MIDSOUTH BANCORP INC - FORM 8-K - EX-99.1 - PRESS RELEASE - JANUARY 31, 2017

Attached files

file	filename
8-K - MIDSOUTH BANCORP FORM 8-K - MIDSOUTH BANCORP INC	form8-kxapril272017.htm
EX-99.2 - 1Q17 SUPPLEMENTAL MATERIALS - MIDSOUTH BANCORP INC	a1q17earningsreleaseener.htm

Investor Contacts: Jim McLemore, CFA

President & CEO

337.237.8343

MidSouth Bancorp, Inc. Reports First Quarter 2017 Results

and Declares Quarterly Dividends

Quarterly Highlights


•	Diluted EPS $0.15 versus $0.17 for 1Q2016 and $0.12 for 4Q2016


•	Total energy loans declined $5.6 million to 18.2% of loans at period end


•	Loan loss reserve to total loans increased to 1.93% with $2.8 million provision


•	Direct C&I energy exposure 15.2% of loans with 6.5% reserve at period end


•	All regulatory capital ratios improved during the first quarter

LAFAYETTE, LA., April 27, 2017/PRNewswire-FirstCall/ -- MidSouth Bancorp, Inc. (“MidSouth”) (NYSE:MSL) today reported quarterly net earnings available to common shareholders of $1.7 million for the first quarter of 2017, compared to net earnings available to common shareholders of $1.9 million reported for the first quarter of 2016 and $1.4 million in net earnings available to common shareholders for the fourth quarter of 2016. Diluted earnings for the first quarter of 2017 were $0.15 per common share, compared to $0.17 per common share reported for the first quarter of 2016 and $0.12 per common share reported for the fourth quarter of 2016.

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.

Other comments on the Bank's energy lending:


•	Total energy loans, as defined above, decreased $5.6 million during 1Q17 to $231.8 million, or 18.2% of total loans, from 18.5% at December 31, 2016.


•	Direct C&I energy loans were $193.1 million or 15.2% of total loans and had a weighted average maturity of 3.2 years at March 31, 2017.


•	Energy-related CRE and residential real estate loans were $38.3 million or 3.0% of total loans at March 31, 2017.


•	Total criticized energy-related loans decreased $7.7 million, or 6.5%, during 1Q17 to $111.5 million and represented 48.1% of energy loans at March 31, 2017, versus 50.2% at December 31, 2016.


•	Seven energy loan relationships had rating changes during the quarter.


◦	One loan relationship totaling $108,000 was downgraded to Special Mention


◦	Five loan relationships totaling $23.4 million were downgraded to Substandard


◦	One loan relationship totaling $438,000 was upgraded to Pass


•	Three energy-related charge-offs totaled $657,000.


•	Cycle to date net charge-offs totaled $4.1 million, or 1.56% of December 31, 2014 energy loans, which was when the effects of declining oil prices began to surface.


•	Two new energy-related impairments totaling $177,000 were identified during 1Q17 and one additional impairment charge of $272,000 was recorded related to an existing impaired loan identified prior to 1Q17.


•	The energy reserve as a percentage of total energy loans, as defined, was 5.5% at March 31, 2017. The reserve attributable to C&I energy loans was approximately 6.5%. The reserve on all other energy loans was 1.0%.


•	The Bank has two Shared National Credits (SNCs) totaling $14.2 million in the energy portfolio at March 31, 2017 and both are rated as Substandard.

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

Balance Sheet

Consolidated assets remained constant at $1.9 billion for the quarters ended March 31, 2017 and 2016 and December 31, 2016. Our stable core deposit base, which excludes time deposits, totaled $1.4 billion at March 31, 2017 and December 31, 2016 and accounted for 90.4% and 90.0% of deposits at March 31, 2017 and December 31, 2016, respectively. Net loans totaled $1.247 billion at March 31, 2017 and 2016, compared to $1.260 billion at December 31, 2016.

MidSouth’s Tier 1 leverage capital ratio was 10.27% at March 31, 2017, compared to 10.11% at December 31, 2016. Tier 1 risk-based capital and total risk-based capital ratios were 13.14% and 14.40% at March 31, 2017, compared to 13.02% and 14.28% at December 31, 2016, respectively. Tier 1 common equity to total risk-weighted assets at March 31, 2017 was 8.91%, compared to 8.81% at December 31, 2016. Tangible common equity totaled $128.4 million at March 31, 2017, compared to $126.5 million at December 31, 2016. Tangible book value per share at March 31, 2017 was $11.28 versus $11.13 at December 31, 2016.

Asset Quality

Nonperforming assets totaled $58.9 million at March 31, 2017, a decrease of $6.1 million compared to $65.0 million reported at December 31, 2016. The decrease is primarily attributable to the payoff of four relationships during the quarter that were on non-accrual at December 31, 2016 and totaled $9.6 million. Allowance coverage for nonperforming loans increased to 42.96% at March 31, 2017, compared to 38.78% at December 31, 2016. The ALLL/total loans ratio was 1.93% at March 31, 2017 and 1.90% at December 31, 2016. Including valuation accounting adjustments on acquired loans, the total valuation accounting adjustment plus ALLL was 2.08% of loans at March 31, 2017. The ratio of annualized net charge-offs to total loans increased to 0.83% for the three months ended March 31, 2017 compared to 0.46% for the three

months ended December 31, 2016, with $1.7 million, or 67.4% of first quarter net charge-offs attributable to loans reserved for in previous quarters.

Total nonperforming assets to total loans plus ORE and other assets repossessed was 4.62% at March 31, 2017 compared to 5.06% at December 31, 2016. Loans classified as troubled debt restructurings, accruing (“TDRs, accruing”) increased to $2.0 million at March 31, 2017 compared to $152,000 at December 31, 2016. Classified assets, including ORE, increased $14.2 million, or 10.6%, to $148.4 million at March 31, 2017 compared to $134.2 million at December 31, 2016. The increase in classified assets during the quarter ended March 31, 2017 is primarily due to the downgrade of two energy-related credits totaling $22.2 million. These increases to classified assets were partially offset by the payoff/paydown of $6.2 million of energy-related classified relationships during the first quarter as well as the payoff of $4.7 million of classified relationships not related to energy.

First Quarter 2017 vs. Fourth Quarter 2016 Earnings Comparison

In sequential-quarter comparison, net earnings available to common shareholders increased $293,000, from $1.4 million for the three months ended December 31, 2016 to $1.7 million for the three months ended March 31, 2017. Net interest income decreased $169,000 in sequential-quarter comparison. Noninterest income decreased $27,000 in sequential-quarter comparison.

Noninterest expense decreased $406,000 in sequential-quarter comparison and consisted primarily of decreases of $107,000 in occupancy expense, $108,000 in ATM and debit card expense, $135,000 in legal and professional fees and $107,000 in corporate development. These decreased costs were partially offset by a $121,000 increase in data processing costs. A reclass of certain hosted services subscriptions from corporate development into data processing at the beginning of 2017 caused the fluctuations in those two expense categories. The provision for loan losses increased $200,000 in sequential-quarter comparison. Income tax expense decreased $282,000.

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 first quarter of 2017 based on a dividend rate of 9%, unchanged from $720,000 for the fourth quarter of 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 March 31, 2017 and $92,000 for the three months ended December 31, 2016.

Fully taxable-equivalent (“FTE”) net interest income decreased $199,000 in sequential-quarter comparison. Interest income on loans decreased $437,000. The average yield on loans decreased 2 basis points, from 5.31% to 5.29%, and the average balance of loans decreased $3.3 million in sequential-quarter comparison. Excluding purchase accounting adjustments, the loan yield increased 3 basis points, from 5.19% to 5.22% during the same period. Interest income on investment securities increased $277,000 in sequential-quarter comparison. The average yield on investment securities increased 9 basis points, and the average balance of investment securities increased $27.5 million. The average yield on total earning assets increased 10 basis points for the same period, from 4.41% to 4.51%, respectively. As a result of these changes in volume and yield on earning assets, the FTE net interest margin increased 9 basis points, from 4.09% to

4.18%. Excluding purchase accounting adjustments, the FTE net interest margin, after reflecting a reclassification of certain credit card income to noninterest income, increased 13 basis points, from 3.98% for the fourth quarter of 2016 to 4.11% for the first quarter of 2017.

First Quarter 2017 vs. First Quarter 2016 Earnings Comparison

First quarter 2017 net earnings available to common shareholders totaled $1.7 million compared to $1.9 million for the first quarter of 2016. Revenues from consolidated operations increased $239,000 in quarterly comparison, from $22.9 million for the three months ended March 31, 2016 to $23.1 million for the three months ended March 31, 2017. Net interest income decreased $61,000 in quarterly comparison, resulting from a $16,000 decrease in interest income and a $45,000 increase in interest expense. Noninterest income increased $300,000 in quarterly comparison and consisted primarily of a $94,000 increase in ATM/debit card income and a $111,000 increase in service charges on deposits accounts.

Noninterest expenses increased $471,000 in quarterly comparison and consisted primarily of a $699,000 increase in salaries and employee benefits costs and a $163,000 increase in data processing costs, which were partially offset by a $101,000 decrease in marketing expense. The $699,000 increase in salaries and benefits costs included a $262,000 increase in group health costs, a $135,000 increase in incentive pay and $81,000 of sign-on bonuses. The provision for loan losses remained unchanged at $2.8 million in quarterly comparison. Income tax expense decreased $374,000 in quarterly comparison.

Dividends on preferred stock totaled $811,000 for the three months ended March 31, 2017 and $427,000 for the three months ended March 31, 2016. Dividends on the Series B Preferred Stock were $720,000 for the first quarter of 2017 and totaled $336,000 for the first quarter of 2016 based on a dividend rate of 4.2%. 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 March 31, 2017 and March 31, 2016.

FTE net interest income, after reflecting a reclassification of certain credit card income to noninterest income, decreased $89,000 in prior year quarterly comparison. Interest income on loans decreased $244,000 due to a decrease in the average yield on loans of 12 basis points. The average balance of loans increased $21.5 million in prior year quarterly comparison. Purchase accounting adjustments added 7 basis points to the average yield on loans for the first quarter of 2017 and 25 basis points to the average yield on loans for the first quarter of 2016. Excluding the impact of the purchase accounting adjustments, average loan yields decreased 3 basis points in prior year quarterly comparison, from 5.25% to 5.22%.

Investment securities totaled $449.0 million, or 23.2% of total assets at March 31, 2017, versus $440.1 million, or 22.6% of total assets at December 31, 2016. The investment portfolio had an effective duration of 4.1 years and a net unrealized loss of $1.2 million at March 31, 2017. The average volume of investment securities increased $19.1 million in prior year quarterly comparison. The average tax equivalent yield on investment securities increased 8 basis points, from 2.58% to 2.66%.

The average yield on all earning assets remained unchanged in prior year quarterly comparison at 4.51%. Excluding the impact of purchase accounting adjustments, the average yield on total earning assets increased 8 basis points, from 4.39% to 4.47% for the three-month periods ended March 31, 2016 and 2017, respectively.

Interest expense increased $45,000 in prior year quarterly comparison. Increases in interest expense included a $28,000 increase in interest expense on deposits and a $41,000 increase in interest expense on variable rate junior subordinated debentures. These increases were partially offset by a $23,000 decrease in interest expense on short-term FHLB advances. Excluding purchase accounting adjustments on acquired certificates of deposit and FHLB borrowings, the average rate paid on interest-bearing liabilities was 0.49% for the three months ended March 31, 2017 and 0.46% for the three months ended March 31, 2016.

As a result of these changes in volume and yield on earning assets and interest-bearing liabilities, the FTE net interest margin remained unchanged in prior year quarterly comparison at 4.18%. Excluding purchase accounting adjustments on loans, deposits and FHLB borrowings, the FTE margin increased 6 basis points, from 4.05% for the first quarter of 2016 to 4.11% for the first quarter of 2017.

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 July 3, 2017 to shareholders of record as of the close of business on June 15, 2017. 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 July 17, 2017 to shareholders of record as of the close of business on July 3, 2017.

Leadership Transition

MidSouth also announced today in a separate press release changes to its executive management team, including the termination of employment of C.R. "Rusty" Cloutier as MidSouth's President and CEO and Troy M. Cloutier as MidSouth Bank's President and CEO and the appointment of James R. McLemore as interim President and CEO for MidSouth and MidSouth Bank, effective immediately.

About MidSouth Bancorp, Inc.

MidSouth Bancorp, Inc. is a financial holding company headquartered in Lafayette, Louisiana, with assets of $1.9 billion as of March 31, 2017. 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 performance of new hires, performance in non-energy related lending, 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, 2016 filed with the SEC on March 16, 2017 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	3/31/2017			12/31/2016			9/30/2016			6/30/2016			3/31/2016
Total interest income	$	19,531		$	19,694		$	19,667		$	19,122		$	19,547
Total interest expense	1,465			1,459			1,414			1,397			1,420
Net interest income	18,066			18,235			18,253			17,725			18,127
FTE net interest income	18,279			18,478			18,472			17,946			18,368
Provision for loan losses	2,800			2,600			2,900			2,300			2,800
Non-interest income	5,044			5,071			5,152			5,139			4,744
Non-interest expense	17,230			17,636			17,114			17,041			16,759
Earnings before income taxes	3,080			3,070			3,391			3,523			3,312
Income tax expense	589			871			993			1,030			963
Net earnings	2,491			2,199			2,398			2,493			2,349
Dividends on preferred stock	811			812			811			811			427
Net earnings available to common shareholders	$	1,680		$	1,387		$	1,587		$	1,682		$	1,922

PER COMMON SHARE DATA
Basic earnings per share	0.15			0.12			0.14			0.15			0.17
Diluted earnings per share	0.15			0.12			0.14			0.15			0.17
Quarterly dividends per share	0.09			0.09			0.09			0.09			0.09
Book value at end of period	15.37			15.25			15.58			15.56			15.38
Tangible book value at period end (Non-GAAP)(*)	11.28			11.13			11.44			11.40			11.19
Market price at end of period	15.30			13.60			10.40			10.04			7.63
Shares outstanding at period end	11,383,914			11,362,716			11,362,716			11,362,705			11,362,150
Weighted average shares outstanding
Basic	11,264,394			11,271,948			11,262,282			11,255,042			11,261,644
Diluted	11,282,491			11,273,302			11,262,710			11,255,178			11,261,644

AVERAGE BALANCE SHEET DATA
Total assets	$	1,932,818		$	1,960,436		$	1,927,351		$	1,921,004		$	1,931,904
Loans and leases	1,274,213			1,277,555			1,268,270			1,256,133			1,252,742
Total deposits	1,569,188			1,591,814			1,562,193			1,562,680			1,552,217
Total common equity	174,785			176,747			177,866			175,994			175,479
Total tangible common equity (Non-GAAP)(*)	128,124			129,821			130,662			128,516			127,722
Total equity	215,895			217,857			218,976			217,112			216,599

SELECTED RATIOS
Annualized return on average assets, operating (Non-GAAP)(*)	0.35		%	0.28		%	0.33		%	0.35		%	0.40		%
Annualized return on average common equity, operating (Non-GAAP)(*)	3.89		%	3.12		%	3.55		%	3.81		%	4.41		%
Annualized return on average tangible common equity, operating (Non-GAAP)(*)	5.31		%	4.25		%	4.83		%	5.22		%	6.05		%
Pre-tax, pre-provision annualized return on average assets, operating (Non-GAAP)(*)	1.23		%	1.15		%	1.30		%	1.21		%	1.27		%
Efficiency ratio, operating (Non-GAAP)(*)	74.51		%	75.67		%	73.04		%	74.49		%	73.28		%
Average loans to average deposits	81.20		%	80.26		%	81.19		%	80.38		%	80.71		%
Taxable-equivalent net interest margin	4.18		%	4.09		%	4.17		%	4.11		%	4.18		%
Tier 1 leverage capital ratio	10.27		%	10.11		%	10.27		%	10.25		%	10.17		%

CREDIT QUALITY
Allowance for loan and lease losses (ALLL) as a % of total loans	1.93		%	1.90		%	1.83		%	1.69		%	1.63		%
Nonperforming assets to tangible equity + ALLL	30.34		%	33.88		%	32.98		%	32.77		%	30.83		%
Nonperforming assets to total loans, other real estate owned and other repossessed assets	4.62		%	5.06		%	5.03		%	4.97		%	4.64		%
Annualized QTD net charge-offs to total loans	0.83		%	0.46		%	0.32		%	0.40		%	0.47		%

(*) See reconciliation of Non-GAAP financial measures on pages 14-16.



MIDSOUTH BANCORP, INC. and SUBSIDIARIES
Condensed Consolidated Balance Sheets (unaudited)
(in thousands)


BALANCE SHEET	March 31,			December 31,			September 30,			June 30,			March 31,
	2017			2016			2016			2016			2016
Assets
Cash and cash equivalents	$	78,471		$	82,228		$	126,667		$	98,535		$	112,410
Securities available-for-sale	357,803			341,873			316,145			318,239			302,151
Securities held-to-maturity	91,242			98,211			103,412			109,420			113,623
Total investment securities	449,045			440,084			419,557			427,659			415,774
Other investments	11,362			11,355			11,339			11,036			11,195
Total loans	1,272,000			1,284,082			1,272,800			1,262,389			1,250,049
Allowance for loan losses	(24,578		)	(24,372		)	(23,268		)	(21,378		)	(20,347		)
Loans, net	1,247,422			1,259,710			1,249,532			1,241,011			1,229,702
Premises and equipment	68,216			68,954			69,778			68,468			68,482
Goodwill and other intangibles	46,516			46,792			47,069			47,346			47,622
Other assets	33,907			34,217			29,978			28,469			31,366
Total assets	$	1,934,939		$	1,943,340		$	1,953,920		$	1,922,524		$	1,916,551


Liabilities and Shareholders' Equity
Non-interest bearing deposits	$	426,998		$	414,921		$	403,301		$	383,797		$	383,684
Interest-bearing deposits	1,145,946			1,164,509			1,181,906			1,176,269			1,174,519
Total deposits	1,572,944			1,579,430			1,585,207			1,560,066			1,558,203
Securities sold under agreements to repurchase	89,807			94,461			95,210			85,786			87,879
Long-term FHLB advances	25,318			25,424			25,531			25,638			25,744
Junior subordinated debentures	22,167			22,167			22,167			22,167			22,167
Other liabilities	8,641			7,482			7,679			10,926			6,704
Total liabilities	1,718,877			1,728,964			1,735,794			1,704,583			1,700,697
Total shareholders' equity	216,062			214,376			218,126			217,941			215,854
Total liabilities and shareholders' equity	$	1,934,939		$	1,943,340		$	1,953,920		$	1,922,524		$	1,916,551



MIDSOUTH BANCORP, INC. and SUBSIDIARIES
Condensed Consolidated Income Statements (unaudited)
(in thousands except per share data)

										Percent Change
EARNINGS STATEMENT	Three Months Ended									1Q17 vs. 4Q16		1Q17 vs. 1Q16
	3/31/2017			12/31/2016			3/31/2016			1Q17 vs. 4Q16		1Q17 vs. 1Q16

Interest income:
Loans, including fees	$	16,437		$	16,697		$	16,404		(1.6	)%	0.2	%
Investment securities	2,734			2,427			2,494			12.6	%	9.6	%
Accretion of purchase accounting adjustments	185			362			462			(48.9	)%	(60.0	)%
Other interest income	175			208			187			(15.9	)%	(6.4	)%
Total interest income	19,531			19,694			19,547			(0.8	)%	(0.1	)%

Interest expense:
Deposits	935			936			920			(0.1	)%	1.6	%
Borrowings	411			422			436			(2.6	)%	(5.7	)%
Junior subordinated debentures	208			197			167			5.6	%	24.6	%
Accretion of purchase accounting adjustments	(89		)	(96		)	(103		)	(7.3	)%	(13.6	)%
Total interest expense	1,465			1,459			1,420			0.4	%	3.2	%

Net interest income	18,066			18,235			18,127			(0.9	)%	(0.3	)%
Provision for loan losses	2,800			2,600			2,800			7.7	%	—	%
Net interest income after provision for loan losses	15,266			15,635			15,327			(2.4	)%	(0.4	)%

Noninterest income:
Service charges on deposit accounts	2,480			2,479			2,369			—	%	4.7	%
ATM and debit card income	1,703			1,682			1,609			1.2	%	5.8	%
Gain on securities, net (non-operating)(*)	6			—			—			-		-
Mortgage lending	143			164			109			(12.8	)%	31.2	%
Other charges and fees	712			746			657			(4.6	)%	8.4	%
Total non-interest income	5,044			5,071			4,744			(0.5	)%	6.3	%

Noninterest expense:
Salaries and employee benefits	8,689			8,726			7,990			(0.4	)%	8.7	%
Occupancy expense	3,624			3,731			3,597			(2.9	)%	0.8	%
ATM and debit card	721			829			785			(13.0	)%	(8.2	)%
Legal and professional fees	385			520			383			(26.0	)%	0.5	%
FDIC premiums	397			387			429			2.6	%	(7.5	)%
Marketing	280			349			381			(19.8	)%	(26.5	)%
Corporate development	316			423			335			(25.3	)%	(5.7	)%
Data processing	621			500			458			24.2	%	35.6	%
Printing and supplies	183			158			188			15.8	%	(2.7	)%
Expenses on ORE, net	79			59			194			33.9	%	(59.3	)%
Amortization of core deposit intangibles	277			277			277			—	%	—	%
Other non-interest expense	1,658			1,677			1,742			(1.1	)%	(4.8	)%
Total non-interest expense	17,230			17,636			16,759			(2.3	)%	2.8	%
Earnings before income taxes	3,080			3,070			3,312			0.3	%	(7.0	)%
Income tax expense	589			871			963			(32.4	)%	(38.8	)%
Net earnings	2,491			2,199			2,349			13.3	%	6.0	%
Dividends on preferred stock	811			812			427			(0.1	)%	89.9	%
Net earnings available to common shareholders	$	1,680		$	1,387		$	1,922		21.1	%	(12.6	)%

Earnings per common share, diluted	$	0.15		$	0.12		$	0.17		25.0	%	(11.8	)%

Operating earnings per common share, diluted (Non-GAAP)(*)	$	0.15		$	0.12		$	0.17		25.0	%	(11.8	)%

(*) See reconciliation of Non-GAAP financial measures on pages 14-16.

Note: Prior period information presented above has been adjusted to reflect a reclass of certain credit card income from interest income to other non-interest income as well as certain wire fee income from other non-interest income into service charges on deposit accounts.



MIDSOUTH BANCORP, INC. and SUBSIDIARIES
Composition of Loans and Deposits and Asset Quality Data (unaudited)
(in thousands)

COMPOSITION OF LOANS	March 31,			December 31,			Mar 17 vs Dec 16		September 30,			June 30,			March 31,			Mar 17 vs Mar 16
COMPOSITION OF LOANS	2017			2016			% Change		2016			2016			2016			% Change
Commercial, financial, and agricultural	$	469,815		$	459,574		2.2	%	$	463,031		$	456,264		$	441,160		6.5	%
Lease financing receivable	969			1,095			(11.5	)%	1,449			1,641			1,590			(39.1	)%
Real estate - construction	100,248			100,959			(0.7	)%	96,365			96,331			84,790			18.2	%
Real estate - commercial	464,859			481,155			(3.4	)%	464,853			463,142			467,648			(0.6	)%
Real estate - residential	159,426			157,872			1.0	%	155,653			148,379			149,961			6.3	%
Installment loans to individuals	75,258			82,660			(9.0	)%	88,537			94,522			103,181			(27.1	)%
Other	1,425			767			85.8	%	2,912			2,110			1,719			(17.1	)%

Total loans	$	1,272,000		$	1,284,082		(0.9	)%	$	1,272,800		$	1,262,389		$	1,250,049		1.8	%

COMPOSITION OF DEPOSITS
COMPOSITION OF DEPOSITS	December 31,			December 31,			Mar 17 vs Dec 16		September 30,			June 30,			March 31,			Mar 17 vs Mar 16
	2017			2016			% Change		2016			2016			2016			% Change
Noninterest bearing	$	426,998		$	414,921		2.9	%	$	403,301		$	383,798		$	383,684		11.3	%
NOW & other	489,789			472,484			3.7	%	465,850			467,987			472,309			3.7	%
Money market/savings	505,669			539,815			(6.3	)%	557,068			544,256			534,854			(5.5	)%
Time deposits of less than $100,000	75,579			75,940			(0.5	)%	78,785			80,158			80,802			(6.5	)%
Time deposits of $100,000 or more	74,909			76,270			(1.8	)%	80,203			83,867			86,554			(13.5	)%

Total deposits	$	1,572,944		$	1,579,430		(0.4	)%	$	1,585,207		$	1,560,066		$	1,558,203		0.9	%

ASSET QUALITY DATA
ASSET QUALITY DATA	December 31,			December 31,					September 30,			June 30,			March 31,
	2017			2016					2016			2016			2016
Nonaccrual loans	$	56,443		$	62,580				$	60,522		$	59,865		$	53,714
Loans past due 90 days and over	775			268					968			56			258
Total nonperforming loans	57,218			62,848					61,490			59,921			53,972
Other real estate	1,643			2,175					2,317			2,735			3,908
Other repossessed assets	30			16					283			263			265
Total nonperforming assets	$	58,891		$	65,039				$	64,090		$	62,919		$	58,145

Troubled debt restructurings, accruing	$	1,995		$	152				$	153		$	154		$	5,675

Nonperforming assets to total assets	3.04		%	3.35		%			3.28		%	3.27		%	3.03		%
Nonperforming assets to total loans + ORE + other repossessed assets	4.62		%	5.06		%			5.03		%	4.97		%	4.64		%
ALLL to nonperforming loans	42.96		%	38.78		%			37.84		%	35.68		%	37.70		%
ALLL to total loans	1.93		%	1.90		%			1.83		%	1.69		%	1.63		%

Quarter-to-date charge-offs	$	2,906		$	1,835				$	1,161		$	1,425		$	1,594
Quarter-to-date recoveries	312			339					151			156			130
Quarter-to-date net charge-offs	$	2,594		$	1,496				$	1,010		$	1,269		$	1,464
Annualized QTD net charge-offs to total loans	0.83		%	0.46		%			0.32		%	0.40		%	0.47		%



MIDSOUTH BANCORP, INC. and SUBSIDIARIES
Loan Portfolio - Quarterly Roll Forward (unaudited)
(in thousands except per share data)

	Three Months Ended
	March 31,			December 31,			March 31,
	2017			2016			2016
LOAN ACTIVITY

Loans originated	$	63,141		$	91,332		$	74,797
Repayments	(72,179		)	(64,528		)	(60,252		)
Increases on renewals	3,940			5,259			2,307
Change in lines of credit	(4,798		)	(19,990		)	(30,920		)
Change in allowance for loan losses	(206		)	(1,104		)	(1,336		)
Other	(2,186		)	(791		)	473
Net change in loans	$	(12,288	)	$	10,178		$	(14,931	)



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	March 31, 2017			March 31, 2016

Total equity	$	216,062		$	215,854
Less preferred equity	41,110			41,120
Total common equity	174,952			174,734
Less goodwill	42,171			42,171
Less intangibles	4,345			5,451
Tangible common equity	$	128,436		$	127,112

Total assets	$	1,934,939		$	1,916,551
Less goodwill	42,171			42,171
Less intangibles	4,345			5,451
Tangible assets	$	1,888,423		$	1,868,929

Tangible common equity to tangible assets	6.80		%	6.80		%

REGULATORY CAPITAL

Common equity tier 1 capital	$	131,660		$	128,483
Tier 1 capital	194,269			191,770
Total capital	212,820			209,848

Regulatory capital ratios:
Common equity tier 1 capital ratio	8.91		%	8.90		%
Tier 1 risk-based capital ratio	13.14		%	13.28		%
Total risk-based capital ratio	14.40		%	14.53		%
Tier 1 leverage ratio	10.27		%	10.17		%



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
	March 31, 2017						December 31, 2016						September 30, 2016						June 30, 2016						March 31, 2016

			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	$	382,105	$	2,327	2.44	%	$	348,673	$	1,965	2.25	%	$	354,770	$	1,983	2.24	%	$	349,433	$	1,940	2.22	%	$	358,623	$	2,036	2.27	%
Tax-exempt securities	60,618		620		4.09	%	66,549		705		4.24	%	60,544		635		4.20	%	60,972		641		4.21	%	64,971		699		4.30	%
Total investment securities	442,723		2,947		2.66	%	415,222		2,670		2.57	%	415,314		2,618		2.52	%	410,405		2,581		2.52	%	423,594		2,735		2.58	%
Federal funds sold	3,571		6		0.67	%	3,261		5		0.60	%	2,703		3		0.43	%	3,655		3		0.32	%	3,843		5		0.51	%
Time and interest bearing deposits in other banks	41,785		85		0.81	%	90,527		125		0.54	%	64,444		83		0.50	%	76,042		97		0.50	%	74,271		94		0.50	%
Other investments	11,355		84		2.96	%	11,342		78		2.75	%	11,253		95		3.38	%	11,232		90		3.21	%	11,189		88		3.15	%
Loans	1,274,213		16,622		5.29	%	1,277,555		17,059		5.31	%	1,268,270		17,087		5.36	%	1,256,133		16,572		5.31	%	1,252,742		16,866		5.41	%
Total interest earning assets	1,773,647		19,744		4.51	%	1,797,907		19,937		4.41	%	1,761,984		19,886		4.49	%	1,757,467		19,343		4.43	%	1,765,639		19,788		4.51	%
Non-interest earning assets	159,171						162,529						165,367						163,537						166,265
Total assets	$	1,932,818					$	1,960,436					$	1,927,351					$	1,921,004					$	1,931,904

Interest-bearing liabilities:
Deposits	$	1,155,407	$	935	0.33	%	$	1,179,174	$	929	0.31	%	$	1,170,660	$	915	0.31	%	$	1,176,387	$	903	0.31	%	$	1,180,581	$	907	0.31	%
Repurchase agreements	92,571		234		1.03	%	94,609		241		1.01	%	88,560		236		1.06	%	85,479		233		1.10	%	85,756		233		1.09	%
Federal funds purchased	—		—		—	%	—		—		—	%	—		—		—	%	2		—		—	%	—		—		—	%
Short-term FHLB advances	—		—		—	%	—		—		—	%	—		—		—	%	—		—		—	%	22,802		23		0.40	%
Long-term FHLB advances	25,370		88		1.39	%	25,474		92		1.41	%	25,581		93		1.42	%	25,687		91		1.40	%	25,794		90		1.38	%
Junior subordinated debentures	22,167		208		3.75	%	22,167		197		3.48	%	22,167		170		3.00	%	22,167		170		3.03	%	22,167		167		2.98	%
Total interest bearing liabilities	1,295,515		1,465		0.46	%	1,321,424		1,459		0.44	%	1,306,968		1,414		0.43	%	1,309,722		1,397		0.43	%	1,337,100		1,420		0.43	%
Non-interest bearing liabilities	421,408						421,155						401,407						394,170						378,205
Shareholders' equity	215,895						217,857						218,976						217,112						216,599
Total liabilities and shareholders' equity	$	1,932,818					$	1,960,436					$	1,927,351					$	1,921,004					$	1,931,904

Net interest income (TE) and spread			$	18,279	4.05	%			$	18,478	3.97	%			$	18,472	4.06	%			$	17,946	4.00	%			$	18,368	4.08	%

Net interest margin					4.18	%					4.09	%					4.17	%					4.11	%					4.18	%

Core net interest margin (Non-GAAP)(*)					4.11	%					3.98	%					4.05	%					4.02	%					4.05	%


(*) See reconciliation of Non-GAAP financial measures on pages 14-16.

Note: Prior period information presented above has been adjusted to reflect a reclass of certain credit card income from interest income to non-interest income.



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
		March 31,		December 31,		September 30,		June 30,		March 31,
		2017		2016		2016		2016		2016
Average Balance Sheet Data

Total average assets	A	$	1,932,818	$	1,960,436	$	1,927,351	$	1,921,004	$	1,931,904

Total equity		$	215,895	$	217,857	$	218,976	$	217,112	$	216,599
Less preferred equity		41,110		41,110		41,110		41,118		41,120
Total common equity	B	$	174,785	$	176,747	$	177,866	$	175,994	$	175,479
Less intangible assets		46,661		46,926		47,204		47,478		47,757
Tangible common equity	C	$	128,124	$	129,821	$	130,662	$	128,516	$	127,722



MIDSOUTH BANCORP, INC. and SUBSIDIARIES
Reconciliation of Non-GAAP Financial Measures (unaudited) (continued)
(in thousands except per share data)

		Three Months Ended
		March 31,			December 31,			September 30,			June 30,			March 31,
Core Net Interest Margin		2017			2016			2016			2016			2016

Net interest income (TE)		$	18,279		$	18,478		$	18,472		$	17,946		$	18,368
Less purchase accounting adjustments		(274		)	(458		)	(493		)	(341		)	(565		)
Net interest income, excluding purchase accounting adjustments	D	$	18,005		$	18,020		$	17,979		$	17,605		$	17,803

Total average earnings assets		$	1,773,647		$	1,797,907		$	1,761,984		$	1,757,467		$	1,765,639
Add average balance of loan valuation discount		1,964			2,316			2,634			2,931			3,323
Average earnings assets, excluding loan valuation discount	E	$	1,775,611		$	1,800,223		$	1,764,618		$	1,760,398		$	1,768,962

Core net interest margin	D/E	4.11		%	3.98		%	4.05		%	4.02		%	4.05		%

		Three Months Ended
		March 31,			December 31,			September 30,			June 30,			March 31,
Return Ratios		2017			2016			2016			2016			2016

Net earnings available to common shareholders		$	1,680		$	1,387		$	1,587		$	1,682		$	1,922
Gain on sales of securities, after-tax		(4		)	—			—			(13		)	—
Net earnings available to common shareholders, operating	F	$	1,676		$	1,387		$	1,587		$	1,669		$	1,922

Earnings before income taxes		$	3,080		$	3,070		$	3,391		$	3,523		$	3,312
Gain on sales of securities		(6		)	—			—			(20		)	—
Provision for loan losses		2,800			2,600			2,900			2,300			2,800
Pre-tax, pre-provision earnings, operating	G	$	5,874		$	5,670		$	6,291		$	5,803		$	6,112

Annualized return on average assets, operating	F/A	0.35		%	0.28		%	0.33		%	0.35		%	0.40		%
Annualized return on average common equity, operating	F/B	3.89		%	3.12		%	3.55		%	3.81		%	4.41		%
Annualized return on average tangible common equity, operating	F/C	5.31		%	4.25		%	4.83		%	5.22		%	6.05		%
Pre-tax, pre-provision annualized return on average assets, operating	G/A	1.23		%	1.15		%	1.30		%	1.21		%	1.27		%



MIDSOUTH BANCORP, INC. and SUBSIDIARIES
Reconciliation of Non-GAAP Financial Measures (unaudited) (continued)
(in thousands except per share data)

		Three Months Ended
		March 31,			December 31,			September 30,			June 30,			March 31,
Per Common Share Data		2017			2016			2016			2016			2016

Book value per common share		$	15.37		$	15.25		$	15.58		$	15.56		$	15.38
Effect of intangible assets per share		4.09			4.12			4.14			4.16			4.19
Tangible book value per common share		$	11.28		$	11.13		$	11.44		$	11.40		$	11.19


		Three Months Ended
		March 31,			December 31,			September 30,			June 30,			March 31,
Efficiency Ratio		2017			2016			2016			2016			2016

Net interest income		$	18,066		$	18,235		$	18,253		$	17,725		$	18,127

Noninterest income		$	5,044		$	5,071		$	5,152		$	5,139		$	4,744
Net gain on sale of securities		(6		)	—			—			(20		)	—
Noninterest income (non-GAAP)		$	5,038		$	5,071		$	5,152		$	5,119		$	4,744

Total revenue	H	$	23,110		$	23,306		$	23,405		$	22,864		$	22,871
Total revenue (non-GAAP)	I	$	23,104		$	23,306		$	23,405		$	22,844		$	22,871

Noninterest expense	J	$	17,230		$	17,636		$	17,114		$	17,041		$	16,759
Net (loss) gain on sale/valuation of other real estate owned		(15		)	—			(19		)	(24		)	(144		)
Noninterest expense (non-GAAP)	K	$	17,215		$	17,636		$	17,095		$	17,017		$	16,615

Efficiency ratio (GAAP)	J/H	74.56		%	75.67		%	73.12		%	74.53		%	73.28		%

Efficiency ratio (non-GAAP)	K/I	74.51		%	75.67		%	73.04		%	74.49		%	72.65		%

MIDSOUTH BANCORP INC - FORM 8-K - EX-99.1 - PRESS RELEASE - JANUARY 31, 2017 - April 27, 2017

Attached files

MIDSOUTH BANCORP INC Reports