10QSB 1 0001.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10QSB __X___QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended..................... June 30, 2000 ______TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ..... to ..... COMMISSION FILE NUMBER 2-91-000FW MIDSOUTH BANCORP, INC. Louisiana 72 -1020809 102 Versailles Boulevard, Lafayette, Louisiana 70501 (337) 237-8343 Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES __X__ NO _____ State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date. Outstanding as of July 31, 2000 Common stock, $.10 par value 2,515,166 Preferred stock, no par value, $14.25 stated value 141,620 Transitional Small Business Disclosure Format: Yes _______ No X Page 1 Page 2 PART 1 - FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) Page Financial Highlights 3 Statements of Condition - June 30, 2000 and December 31, 1999 4 Statements of Income - Three and Six Months Ended June 30, 2000 and 1999 5 Statement of Stockholders' Equity - Six Months Ended June 30, 2000 6 Statements of Cash Flows - Six Months Ended June 30, 2000 and 1999 7 Notes to Financial Statements 8 Item 2. Management's Discussion and Analysis or Plan of Operation 9 PART II - OTHER INFORMATION Item 4. Submission of Matters to a Vote of Security Holders 16 Item 6. Exhibits and Reports on Form 8-K 17 Signatures 18
MIDSOUTH BANCORP, INC. AND SUBSIDIARIES FINANCIAL HIGHLIGHTS (UNAUDITED) Three Months Ended Six Months Ended June 30, June 30, EARNINGS DATA 2000 1999 2000 1999 _______________________________________________________________ Net interest income $3,631,617 $3,296,977 $7,104,344 $6,319,117 Provision for loan losses 177,391 238,000 394,353 504,950 Non-interest income 1,157,794 979,195 2,195,064 1,888,335 Non-interest expense 3,510,911 3,125,265 7,099,702 6,028,358 Provision for income tax 309,550 245,050 465,526 409,437 Net income 791,559 667,857 1,339,827 1,264,707 Preferred dividend requirement 35,405 32,903 73,464 66,286 Income available to common shareholders $756,154 $634,954 $1,266,363 $1,198,421 ==================================================================================================== PER COMMON SHARE DATA Basic earnings per share $0.30 $0.26 $0.51 $0.49 Diluted earnings per share $0.27 $0.23 $0.45 $0.43 Book value at end of period $6.31 $5.69 $6.31 $5.69 Market price at end of period $8.06 $10.88 $8.06 $10.88 Market price of preferred stock at end of period $25.50 $31.00 $25.50 $31.00 Weighted average shares outstanding Basic 2,500,019 2,450,164 2,485,285 2,444,740 Diluted 2,968,851 2,967,755 2,964,430 2,968,195 ==================================================================================================== AVERAGE BALANCE SHEET DATA Total assets $286,226,612 $280,657,061 $283,262,166 $269,966,798 Earning assets 259,193,740 254,546,089 256,023,672 245,118,332 Loans and leases 177,420,427 158,432,030 174,468,558 156,817,654 Interest-bearing deposits 195,972,355 199,047,941 195,862,109 189,767,500 Total deposits 258,855,188 259,606,028 257,994,626 249,391,744 Common stockholders' equity 15,020,942 14,078,482 14,822,693 13,814,301 Total stockholders' equity 17,078,628 16,293,605 16,931,294 16,036,629 ==================================================================================================== SELECTED RATIOS Return on average assets (annualized) 1.10% 0.95% 0.95% 0.94% Return on average common equity (annualized) 19.97% 18.09% 17.13% 17.49% Return on average total equity (annualized) 18.39% 16.44% 15.87% 15.90% Leverage capital ratio 6.34% 5.70% 6.34% 5.70% Tier 1 risk-based capital ratio 9.20% 9.01% 9.20% 9.01% Total risk-based capital ratio 10.25% 10.08% 10.25% 10.08% Allowance for loan losses as a % of total loans 1.13% 1.17% 1.13% 1.17% ===================================================================================================== PERIOD ENDING BALANCE SHEET DATA 6/30/00 6/30/99 Net Change % Change Total assets $290,655,749 $282,503,279 $8,152,470 2.89% Earning assets 261,394,994 257,675,940 $3,719,054 1.44% Loans and leases, net 180,998,954 160,787,191 $20,211,763 12.57% Interest-bearing deposits 195,136,541 201,570,300 ($6,433,759) -3.19% Total deposits 259,557,897 261,272,545 ($1,714,648) -0.66% Common stockholders' equity 15,863,166 13,991,819 $1,871,347 13.37% Total stockholders' equity 17,881,251 16,185,079 $1,696,172 10.48% =====================================================================================================
3 [CAPTION] MIDSOUTH BANCORP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CONDITION __________________________________________________________________________________ June 30, December 31, 2000 1999 * ASSETS (unaudited) ___________ ___________ Cash and due from banks $14,028,769 $13,587,690 Federal funds sold - 900,000 ___________ ___________ Total cash and cash equivalents 14,028,769 14,487,690 Interest bearing deposits in banks 128,619 356,124 Securities available-for-sale, at fair value (cost of $56,215,922 in June 2000 and $57,106,793 in December 1999) 54,881,822 55,689,863 Securities held-to-maturity (estimated market value of $23,112,774 in June 2000 and $20,776,767 in December 1999) 23,317,417 21,287,597 Loans, net of allowance for loan losses of $2,068,182 in June 2000 and $1,967,326 in December 1999 180,998,954 168,501,407 Bank premises and equipment, net 12,056,724 11,367,815 Other real estate owned, net 462,268 569,963 Accrued interest receivable 2,179,637 1,919,182 Goodwill, net 523,612 554,153 Other assets 2,077,927 1,990,047 ___________ ___________ Total assets $290,655,749 $276,723,841 =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY Deposits: Non-interest bearing $64,421,356 $63,668,676 Interest bearing 195,136,541 188,021,530 ___________ ___________ Total deposits 259,557,897 251,690,206 Securities sold under repurchase agreements 1,474,471 606,601 FHLB advances 7,000,000 3,000,000 Accrued interest payable 677,053 715,171 Long-term notes payable 3,565,448 3,459,097 Other liabilities 499,629 327,605 ___________ ___________ Total liabilities 272,774,498 259,798,680 ___________ ___________ Commitments and contingencies - - Stockholders' Equity: Preferred Stock, no par value, $14.25 stated value - 5,000,000 shares authorized, 141,620 and 152,736 issued and outstanding on June 30, 2000 and December 31, 1999, respectively 2,018,085 2,176,488 Common stock, $.10 par value- 5,000,000 shares authorized, 2,515,166 and 2,481,843 issued and outstanding on June 30, 2000 and December 31, 1999, respectively 251,517 248,184 Surplus 11,138,784 10,983,714 Unearned ESOP shares (201,671) (89,044) Unrealized losses on securities available-for-sale, net of deferred taxes of ($437,950) in June 2000 and ($468,500) in December 1999 (896,150) (948,430) Retained earnings 5,570,686 4,554,249 ___________ ___________ Total stockholders' equity 17,881,251 16,925,161 ___________ ___________ Total liabilities and stockholders' equity $290,655,749 $276,723,841 =========== ===========
* The consolidated statement of condition at December 31, 1999 is taken from the audited balance sheet on that date. See notes to consolidated financial statements. 4
MIDSOUTH BANCORP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME _______________________________________________________________________________________________ Three Months Ended Six Months Ended June 30, June 30, 2000 1999 2000 1999 ___________________________ ___________________________ INTEREST INCOME: Loans, including fees $4,654,319 $4,000,706 $9,047,119 $7,758,244 Securities Taxable 910,005 832,024 1,768,858 1,517,003 Nontaxable 305,964 277,107 594,098 537,789 Federal funds sold 15,048 213,666 67,286 372,299 __________ __________ __________ __________ TOTAL 5,885,336 5,323,503 11,477,361 10,185,335 __________ __________ __________ __________ INTEREST EXPENSE: Deposits 2,088,645 1,959,050 4,110,632 3,734,316 Securities sold under repurchase agreements, federal funds purchased and advances 83,893 3,039 107,991 3,039 Long term debt 81,181 64,437 154,394 128,863 __________ __________ __________ __________ TOTAL 2,253,719 2,026,526 4,373,017 3,866,218 __________ __________ __________ __________ NET INTEREST INCOME 3,631,617 3,296,977 7,104,344 6,319,117 PROVISION FOR LOAN LOSSES 177,391 238,000 394,353 504,950 __________ __________ __________ __________ NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 3,454,226 3,058,977 6,709,991 5,814,167 __________ __________ __________ __________ OTHER OPERATING INCOME: Service charges on deposits 832,610 724,369 1,573,495 1,430,366 Gains on securities, net - - 1,770 - Credit life insurance 68,435 25,172 125,729 41,340 Other charges and fees 256,749 229,654 494,070 416,629 __________ __________ __________ __________ TOTAL OTHER INCOME 1,157,794 979,195 2,195,064 1,888,335 __________ __________ __________ __________ OTHER EXPENSES: Salaries and employee benefits 1,670,078 1,479,320 3,324,315 2,860,928 Occupancy expense 790,133 674,631 1,570,665 1,325,389 Other 1,050,700 971,314 2,204,722 1,842,041 __________ __________ __________ __________ TOTAL OTHER EXPENSES 3,510,911 3,125,265 7,099,702 6,028,358 __________ __________ __________ __________ INCOME BEFORE INCOME TAXES 1,101,109 912,907 1,805,353 1,674,144 PROVISION FOR INCOME TAXES 309,550 245,050 465,526 409,437 __________ __________ __________ __________ NET INCOME $791,559 $667,857 $1,339,827 $1,264,707 PREFERRED DIVIDEND REQUIREMENT 35,405 32,903 73,464 66,286 __________ __________ __________ __________ INCOME AVAILABLE TO COMMON SHAREHOLDERS $756,154 $634,954 $1,266,363 $1,198,421 ========== ========== ========== ========== BASIC EARNINGS PER COMMON SHARE $0.30 $0.26 $0.51 $0.49 ========== ========== ========== ========== DILUTED EARNINGS PER COMMON SHARE $0.27 $0.23 $0.45 $0.43 ========== ========== ========== ==========
* The consolidated statement of income at December 31, 1999 is taken from the audited income statement of that date. See notes to consolidated financial statements. 5
MIDSOUTH BANCORP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY FOR THE SIX MONTHS ENDED JUNE 30, 2000 (UNAUDITED) ___________________________________________________________________________________________________________________________________ UNREALIZED LOSSES ON SECURITIES PREFERRED STOCK COMMON STOCK ESOP AVAILABLE RETAINED SHARES AMOUNT SHARES AMOUNT SURPLUS OBLIGATION FOR-SALE EARNINGS TOTAL ___________________ ___________________ ___________ __________________________________ __________ BALANCE, DECEMBER 31, 1999 152,736 $2,176,488 2,481,843 $248,184 $10,983,714 ($89,044) ($948,430) $4,554,249 $16,925,161 Dividends on common stock (249,926) (249,926) Dividends on preferred stock (73,464) (73,464) Preferred stock conversion (11,116) (158,403) 33,323 3,333 155,070 Net income 1,339,827 1,339,827 Increase in ESOP obligation, net of repayments (112,627) (112,627) Net change in unrealized gain/loss on securities available-for-sale, net of tax 52,280 52,280 ________ __________ _________ ________ ___________ _________ _________ __________ ___________ BALANCE, JUNE 30, 2000 141,620 $2,018,085 2,515,166 $251,517 $11,138,784 ($201,671) ($896,150) $5,570,686 $17,881,251 ======== ========== ========= ======== =========== ========= ========= ========== ===========
See notes to consolidated financial statements. 6
MIDSOUTH BANCORP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) FOR THE SIX MONTHS ENDED JUNE 30, 2000 and 1999 __________________________________________________________________________________________ June 30, 2000 June 30, 1999 _____________ _____________ CASH FLOWS FROM OPERATING ACTIVITIES: Net Income $1,339,827 $1,264,707 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 671,201 571,616 Provision for loan losses 394,353 504,950 Provision for deferred income taxes 4,548 12,228 Discount accretion (premium amortization), net 45,370 13,660 Gain on sale of premises and equipment (5,338) (1,925) Gain on sale of securities (1,770) - Change in accrued interest receivable (260,455) (171,653) Change in accrued interest payable (38,118) 81,256 Write-down of other real estate owned 93,000 - Other, net 49,046 (46,651) _________________________________ NET CASH PROVIDED BY OPERATING ACTIVITIES 2,291,664 2,228,188 _____________ _____________ CASH FLOWS FROM INVESTING ACTIVITIES: Net decrease in interest-bearing deposits in banks 227,505 4,917 Proceeds from maturities and calls of securities ava 6,463,539 6,313,566 Proceeds from sales of securities available-for-sale 1,027,765 - Purchases of securities available-for-sale (6,642,548) (27,027,658) Purchases of securities held-to-maturity (2,031,305) (2,092,845) Loan originations, net of repayments (13,066,444) (5,000,180) Purchases of premises and equipment (1,330,481) (1,851,017) Proceeds from sales of premises and equipment 6,250 24,000 Proceeds from sales of other real estate owned 76,612 58,724 Purchase of insurance premium financing company - (3,503,497) _____________ _____________ NET CASH USED IN INVESTING ACTIVITIES (15,269,107) (33,073,990) _____________ _____________ CASH FLOWS FROM FINANCING ACTIVITIES: Net increase in deposits 7,867,691 31,348,243 Net increase in securities sold under repurchase agreements and FHLB borrowings 4,867,870 752,946 Issuance of notes payable 415,000 75,000 Repayments of notes payable (308,649) (196,774) Proceeds from issuance of common stock - 198,097 Payment of dividends (323,390) (311,325) _________________________________ NET CASH PROVIDED BY FINANCING ACTIVITIES 12,518,522 31,866,187 NET (DECREASE) INCREASE IN CASH & CASH EQUIVALENTS (458,921) 1,020,385 CASH & CASH EQUIVALENTS AT BEGINNING OF PERIOD 14,487,690 20,603,536 _____________ _____________ CASH & CASH EQUIVALENTS AT END OF PERIOD $14,028,769 $21,623,921 ============= =============
See notes to consolidated financial statements. 7 MIDSOUTH BANCORP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. STATEMENT BY MANAGEMENT CONCERNING THE REVIEW OF UNAUDITED FINANCIAL INFORMATION The accompanying unaudited consolidated financial statements and notes thereto contain all adjustments, consisting only of normal recurring adjustments, necessary to present fairly the financial position of MidSouth Bancorp, Inc. ("MidSouth") and its subsidiaries as of June 30, 2000 and the results of their operations and their cash flows for the periods presented. The consolidated financial statements should be read in conjunction with the annual consolidated financial statements and the notes thereto included in MidSouth's 1999 annual consolidated report and Form 10-KSB. The results of operations for the three and six month periods ended June 30, 2000 are not necessarily indicative of the results to be expected for the entire year. 2. ALLOWANCE FOR LOAN AND LEASE LOSSES An analysis of the activity in the allowance for loan and lease losses is as follows:
Six Months Ended June 30, 2000 1999 __________ __________ Balance at beginning of period $1,967,326 $1,860,490 Provision for loan losses 394,353 504,950 Recoveries 76,871 65,122 Loans charged off (370,368) (526,873) __________ __________ Balance at end of period $2,068,182 $1,903,689 ========== ==========
3. COMPREHENSIVE INCOME MidSouth adopted Statement of Financial Accounting Standards No. 130 "Reporting Comprehensive Income" ("SFAS 130") effective January 1, 1998. SFAS 130 establishes standards for reporting and display of comprehensive income and its components. Comprehensive income includes net income and other comprehensive income (losses) which, in the case of MidSouth, only includes unrealized gains and losses on securities available-for-sale. Following is a summary of MidSouth's comprehensive income for the six months ended June 30, 2000 and 1999.
2000 1999 ___________ ___________ Net income $1,339,827 $1,264,707 Other comprehensive income (losses), net of tax 52,280 (664,650) ___________ ___________ Total comprehensive income $1,392,107 $600,057 =========== ===========
8 MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION This review should be read in conjunction with MidSouth Bancorp Inc.'s ("MidSouth") consolidated financial statements and accompanying notes contained herein, as well as with MidSouth's 1999 annual consolidated financial statements, the notes thereto and the related Management's Discussion and Analysis. MidSouth Bancorp, Inc. announced net income of $791,559 for the second quarter of 2000, a 19% increase over net income of $667,857 reported for the second quarter of 1999. Income available to common shareholders totaled $756,154 for the second quarter of 2000, compared to $634,954 for the second quarter of 1999. Basic earnings per share were $.30 and $.26 for the quarters ended June 30, 2000 and 1999, respectively. Diluted earnings per share were $.27 for the second quarter of 2000 compared to $.23 for the second quarter of 1999. Net income for the six months ended June 30, 2000 totaled $1,339,827 compared to $1,264,707 for the six months ended June 30, 1999. Basic earnings per share were $.51 and $.49 for the two six month periods, respectively. Diluted earnings per share were $.45 for the six months ended June 30, 2000 compared to $.43 for the six months ended June 30, 1999. The increase in earnings resulted from increased net interest income primarily due to a higher volume of loans as a percentage of earning assets combined with an increase in the net yield on earning assets. An increase in non-interest income from service charges on deposit accounts and sales of credit life insurance contributed to the increase in earnings for the three and six month periods ending June 30, 2000. Net income was also favorably affected by decreases in provisions for loan losses of $60,609 and $110,587, respectively for the quarter and six months. The increased net interest income and non-interest income were partially offset by increases in non-interest expense, primarily salaries and benefits and occupancy expenses. These increases reflect the opening of three additional offices in the past twelve months and expenses associated with the development and introduction of MidSouth's internet banking product, NetBanking. Launched on May 1, 2000, by June 30th 6% of MidSouth's demand deposit customer base was using NetBanking for on-line account access, bill paying, or cash management services. Total end of period consolidated assets increased $8.2 million, from $282.5 million at June 30, 1999 to $290.7 million at June 30, 2000. Interest-bearing deposits decreased $6.4 million and total deposits decreased $1.7 million, from $201.6 million and $261.3 million, respectively at June 30, 1999 to $195.1 million and $259.6 million at June 30, 2000. The decrease results primarily from the loss of a large public fund contract in the third quarter of 1999, offset by a $4.7 million increase in demand deposits. Loans, net of Allowance for Loan Losses ("ALL"), increased $20.2 million or 13%, from $160.8 million in the second quarter of 1999 to $181.0 million in the second 9 quarter of 2000. Provisions for loan and lease losses totaled $177,391 in the second quarter of 2000 compared to $238,000 in the second quarter of 1999, and $394,353 in the first six months of 2000 compared to $504,950 in the comparable 1999 period. Nonperforming loans as a percentage of total loans decreased slightly from .10% in June of 1999 to .08% in June of 2000. Loans past due ninety days and over decreased, from $550,516 at June 30, 1999 to $491,871 at June 30, 2000. Other real estate owned increased $104,661 for the same period. The ALL represented 339% of nonperforming assets as of June 30, 2000 compared to 364% as of June 30, 1999. MidSouth's leverage ratio was 6.34% at June 30, 2000, up from 5.70% at June 30, 1999. Return on average common equity for the quarter was 19.97% and return on average assets was 1.10%. Earnings Analysis Net Interest Income Average earning assets increased 2%, or $6.1 million, from $254.5 million for the three months ended June 30, 1999 to $260.6 million for the three months ended June 30, 2000. The mix of earning assets shifted significantly, from 62% of average earning assets in loans for the second quarter of 1999 up to 68% in the second quarter of 2000. The average yield on loans increased 28 basis points, from 10.13% to 10.41% for the six months ended June 30, 2000. Market competition for quality credits held commercial and real estate loan yields to a 4 basis point increase in quarterly comparison. Consumer loan yields increased 124 basis points primarily due to insurance premium financing loans acquired with the purchase of TMC Financial Services, Inc. ("TMC") on May 15,1999. For the quarter ending June 30, 2000, TMC's portfolio averaged $3.3 million with an average yield of approximately 22%. In the second quarter of 1999, TMC's portfolio had a lesser impact on consumer yields due to a fewer number of days held in the Bank's loan portfolio. Also included in calculating consumer loan yields, the Finance Company's portfolio averaged $1.7 million in consumer finance loans yielding an average of 28% for the second quarter of 2000. Additionally, credit card loans at the Bank averaged $1.3 million and yielded an average of 19% for the same period. Investment volume increased by $4.3 million, from $77.9 million at June 30, 1999 to $82.2 million at June 30, 2000. The volume of federal funds sold decreased $17.1 million in quarterly comparison due to the anticipated withdrawal of significant public fund deposits in the third quarter of 1999. The average taxable-equivalent yield on investments increased 18 basis points, from 6.34% at June 30, 1999 to 6.52% at June 30, 2000. The change in the mix of earning assets combined with higher yields increased the taxable- equivalent yield on quarterly average earning assets 58 10 basis points, from 8.58% for the second quarter of 1999 to 9.16% for the second quarter of 2000. Average interest-bearing deposits decreased $3.1 million in quarterly comparison, from $199.0 million at June 30, 1999 to $195.9 million at June 30, 2000, primarily due to the withdrawal of public fund deposits in the third quarter of 1999. The rate paid on interest-bearing deposits increased 28 basis points for the same period and resulted in increased interest expense for the quarter ended June 30, 2000 despite the decrease in volume. An increase in overnight borrowings with the Federal Home Loan Bank of Dallas resulted in an increase in total interest-bearing liabilities of $2.3 million in quarterly comparison. The average rate paid on total interest-bearing liabilities increased 35 basis points, from 4.01% for the quarter ended June 30, 1999 to 4.36% for the quarter ended June 30, 2000. The net effect of changes in the volume and mix of average earning assets and interest-bearing liabilities increased net interest income $334,640 in quarterly comparison. The net taxable-equivalent yield on average earning assets increased 34 basis points, from 5.39% for the quarter ended June 30, 1999 to 5.73% for the quarter ended June 30, 2000. Review of the changes in the volume and yields of average earning assets and interest-bearing liabilities between the two six month periods ended June 30, 2000 and 1999 reflected results similar to the quarterly comparison. The net taxable-equivalent yield on average earning assets for the six months ended June 30, 2000 increased 35 basis points from 5.39% at June 30, 1999 to 5.74% at June 30, 2000. As a result, net interest income increased $785,227 between the two six month periods reviewed. Non-interest Income MidSouth's primary source of non-interest income, service charges on deposit accounts, increased $108,241 for the three months and $143,129 for the six months ended June 30, 2000 as compared to the same periods for 1999. The increases resulted primarily from an increase in service charge income due to a higher volume of accounts serviced and additional insufficient funds fees. Other non-interest income, net of gains on sales of investment securities, increased $27,095 in quarterly comparison and $77,441 in year-to-date comparison. A mortgage origination program with a third party processor contributed $11,531 to the increase for the quarter and $14,365 for the six months ended June 30, 2000. Lease income from a third party investment firm contributed $13,625 to the quarterly increase and $26,686 to the year- to-date increase. VISA merchant, debit card and ATM fee income increased in 2000, however, expenses associated with these programs have also increased, offsetting the income. Income from the sale of credit life insurance increased $43,263 for the quarter and $84,389 for the six months period ended June 30, 2000 as compared to the same periods ended June 30, 1999. 11 Non-interest Expense Non-interest expense increased $385,646 for the three months and $1,017,344 for the six months ended June 30, 2000 compared to the three and six months ended June 30, 1999. Increases were recorded primarily in the categories of salaries and employee benefits and occupancy expenses due primarily to the three new offices opened in the past twelve months. In addition, increases were recorded in credit reporting expenses, VISA programs and ATM processing fees. These increases reflect MidSouth's long term investment in staff development, system upgrades and market penetration. Salaries and employee benefits increased primarily due to additional staff and an increase in the cost of group health insurance. The number of full-time equivalent ("FTE") employees increased by 14, from 169 in June 1999 to 183 in June 2000. The increase results primarily from staffing three new locations and an electronic banking department responsible for MidSouth's NetBanking product introduced during the second quarter of 2000. Occupancy expense increased in the three and six month periods ended June 30, 2000 compared to the same period of 1999 due to increases in depreciation of building, furniture, and equipment, maintenance expenses incurred on fixed assets and property taxes. Balance Sheet Analysis MidSouth ended the second quarter of 2000 with consolidated assets of $290,655,749, an increase of $13.9 million or 5% from the $276,723,841 reported for December 31, 1999. Deposits increased over the six months ended June 30, 1999 by $7.9 million, from $251,690,206 at December 31, 1999 to $259,557,897, primarily in commercial and individual money market accounts. Loans experienced growth of $12.6 million in the first six months of 2000, primarily during the second quarter, with the majority of the increase in commercial and real estate loans. Securities available-for-sale decreased $808,041 from $55,689,863 at December 31, 1999 to $54,881,822 at June 30, 2000. The decrease reflects sales, maturities and principal paydowns of $7.5 million, offset by purchases of $6.7 million. Purchases of securities held-to-maturity totaled $2.0 million for the same period. Unrealized losses in the securities available-for-sale portfolio, net of unrealized gains and tax effect, were $896,150 at June 30, 2000, compared to a net unrealized loss of $948,430 at December 31, 1999. These amounts result from interest rate fluctuations and do not represent permanent adjustment of value. Moreover, classification of securities as available-for-sale does not necessarily indicate that the securities will be sold prior to maturity. 12 Capital As of June 30, 2000, MidSouth's leverage ratio was 6.34% as compared to 6.23% at December 31, 1999. Tier 1 capital to risk-weighted assets was 9.20% and total capital to risk- weighted assets was 10.25% at the end of the second quarter of 2000. At year-end 1999, Tier 1 capital to risk- weighted assets was 9.47% and total capital to risk- weighted assets was 10.55%. 13 Nonperforming Assets and Past Due Loans Table 1 summarizes MidSouth's nonaccrual, past due and restructured loans and nonperforming assets. Nonperforming Assets and Loans Past Due 90 Days =========================================================== June December June 30, 31, 30, 2000 1999 1999 =========================================================== Nonperforming loans $147,145 $234,962 $165,630 Other real estate owned, net 462,236 569,963 357,575 Other assets repossessed - 31,755 42,563 __________________________________ Total nonperforming assets $609,381 $836,680 $565,768 ================================== Loans past due 90 days or more and still accruing $491,871 $793,823 $550,516 Nonperforming loans as a % of total loans .08% 0.14% 0.10% Nonperforming assets as a % of total loans, other real estate owned and other assets Repossessed 0.33% 0.49% 0.35% ALL as a % of nonperforming assets 339.39% 235.13% 363.85% 14 Nonperforming assets were $609,381 as of June 30, 2000 a decrease of $227,299 from the $836,680 reported for December 31, 1999 and an increase of $43,613 from the $565,768 reported for June 30, 1999. Loans past due 90 days or more increased from $550,516 in June 1999 to $793,823 in December 1999 and decreased to $491,871 as of June 30, 2000. Of the $491,871 in loans past due 90 days or more, $66,058 were funded by the Finance Company and $15,694 represent past due insurance premium financing loans at TMC. Specific reserves have been established in the ALL to cover potential losses on nonperforming assets. The ALL is analyzed quarterly and additional reserves, if needed, are allocated at that time. Management believes the $2,068,182 in the reserve as of June 30, 2000 is sufficient to cover potential losses in nonperforming assets and in the loan and lease portfolios. Loans classified for regulatory purposes but not included in Table 1 do not represent material credits about which management has serious doubts as to the ability of the borrower to comply with loan repayment terms. 15 Page 16 Item 4. Submission of Matters to a Vote of Security Holders At the annual meeting of shareholders of MidSouth Bancorp, Inc. held May 10, 2000 at 2:00 p.m., the Class III Directors were elected. The following provides information as to the votes:
Election of Directors For Withheld Abstentions Broker Non-Votes C. R. Cloutier 1,876,165 9,138 J. B. Hargroder 1,876,544 8,759 William Simmons 1,876,207 9,096
Page 17 Item 6. Exhibits and Reports on Form 8-K (a) Exhibits Exihibit Number Document Description _______________ ____________________ 3.1 Amended and Restated Articles of Incorporation of MidSouth Bancorp, Inc. is included as Exhibit 3.1 to the MidSouth's Report on Form 10-K for the year ended December 31, 1993, and is incorporated herein by reference. 3.2 Articles of Amendment to Amended and Restated Articles of Incorporation dated July 19, 1995 are included as Exhibit 4.2 to MidSouth's Registration Statement on Form S-8 filed September 20, 1995 and is incorporated herein by reference. 3.3 Amended and Restated By-laws adopted by the Board of Directors on April 12, 1995 are included as Exhibit 3.2 to Amendment No. 1 to MidSouth's Registration Statement on Form S-4 (Reg. No. 33-58499) filed on June 1, 1995. 10.1 MidSouth National Bank Lease Agreement with Southwest Bank Building Limited Partnership is included as Exhibit 10.7 to the Company's annual report on Form 10-K for the Year Ended December 31, 1992, and is incorporated herein by reference. 10.2 First Amendment to Lease between MBL Life Assurance Corporation, successor in interest to Southwest Bank Building Limited Partnership in Commendam, and MidSouth National Bank is included as Exhibit 10.1 to Report on the Company's annual report on Form 10-KSB for the year ended December 31, 1994, and is incorporated herein by reference. 10.3 Amended and Restated Deferred Compensation Plan and Trust is included as Exhibit 10.3 to the Company's annual report on Form 10-K for the year ended December 31, 1992 and is incorporated herein by reference. 10.4 Employment Agreements with C. R. Cloutier and Karen L. Hail are included as Exhibit 5(c) to MidSouth's Form 1-A and are incorporated herein by reference. 10.6 MidSouth Bancorp, Inc.'s 1997 Stock Incentive Plan is included as Exhibit 4.5 to MidSouth's definitive Proxy Statement filed April 11, 1997, and is incorporated herein by reference. Page 18 10.7 The MidSouth Bancorp, Inc. Dividend Reinvestment and Stock Purchase Plan is included as Exhibit 4.6 to MidSouth Bancorp, Inc.'s Form S-3D filed on July 25, 1997 and is incorporated herein by reference. 10.8 Loan Agreements and Master Notes for lines of credit established for MidSouth Bancorp, Inc. and Financial Services of the South, Inc. are included as Exhibit 10.7 of MidSouth's Form 10-QSB filed on August 14, 1997 and is incorporated herein by reference. 10.9 Modification Agreement to the Loan Agreement and Master Note for the Line of Credit established for MidSouth Bancorp, Inc. is included as Exhibit 10.9 of MidSouth's Form 10-QSB filed on August 13, 1999 and is incorporated herein by reference. 11 Computation of earnings per share 27 Financial Data Schedule (b) Reports Filed on Form 8-K (none) Signatures In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. MidSouth Bancorp, Inc. (Registrant) Date: August 14, 2000 /s/ C. R. Cloutier C. R. Cloutier, President & CEO /s/ Karen L. Hail Karen L. Hail, Executive Vice President & CFO /s/ Teri S. Stelly Teri S. Stelly, Senior Vice President & Controller