92


10.97


10.78

     Market price at end of period


10.04


7.63


9.08


11.70


15.26

     Shares outstanding at period end 


11,362,705


11,362,150


11,362,150


11,361,839


11,359,396

     Weighted average shares outstanding











        Basic


11,255,042


11,261,644


11,281,286


11,311,841


11,323,506

        Diluted


11,255,178


11,261,644


11,281,286


11,830,540


11,849,683












AVERAGE BALANCE SHEET DATA











     Total assets


$  1,921,004


$  1,931,904


$  1,938,235


$  1,949,352


$  1,976,574

     Loans and leases


1,256,133


1,252,742


1,271,106


1,285,991


1,312,359

     Total deposits


1,562,680


1,552,217


1,557,272


1,559,308


1,593,318

     Total common equity


175,994


175,479


173,950


173,466


170,885

     Total tangible common equity (Non-GAAP)(*)


128,516


127,722


125,919


125,156


122,299

     Total equity 


217,112


216,599


215,072


214,623


212,112












SELECTED RATIOS











     Annualized return on average assets, operating (Non-GAAP)(*)


0.35%


0.40%


0.34%


0.49%


0.82%

     Annualized return on average common equity, operating (Non-GAAP)(*)


3.81%


4.41%


3.80%


5.53%


9.47%

     Annualized return on average tangible common equity, operating (Non-GAAP)(*)


5.22%


6.05%


5.25%


7.66%


13.23%

     Pre-tax, pre-provision annualized return on average assets, operating (Non-GAAP)(*)


1.21%


1.27%


1.15%


1.51%


1.47%

     Efficiency ratio, operating (Non-GAAP)(*)


74.49%


73.28%


75.69%


68.65%


69.89%

     Average loans to average deposits


80.38%


80.71%


81.62%


82.47%


82.37%

     Taxable-equivalent net interest margin


4.17%


4.24%


4.22%


4.34%


4.38%

     Tier 1 leverage capital ratio


10.25%


10.17%


10.10%


9.98%


9.79%












CREDIT QUALITY











     Allowance for loan and lease losses (ALLL) as a % of total loans


1.69%


1.63%


1.50%


1.46%


1.24%

     Nonperforming assets to tangible equity + ALLL


32.77%


30.83%


29.54%


30.51%


16.18%

     Nonperforming assets to total loans, other real estate











          owned and other repossessed assets


4.97%


4.64%


4.29%


4.32%


2.24%

     Annualized QTD net charge-offs to total loans


0.40%


0.47%


0.92%


0.28%


0.34%












(*)See reconciliation of Non-GAAP financial measures on pages 8-10.

 


MIDSOUTH BANCORP, INC. and SUBSIDIARIES          

Condensed Consolidated Balance Sheets (unaudited)       

(in thousands)               



















BALANCE SHEET


June 30,


March 31,


December 31,


September 30,


June 30,



2016


2016


2015


2015


2015

Assets











Cash and cash equivalents


$           98,535


$         112,410


$           89,201


$          125,437


$            82,636

Securities available-for-sale


318,239


302,151


318,159


285,485


300,335

Securities held-to-maturity


109,420


113,623


116,792


121,043


126,529

     Total investment securities


427,659


415,774


434,951


406,528


426,864

Other investments


11,036


11,195


11,188


12,063


10,598

Total loans


1,262,389


1,250,049


1,263,645


1,301,452


1,294,392

Allowance for loan losses


(21,378)


(20,347)


(19,011)


(18,939)


(16,048)

     Loans, net


1,241,011


1,229,702


1,244,634


1,282,513


1,278,344

Premises and equipment


68,468


68,482


69,105


68,718


69,263

Goodwill and other intangibles


47,346


47,622


47,899


48,175


48,452

Other assets


28,469


31,366


30,755


30,874


32,627

     Total assets


$      1,922,524


$      1,916,551


$      1,927,733


$       1,974,308


$       1,948,784























Liabilities and Shareholders' Equity











Non-interest bearing deposits


$         383,797


$         383,684


$         374,261


$          406,118


$          408,742

Interest-bearing deposits


1,176,269


1,174,519


1,176,589


1,137,303


1,149,508

   Total deposits


1,560,066


1,558,203


1,550,850


1,543,421


1,558,250

Securities sold under agreements to 











    repurchase


85,786


87,879


85,957


92,085


84,547

Short-term FHLB advances


-


-


25,000


70,000


40,000

Long-term FHLB advances


25,638


25,744


25,851


25,958


26,064

Junior subordinated debentures


22,167


22,167


22,167


22,167


22,167

Other liabilities


10,926


6,704


4,771


6,713


5,720

     Total liabilities


1,704,583


1,700,697


1,714,596


1,760,344


1,736,748

Total shareholders' equity


217,941


215,854


213,137


213,964


212,036

     Total liabilities and shareholders' equity


$      1,922,524


$      1,916,551


$      1,927,733


$       1,974,308


$       1,948,784

 




MIDSOUTH BANCORP, INC. and SUBSIDIARIES             

Condensed Consolidated Income Statements (unaudited)          

(in thousands except per share data)                
























Percent Change







EARNINGS STATEMENT


Three Months Ended


2Q16 vs. 1Q16


2Q16 vs. 2Q15


Six Months Ended


Percent



6/30/2016


3/31/2016


6/30/2015




6/30/2016


6/30/2015


Change


















Interest income:

















Loans, including fees


$ 16,598


$ 16,661


$ 17,709


-0.4%


-6.3%


$ 33,259


$ 35,426


-6.1%

Investment securities


2,360


2,494


2,412


-5.4%


-2.2%


4,854


4,921


-1.4%

Accretion of purchase accounting adjustments


240


462


559


-48.1%


-57.1%


702


896


-21.7%

Other interest income


190


187


118


1.6%


61.0%


377


236


59.7%

Total interest income


19,388


19,804


20,798


-2.1%


-6.8%


39,192


41,479


-5.5%


















Interest expense:

















Deposits


914


920


949


-0.7%


-3.7%


1,834


1,933


-5.1%

Borrowings


414


436


436


-5.0%


-5.0%


850


854


-0.5%

Junior subordinated debentures


170


167


151


1.8%


12.6%


337


301


12.0%

Accretion of purchase accounting adjustments


(101)


(103)


(119)


-1.9%


-15.1%


(204)


(247)


-17.4%

Total interest expense


1,397


1,420


1,417


-1.6%


-1.4%


2,817


2,841


-0.8%


















Net interest income


17,991


18,384


19,381


-2.1%


-7.2%


36,375


38,638


-5.9%

Provision for loan losses


2,300


2,800


1,100


-17.9%


109.1%


5,100


7,100


-28.2%

Net interest income after provision for loan losses


15,691


15,584


18,281


0.7%


-14.2%


31,275


31,538


-0.8%


















Noninterest income:

















Service charges on deposit accounts


2,391


2,313


2,347


3.4%


1.9%


4,704


4,679


0.5%

ATM and debit card income


1,668


1,609


1,655


3.7%


0.8%


3,277


3,284


-0.2%

Gain on securities, net  (non-operating)(*)


20


-


1,128


-


-98.2%


20


1,243


-98.4%

Mortgage lending


123


109


145


12.8%


-15.2%


232


298


-22.1%

Income from death benefit on BOLI (non-operating)(*)


-


-


160


-


-100.0%


0


160


-100.0%

Other charges and fees


671


456


702


47.1%


-4.4%


1,127


1,314


-14.2%

Total non-interest income


4,873


4,487


6,137


8.6%


-20.6%


9,360


10,978


-14.7%


















Noninterest expense:

















Salaries and employee benefits


8,182


7,990


8,197


2.4%


-0.2%


16,172


16,139


0.2%

Occupancy expense


3,667


3,597


3,865


1.9%


-5.1%


7,264


7,550


-3.8%

ATM and debit card


792


785


693


0.9%


14.3%


1,577


1,356


16.3%

Legal and professional fees


436


383


382


13.8%


14.1%


819


727


12.7%

FDIC premiums


420


429


331


-2.1%


26.9%


849


612


38.7%

Marketing


351


381


417


-7.9%


-15.8%


732


704


4.0%

Corporate development


419


335


387


25.1%


8.3%


754


707


6.6%

Data processing


478


458


467


4.4%


2.4%


936


924


1.3%

Printing and supplies


223


188


255


18.6%


-12.5%


411


480


-14.4%

Expenses on ORE, net


36


194


85


-81.4%


-57.6%


230


98


134.7%

Amortization of core deposit intangibles


276


277


276


-0.4%


0.0%


553


553


0.0%

Other non-interest expense


1,761


1,742


1,621


1.1%


8.6%


3,503


3,287


6.6%

Total non-interest expense


17,041


16,759


16,976


1.7%


0.4%


33,800


33,137


2.0%

Earnings before income taxes


3,523


3,312


7,442


6.4%


-52.7%


6,835


9,379


-27.1%

Income tax expense


1,030


963


2,343


7.0%


-56.0%


1,993


2,789


-28.5%

Net earnings


2,493


2,349


5,099


6.1%


-51.1%


4,842


6,590


-26.5%

Dividends on preferred stock


811


427


172


89.9%


371.5%


1,238


345


258.8%

Net earnings available to common shareholders


$   1,682


$   1,922


$   4,927


-12.5%


-65.9%


$   3,604


$   6,245


-42.3%


















Earnings per common share, diluted


$     0.15


$     0.17


$     0.42


-11.8%


-64.3%


$     0.32


$     0.54


-40.7%


















Operating earnings per common share, diluted (Non-GAAP)(*)


$     0.15


$     0.17


$     0.35


-11.8%


-57.1%


$     0.32


$     0.46


-30.4%


















(*)See reconciliation of Non-GAAP financial measures on page 8-10.

 


MIDSOUTH BANCORP, INC. and SUBSIDIARIES          

Composition of Loans and Deposits and Asset Quality Data (unaudited)       

(in thousands)               






COMPOSITION OF LOANS


June 30,


March 31, 


Jun 16 vs Mar 16 % Change


December 31,


September 30,


June 30,


Jun 16 vs Jun 15 % Change



2016


2016



2015


2015


2015



Commercial, financial, and agricultural


$   456,264


$   441,160


3.4%


$       454,028


$       482,452


$   471,397


-3.2%


Lease financing receivable


1,641


1,590


3.2%


1,968


4,790


5,561


-70.5%


Real estate - construction


96,331


84,790


13.6%


74,952


74,279


79,176


21.7%


Real estate - commercial


463,142


467,648


-1.0%


471,141


473,319


469,022


-1.3%


Real estate - residential


148,379


149,961


-1.1%


149,064


151,667


153,820


-3.5%


Installment loans to individuals


94,522


103,181


-8.4%


111,009


113,199


113,626


-16.8%


Other


2,110


1,719


22.7%


1,483


1,746


1,790


17.9%


















Total loans


$1,262,389


$1,250,049


1.0%


$    1,263,645


$    1,301,452


$1,294,392


-2.5%


















COMPOSITION OF DEPOSITS

















June 30,


March 31, 


Jun 16 vs Mar 16 % Change


December 31,


September 30,


June 30,


Jun 16 vs Jun 15 % Change




2016


2016



2015


2015


2015



Noninterest bearing


$   383,798


$   383,684


0.0%


$       374,261


$       406,118


$   408,742


-6.1%


NOW & other


467,987


472,309


-0.9%


475,346


448,938


458,338


2.1%


Money market/savings


544,256


534,854


1.8%


531,449


468,297


453,902


19.9%


Time deposits of less than $100,000


80,158


80,802


-0.8%


81,638


85,589


90,348


-11.3%


Time deposits of $100,000 or more


83,867


86,554


-3.1%


88,156


134,479


146,920


-42.9%


















Total deposits


$1,560,066


$1,558,203


0.1%


$    1,550,850


$    1,543,421


$1,558,250


0.1%


















ASSET QUALITY DATA

















June 30,


March 31, 




December 31,


September 30,


June 30,






2016


2016



2015


2015


2015




Nonaccrual loans


$     59,865


$     53,714




$         50,051


$         51,616


$     23,873




Loans past due 90 days and over


56


258




147


82


609




Total nonperforming loans


59,921


53,972




50,198


51,698


24,482




Other real estate


2,735


3,908




4,187


4,661


4,542




Other repossessed assets


263


265




38


-


38




Total nonperforming assets


$     62,919


$     58,145




$         54,423


$         56,359


$     29,062




















Troubled debt restructurings, accruing


$          154


$       5,675




$              164


$              168


$     21,529




































Nonperforming assets to total assets


3.27%


3.03%




2.82%


2.85%


1.49%




Nonperforming assets to total loans +      
















ORE + other repossessed assets


4.97%


4.64%




4.29%


4.32%


2.24%




ALLL to nonperforming loans


35.68%


37.70%




37.87%


36.63%


65.55%




ALLL to total loans


1.69%


1.63%




1.50%


1.46%


1.24%




















Quarter-to-date charge-offs


$       1,425


$       1,594




$           3,091


$           1,000


$       1,151




Quarter-to-date recoveries


156


130




163


91


39




Quarter-to-date net charge-offs


$       1,269


$       1,464




$           2,928


$              909


$       1,112




Annualized QTD net charge-offs to total loans


0.40%


0.47%




0.92%


0.28%


0.34%




 








MIDSOUTH BANCORP, INC. and SUBSIDIARIES             

Loan Portfolio - Quarterly Roll Forward (unaudited)

(in thousands)    










Three Months Ended



June 30,


March 31,


June 30,



2016


2016


2015

LOAN ACTIVITY














Loans originated


$        92,444


$        74,797


$        82,439

Repayments


(65,381)


(60,252)


(73,319)

Increases on renewals


3,465


2,307


1,631

Change in lines of credit


(18,586)


(30,920)


(28,373)

Change in allowance for loan losses


(1,031)


(1,336)


12

Other


398


473


1,085

Net change in loans


$        11,309


$       (14,931)


$       (16,525)

 


MIDSOUTH BANCORP, INC. and SUBSIDIARIES          

Tangible Common Equity to Tangible Assets and Regulatory Ratios (unaudited)

(in thousands)               



COMPUTATION OF TANGIBLE COMMON EQUITY TO TANGIBLE ASSETS







June 30, 


June 30,




2016


2015


Total equity


$         217,941


$         212,036


Less preferred equity


41,110


41,170


Total common equity


176,831


170,866


Less goodwill


42,171


42,171


Less intangibles


5,175


6,281


Tangible common equity


$         129,485


$         122,414








Total assets


$      1,922,524


$      1,948,784


Less goodwill


42,171


42,171


Less intangibles


5,175


6,281


Tangible assets


$      1,875,178


$      1,900,332








Tangible common equity to tangible assets


6.91%


6.44%








REGULATORY CAPITAL


June 30,


June 30,




2016


2015


Common equity tier 1 capital


$         129,516


$         126,188


Tier 1 capital


192,125


188,857


Total capital


210,444


205,072








Regulatory capital ratios:






Common equity tier 1 capital ratio


8.86%


8.47%


Tier 1 risk-based capital ratio


13.14%


12.68%


Total risk-based capital ratio


14.39%


13.77%


Tier 1 leverage ratio


10.25%


9.79%


 




















MIDSOUTH BANCORP, INC. and SUBSIDIARIES             



















Quarterly Yield Analysis (unaudited)   



















(in thousands)    






























YIELD ANALYSIS


Three Months Ended


Three Months Ended  


Three Months Ended  


Three Months Ended  


Three Months Ended  


June 30, 2016


March 31, 2016


December 31, 2015


September 30, 2015


June 30, 2015


























Tax






Tax






Tax






Tax






Tax





Average


Equivalent


Yield/


Average


Equivalent


Yield/


Average


Equivalent


Yield/


Average


Equivalent


Yield/


Average


Equivalent


Yield/



Balance


Interest


Rate


Balance


Interest


Rate


Balance


Interest


Rate


Balance


Interest


Rate


Balance


Interest


Rate
































Taxable securities


$     349,433


$       1,940


2.22%


$     358,623


$       2,036


2.27%


$     339,033


$      1,917


2.26%


$     341,192


$      1,864


2.19%


$     345,108


$      1,853


2.15%

Tax-exempt securities


60,972


641


4.21%


64,971


699


4.30%


70,548


778


4.41%


73,523


818


4.45%


76,433


854


4.47%

Total investment securities


410,405


2,581


2.52%


423,594


2,735


2.58%


409,581


2,695


2.65%


414,715


2,682


2.57%


421,541


2,707


2.57%

Federal funds sold


3,655


3


0.32%


3,843


5


0.51%


3,922


3


0.30%


3,349


1


0.12%


3,228


2


0.25%

Time and interest bearing deposits in































other banks


76,042


97


0.50%


74,271


94


0.50%


73,069


52


0.28%


62,086


40


0.25%


56,110


35


0.25%

Other investments


11,232


90


3.21%


11,189


88


3.15%


11,544


86


2.99%


10,508


99


3.77%


10,057


81


3.22%

Loans 


1,256,133


16,838


5.39%


1,252,742


17,123


5.50%


1,271,106


17,319


5.41%


1,285,991


17,992


5.55%


1,312,359


18,268


5.58%

Total interest earning assets


1,757,467


19,609


4.49%


1,765,639


20,045


4.57%


1,769,222


20,155


4.52%


1,776,649


20,814


4.65%


1,803,295


21,093


4.69%

Non-interest earning assets


163,537






166,265






169,013






172,703






173,279





Total assets


$  1,921,004






$  1,931,904






$  1,938,235






$  1,949,352






$  1,976,574




































Interest-bearing liabilities:































Deposits


$  1,176,387


$          903


0.31%


$  1,180,581


$          907


0.31%


$  1,156,166


$         836


0.29%


$  1,150,190


$         883


0.30%


$  1,181,381


$         921


0.31%

Repurchase agreements


85,479


233


1.10%


85,756


233


1.09%


85,178


240


1.12%


89,025


249


1.11%


84,545


242


1.15%

Federal funds purchased


2


-


0.00%


-


-


0.00%


4


-


0.00%


-


-


0.00%


-


-


0.00%

Short-term FHLB advances


-


-


0.00%


22,802


23


0.40%


25,000


19


0.30%


31,196


16


0.20%


30,604


13


0.17%

Long-term FHLB advances


25,687


91


1.40%


25,794


90


1.38%


25,900


92


1.39%


26,007


93


1.40%


26,114


90


1.36%

Junior subordinated debentures


22,167


170


3.03%


22,167


167


2.98%


22,167


162


2.86%


22,167


150


2.65%


22,167


151


2.69%

Total interest bearing liabilities


1,309,722


1,397


0.43%


1,337,100


1,420


0.43%


1,314,415


1,349


0.41%


1,318,585


1,391


0.42%


1,344,811


1,417


0.42%

Non-interest bearing liabilities


394,170






378,205






408,748






416,144






419,651





Shareholders' equity


217,112






216,599






215,072






214,623






212,112





Total liabilities and  shareholders'































equity


$  1,921,004






$  1,931,904






$  1,938,235






$  1,949,352






$  1,976,574




































Net interest income (TE) and spread


$     18,212


4.06%




$     18,625


4.14%




$    18,806


4.11%




$    19,423


4.23%




$    19,676


4.27%
































Net interest margin




4.17%






4.24%






4.22%






4.34%






4.38%
































Core net interest margin (Non-GAAP)(*)






4.08%






4.11%






4.09%






4.17%






4.21%































































(*) See reconciliation of Non-GAAP financial measures on page 8-10.

 












MIDSOUTH BANCORP, INC. and SUBSIDIARIES             

Reconciliation of Non-GAAP Financial Measures (unaudited)

(in thousands except per share data)    












     Certain financial information included in the earnings release and the associated Condensed Consolidated Financial Information (unaudited) is determined by methods other than in accordance with GAAP.  We are providing disclosure of the reconciliation of these non-GAAP financial measures to the most comparable GAAP financial measures.  "Tangible common equity" is defined as total common equity reduced by intangible assets.  "Core net interest margin" is defined as reported net interest margin less purchase accounting adjustments.  "Annualized return on average assets, operating" is defined as net earnings available to common shareholders adjusted for specified one-time items divided by average assets.  "Annualized return on average common equity, operating" is defined as net earnings available to common shareholders adjusted for specified one-time items divided by average common equity.  "Annualized return on average tangible common equity, operating" is defined as net earnings available to common shareholders adjusted for specified one-time items divided by average tangible common equity.  "Pre-tax, pre-provision annualized return on average assets, operating" is defined as pre-tax, pre-provision earnings adjusted for specified one-time items divided by average assets.  "Tangible book value per common share" is defined as tangible common equity divided by total common shares outstanding.  "Diluted earnings per share, operating" is defined as net earnings available to common shareholders adjusted for specified one-time items divided by diluted weighted-average shares.  The GAAP-based efficiency ratio is measured as noninterest expense as a percentage of net interest income plus noninterest income.  The non-GAAP efficiency ratio excludes specified one-time items in addition to securities gains and losses and gains and losses on the sale/valuation of other real estate owned and other assets repossessed.


     We use non-GAAP measures because we believe they are useful for evaluating our financial condition and performance over periods of time, as well as in managing and evaluating our business and in discussions about our performance.  We also believe these non-GAAP financial measures provide users of our financial information with a meaningful measure for assessing our financial condition as well as comparison to financial results for prior periods.  These results should not be viewed as a substitute for results determined in accordance with GAAP, and are not necessarily comparable to non-GAAP performance measures that other companies may use.

























Three Months Ended



June 30,


March 31,


December 31,


September 30,


June 30,



2016


2016


2015


2015


2015

AVERAGE BALANCE SHEET DATA






















Total average assets

A

$   1,921,004


$   1,931,904


$   1,938,235


$   1,949,352


$   1,976,574












Total equity


$      217,112


$      216,599


$      215,072


$      214,623


$      212,112

Less preferred equity


41,118


41,120


41,122


41,157


41,226

Total common equity

B

$      175,994


$      175,479


$      173,950


$      173,466


$      170,886

Less intangible assets


47,478


47,757


48,031


48,310


48,587

Tangible common equity

C

$      128,516


$      127,722


$      125,919


$      125,156


$      122,299

 












MIDSOUTH BANCORP, INC. and SUBSIDIARIES             

Reconciliation of Non-GAAP Financial Measures (unaudited) (continued)

(in thousands except per share data)    














Three Months Ended



June 30,


March 31,


December 31,


September 30,


June 30,

CORE NET INTEREST MARGIN


2016


2016


2015


2015


2015












Net interest income (FTE)


$        18,212


$        18,625


$        18,806


$        19,423


$        19,676

Less purchase accounting adjustments


(341)


(565)


(510)


(689)


(678)

Core net interest income, net of purchase accounting adjustments

D

$        17,871


$        18,060


$        18,296


$        18,734


$        18,998












Total average earnings assets


$   1,757,467


$   1,765,639


$   1,769,222


$   1,776,649


$   1,803,295

Add average balance of loan valuation discount


2,931


3,323


3,712


4,269


4,888

Average earnings assets, excluding loan valuation discount

E

$   1,760,398


$   1,768,962


$   1,772,934


$   1,780,918


$   1,808,183












Core net interest margin

D/E

4.08%


4.11%


4.09%


4.17%


4.21%














Three Months Ended



June 30,


March 31,


December 31,


September 30,


June 30,

RETURN RATIOS


2016


2016


2015


2015


2015












Net earnings available to common shareholders


$          1,682


$          1,922


$          1,667


$          2,417


$          4,927

Net gain on sale of securities, after-tax


(13)


-


-


-


(733)

Income from death benefit on bank owned life insurance


-


-


-


-


(160)

   Net earnings available to common shareholders, operating

F

$          1,669


$          1,922


$          1,667


$          2,417


$          4,034












Earnings before income taxes


$          3,523


$          3,312


$          2,604


$          3,617


$          7,442

Net gain on sale of securities


(20)


-


-


-


(1,128)

Income from death benefit on bank owned life insurance


-


-


-


-


(160)

Provision for loan losses


2,300


2,800


3,000


3,800


1,100

   Pre-tax, pre-provision earnings, operating

G

$          5,803


$          6,112


$          5,604


$          7,417


$          7,254












Annualized return on average assets, operating

F/A

0.35%


0.40%


0.34%


0.49%


0.82%

Annualized return on average common equity, operating

F/B

3.81%


4.41%


3.80%


5.53%


9.47%

Annualized return on average tangible common equity, operating

F/C

5.22%


6.05%


5.25%


7.66%


13.23%

Pre-tax, pre-provision annualized return on average assets, operating

G/A

1.21%


1.27%


1.15%


1.51%


1.47%

 












MIDSOUTH BANCORP, INC. and SUBSIDIARIES             

Reconciliation of Non-GAAP Financial Measures (unaudited) (continued)

(in thousands except per share data)    














Three Months Ended



June 30,


March 31,


December 31,


September 30,


June 30,

PER COMMON SHARE DATA


2016


2016


2015


2015


2015












Book value per common share


$            15.56


$          15.38


$          15.14


$         15.21


$        15.04

Effect of intangible assets per share


4.16


4.19


4.22


4.24


4.26

Tangible book value per common share


$            11.40


$          11.19


$          10.92


$         10.97


$        10.78












Diluted earnings per share


$              0.15


$            0.17


$            0.15


$           0.21


$          0.42

Effect of net gain on sale of securities, after-tax


-


-


-


-


(0.06)

Effect of income from death benefit on bank owned life insurance


-


-


-


-


(0.01)

Diluted earnings per share, operating


$              0.15


$            0.17


$            0.15


$           0.21


$          0.35














Three Months Ended



June 30,


March 31,


December 31,


September 30,


June 30,

EFFICIENCY RATIO


2016


2016


2015


2015


2015












Net interest income


$          17,991


$        18,384


$        18,537


$       19,141


$      19,381












Noninterest income


4,873


4,487


4,575


4,768


6,137

Income from death benefit on bank owned life insurance


-


-


-


-


(160)

Net gain on sale of securities


(20)


-


-


-


(1,128)

   Noninterest income (non-GAAP)


$            4,853


$          4,487


$          4,575


$         4,768


$        4,849












Total revenue

H

$          22,864


$        22,871


$        23,112


$       23,909


$      25,518

Total revenue (non-GAAP)

I

$          22,844


$        22,871


$        23,112


$       23,909


$      24,230












Noninterest expense

J

$          17,041


$        16,759


$        17,508


$       16,492


$      16,976

Net (loss) gain on sale/valuation of other real estate owned


(24)


-


(14)


(79)


(41)

   Noninterest expense (non-GAAP)

K

$          17,017


$        16,759


$        17,494


$       16,413


$      16,935












Efficiency ratio (GAAP)

J/H

74.53%


73.28%


75.75%


68.98%


66.53%












Efficiency ratio (non-GAAP)

K/I

74.49%


73.28%


75.69%


68.65%


69.89%

 

Logo - http://photos.prnewswire.com/prnh/20100125/MIDSOUTHLOGO

 

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/midsouth-bancorp-inc-reports-second-quarter-2016-results-and-declares-quarterly-dividends-300305038.html

SOURCE MidSouth Bancorp, Inc.


Source: PR Newswire (July 27, 2016 - 4:15 PM EDT)

News by QuoteMedia
www.quotemedia.com

Legal Notice