Quarterly Highlights
- Reported EPS for the second quarter of 2019 was a loss of
$0.22 versus a loss of $0.09 for the second quarter of 2018
primarily due to the impact of a $3.8 million impairment charge for
a shared national healthcare credit.
- Bank level classified assets to capital were 32% for the
second quarter of 2019 compared to 25% in the first quarter of
2019.
- FTE net interest margin of 4.00% showed an increase of 11
basis points from first quarter 2019, which included a 13 basis
point impact due to the reversal of accrued interest in the first
quarter of 2019 for a shared national healthcare credit.
- Funding costs of 54 basis points were stable with core
deposits comprising a strong 88% of total deposits.
- Tangible common equity to tangible assets at June 30, 2019
was 8.1% compared to 8.0% at March 31, 2019.
MidSouth Bancorp, Inc. (“MidSouth”) (NYSE:MSL) today reported a
quarterly net loss available to common shareholders of $3.7 million
for the second quarter of 2019 compared to net loss available to
common shareholders of $1.5 million for the second quarter of 2018
and $6.6 million in net loss available to common shareholders for
the first quarter of 2019. The second quarter loss is primarily due
to the $3.8 million impairment charge for a shared national
healthcare credit with 91% of the loan being fully reserved for and
$1.1 million of expense related to the anticipated merger with
Hancock Whitney Corporation. MidSouth has two additional pass rated
shared national credits with a balance of $12.2 million and $22.0
million committed. The second quarter of 2018 included an after-tax
charge of $4.2 million resulting from regulatory remediation costs.
Excluding non-operating expenses, a loss of $0.17 per diluted share
was reported for the second quarter of 2019 compared to loss per
diluted share of $0.40 for the first quarter of 2019 and earnings
per diluted share of $0.17 for the second quarter of 2018.
Balance Sheet
Consolidated assets decreased $143.8 million to $1.7 billion at
June 30, 2019 from $1.9 billion at June 30, 2018 and essentially
unchanged from March 31, 2019. Our stable core deposit base, which
excludes time deposits, totaled $1.2 billion at June 30, 2019 and
March 31, 2019 and accounted for 87.8% and 87.65% of deposits at
June 30, 2019 and March 31, 2019, respectively. Net loans totaled
$851.9 million at June 30, 2019, compared to $868.9 million at
March 31, 2019 and $1.0 billion at June 30, 2018. Loans held for
sale of $10.3 million at June 30, 2019 increased from $1.5 million
at March 31, 2019, with an anticipated loan sale of some or all
these loans set to close in the 3rd quarter of 2019.
MidSouth’s Tier 1 leverage capital ratio was 11.53% at June 30,
2019, compared to 11.60% at March 31, 2019. Tier 1 risk-based
capital and total risk-based capital ratios were 18.23% and 19.50%
at June 30, 2019, respectively, essentially unchanged from March
31, 2019. Tier 1 common equity to total risk-weighted assets at
June 30, 2019 was 12.37%, compared to 12.48% at March 31, 2019.
Tangible common equity totaled $136.0 million at June 30, 2019,
unchanged from March 31, 2019. Tangible book value per share at
June 30, 2019 remained constant versus the first quarter at
$8.13.
Asset Quality
Nonperforming assets totaled $23.7 million at June 30, 2019, a
decrease of $239,000 compared to $23.9 million reported at March
31, 2019. Allowance coverage for nonperforming loans increased to
120.79% at June 30, 2019 compared to 106.85% at March 31, 2019. The
ALLL/total loans ratio was 3.20% at June 30, 2019 compared to 2.77%
at March 31, 2019. The ratio of annualized net charge-offs to total
loans increased to 0.64% for the three months ended June 30, 2019
compared to 0.11% at March 31, 2019, which was primarily the result
of two commercial loan charge-offs in the second quarter totaling
$906,000.
Total nonperforming assets to total loans plus ORE and other
assets repossessed were 2.69% at June 30, 2019 compared to 2.68% at
March 31, 2019. Loans classified as troubled debt restructurings,
totaled $593,000 at June 30, 2019 compared to $713,000 at March 31,
2019. Total classified assets, including ORE, were $55.7 million at
June 30, 2019 compared to $44.4 million at March 31, 2019, as
downgrades outpaced upgrades, pay downs/pay offs, and scheduled
principal amortization during the quarter. The two largest
downgrades were in the commercial real estate portfolio totaling
$6.5 million or approximately 59% of the total classified
downgrades. As a result, the classified assets to capital ratio at
MidSouth Bank was 32% at June 30, 2019 versus 25% at March 31,
2019.
More information on our energy loan portfolio and other
information on quarterly results can be found on our website at
MidSouthBank.com under Investor Relations/Presentations.
Second Quarter 2019 vs. First Quarter 2019
Earnings Comparison
MidSouth reported a net loss available to common shareholders of
$3.7 million for the three months ended June 30, 2019, compared to
net loss available to common shareholders of $6.6 million for the
three months ended March 31, 2019. Revenues from consolidated
operations decreased $982,000 from $23.7 million in the first
quarter of 2019 to $22.7 million in the second quarter of 2019,
primarily as a result of the first quarter gain on sale of loans of
$1.3 million in the first quarter.
The second quarter of 2019 included merger related expenses of
$1.1 million. The first quarter of 2019 did not include any merger
related expenses. Excluding these non-operating expenses, compared
with the first quarter of 2019 noninterest expense decreased $2.2
million in the second quarter of 2019. Between the first and
quarters of 2019, salaries and employee benefits expense decreased
$761,000, occupancy expenses declined $345,000 and ongoing legal
and professional fees declined $719,000, primarily as a result of
the completion of remediation efforts.
The provision for loan losses decreased $2.8 million from the
first quarter 2019 compared to the second quarter 2019. Excluding
the impact of provisioning for the previously mentioned shared
national healthcare credit, the provision for loan losses was
essentially unchanged on a sequential quarterly basis at $1.0
million.
Dividends on the Series B Preferred Stock issued to the U.S.
Treasury as a result of our participation in the Small Business
Lending Fund totaled $720,000 for the second quarter of 2019 and
the first quarter of 2019 based on a dividend rate of 9%. Dividends
on the Series C Preferred Stock totaled $90,000 for the three
months ended June 30, 2019 and March 31, 2019.
Fully taxable-equivalent (“FTE”) net interest income increased
$509,000 from the first quarter 2019 to the second quarter 2019,
primarily due to an increase in interest income on other
investments and interest bearing deposits with other banks of
$314,000 and $220,000, respectively, offset by a decline in tax
exempt securities interest income of $120,000 due to recent selling
of municipal bonds. Loan yields increased 11 basis points from
first quarter levels which were depressed by the reversal of income
for a significant shared national healthcare credit. The average
yield on investment securities decreased 8 basis points, from 2.86%
to 2.78%, due to a continued repositioning of the bond portfolio
through the sale of higher yielding municipal and corporate bonds
and the timing impact of the sales and reinvestments on average
balances. The average yield on total earning assets increased 10
bps for the same period, from 4.41% to 4.51%, respectively. The FTE
net interest margin increased 11 bps from 3.89% for the first
quarter 2019 to 4.00% for the second quarter of 2019.
Second Quarter 2019 vs. Second Quarter
2018 Earnings Comparison
MidSouth reported a net loss available to common shareholders of
$3.7 million for the three months ended June 30, 2019 compared to
net loss available to common shareholders of $1.5 million for the
three months ended June 30, 2018. Net interest income decreased
$1.0 million in quarterly comparison, resulting from a $793,000
decrease in interest income primarily driven by lower loan levels,
in addition to a higher interest expense of $216,000 reflecting the
impact of higher interest rates. Operating noninterest income
decreased $295,000, which excludes $202,000 gains on sales of
investments.
Excluding remediation expenses of $5.3 million for the second
quarter of 2018 and merger-related expenses of $1.1 million for the
second quarter of 2019, noninterest expenses increased $750,000 in
quarterly comparison and consisted primarily of a $1.0 million
increase in salary and employee benefits costs from the additional
staffing necessary in connection with regulatory remediation
efforts. The provision for loan losses increased $4.3 million in
quarterly comparison, from $440,000 for the three months ended June
30, 2018 to $4.8 million for the three months ended June 30, 2019
resulting primarily from the impairment of the above-mentioned
shared healthcare credit. We recorded an income tax benefit of
$237,000 for the second quarter of 2018 versus no benefit for the
second quarter of 2019.
Interest income on loans decreased $2.3 million between the
second quarter 2018 compared with the same quarter 2019 primarily
due to a $219.2 million decline in average loans given ongoing
efforts to reduce problem loans and slower loan originations due to
an internal focus on improving loan portfolio management and loan
operations.
Investment securities totaled $458.9 million, or 26.8% of total
assets at June 30, 2019, versus $376.7 million, or 20.3% of total
assets at June 30, 2018. The investment portfolio had an effective
duration of 2.13 years, as measured on a 100 basis point parallel
shock in interest rates, and a net unrealized gain of $4.2 million
at June 30, 2019. FTE interest income on investments increased
$859,000 in prior year quarterly comparison. The average volume of
investment securities increased $90.8 million in prior year
quarterly comparison, and the average tax equivalent yield on
investment securities increased 24 basis points, from 2.54% to
2.78%.
The average yield on all earning assets increased 12 basis
points in prior year quarterly comparison, from 4.39% for the
second quarter of 2018 to 4.51% for the second quarter of 2019, due
to higher yields in the loan and investment portfolios offsetting
the change of mix of interest earning assets on a year-over-year
basis.
Interest expense increased $216,000 in prior year quarterly
comparison primarily due to a $256,000 increase in interest expense
on deposits and a $23,000 increase in interest expense on junior
subordinated debt, which were partially offset by a $63,000
decrease in interest expense on repurchase agreements and FHLB
borrowings.
As a result of these changes in volume and yield on earning
assets and interest-bearing liabilities, the FTE net interest
margin decreased 12 basis points, from 4.12% for the second quarter
of 2018 to 4.00% for the second quarter of 2019.
Six Months Ended June 30, 2019 vs Six
Months Ended June 30, 2018
MidSouth reported a net loss available to common shareholders of
$10.4 million for the six months ended June 30, 2019 compared to
net loss available to common shareholders of $1.9 million for six
months ended June 30, 2018. Revenues from consolidated operations
decreased $993,000 in quarterly comparison, from $47.4 million for
the six months ended June 30, 2018 to $46.5 million for the six
months ended June 30, 2019.
Excluding remediation expenses of $9.2 million for the first six
months of 2018 and merger-related expenses of $1.1 million for the
first six months of 2019, noninterest expenses increased $2.7
million in semiannual comparison and consisted primarily of a $3.0
million increase in salary and employee benefits costs from the
additional staffing necessary in connection with regulatory
remediation efforts. The provision for loan losses increased $11.9
million in prior year comparison, from $440,000 for the six months
ended June 30, 2018 to $12.4 million for the six months ended June
30, 2019 due primarily to impairment of the shared healthcare
credit. We recorded an income tax benefit of $271,000 for the first
six months of 2018 versus no benefit for the first six months of
2019.
Dividends on preferred stock totaled $1.6 million for the six
months ended June 30, 2019 and 2018. Dividends on the Series B
Preferred Stock were $1.4 million for the six months ended June 30,
2019 and 2018. Dividends on the Series C Preferred Stock totaled
$180,000 for the six months ended June 30, 2019 and 2018.
Interest income on loans decreased $5.3 million primarily due to
a $238.6 million decline in average loans given ongoing efforts to
reduce problem loans and slower loan originations due to an
internal focus on improving loan portfolio management and loan
operations.
The average volume of investment securities increased $47.5
million in prior year comparison, and the average tax equivalent
yield on investment securities increased 37 basis points, from
2.55% to 2.92% at June 30, 2019 .
The average yield on all earning assets increased 12 basis
points in prior year comparison, from 4.56% for 2019 to 4.44% for
2019, due to a less favorable mix of earning assets given the
decline in loans on a year-over-year basis.
Interest expense increased $652,000 in prior year comparison
primarily due to a $698,000 increase in interest expense on
deposits and a $91,000 increase in interest expense on junior
subordinated debt, which were partially offset by a $137,000
decrease in interest expense on repurchase agreements and FHLB
borrowings.
As a result of these changes in volume and yield on earning
assets and interest-bearing liabilities, the FTE net interest
margin decreased 2 basis points, from 4.04% for the six months of
2018 to 4.02% for the six months of 2019.
About MidSouth Bancorp,
Inc.
MidSouth Bancorp, Inc. is a bank holding company headquartered
in Lafayette, Louisiana, with assets of $1.7 billion as of June 30,
2019. 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 42 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.
Non-GAAP Financial
Measures
This press release, including the accompanying financial
statement tables, contains financial information determined by
methods other than in accordance with generally accepted accounting
principles, or GAAP. This financial information includes certain
operating performance measures, which exclude charges that are not
considered part of recurring operations. Non-GAAP measures in this
press release include, but are not limited to, descriptions such as
“operating noninterest income,” “operating (loss) earnings per
share,” “tangible common equity”, “tangible book value per share,”
“operating return on average common equity,” “operating return on
average assets,” and “operating efficiency ratio.” In addition,
this press release, consistent with SEC Industry Guide 3, presents
total revenue, net interest income, net interest margin,
"non-operating expenses" and efficiency ratios on a fully taxable
equivalent (“FTE”) basis, and ratios on an annualized basis. The
FTE basis adjusts for the tax-favored status of net interest income
from certain loans and investments using a federal tax rate of 21%
for all periods beginning on or after January 1, 2018, as well as
state income taxes, where applicable, to increase tax-exempt
interest income to a taxable-equivalent basis. MidSouth believes
this measure to be the preferred industry measurement of net
interest income and it enhances comparability of net interest
income arising from taxable and tax-exempt sources.
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
measures should be viewed in addition to, and not as an alternative
to or substitute for, measures determined in accordance with GAAP,
and are not necessarily comparable to non-GAAP measures that may be
presented by other companies. To the extent applicable,
reconciliations of these non-GAAP measures to the most directly
comparable measures as reported in accordance with GAAP are
included with the accompanying financial statement tables.
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, statements
regarding expected future performance and shareholder value. The
words “anticipate,” “believe,” “estimate,” “expect,” “intend,”
“may,” “plan,” “will,” “would,” “could,” “should,” “guidance,”
“potential,” “continue,” “project,” “forecast,” “confident,” and
similar expressions are typically used to identify forward-looking
statements.
These statements are based on assumptions and assessments
made by management in light of their experience and their
perception of historical trends, current conditions, expected
future developments and other factors they believe to be
appropriate. Any forward-looking statements are not guarantees of
our future performance and are subject to risks and uncertainties
and may be affected by various factors that may cause actual
results, developments and business decisions to differ materially
from those in the forward-looking statements. 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 in the markets we serve,
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; increases in competitive pressure in the
banking and financial services industries; increased competition
for deposits and loans which could affect compositions, rates and
terms; changes in the levels of prepayments received on loans and
investment securities that adversely affect the yield and value of
the earning assets; our ability to successfully implement and
manage our strategic initiatives; costs and expenses associated
with our strategic initiatives and regulatory remediation efforts
and possible changes in the size and components of the expected
costs and charges associated with our strategic initiatives and
regulatory remediation efforts; our ability to realize the
anticipated benefits and cost savings from our strategic
initiatives within the anticipated time frame, if at all; the
ability of the Company to comply with the terms of the formal
agreement and the consent order with the Office of the Comptroller
of the Currency; risk of noncompliance with and further enforcement
actions regarding the Bank Secrecy Act and other anti-money
laundering statues and regulations; credit losses due to loan
concentration, particularly our energy lending and commercial real
estate portfolios; a deviation in actual experience from the
underlying assumptions used to determine and establish our
allowance for loan and lease losses (“ALLL”), which could result in
greater than expected loan losses; the adequacy of the level of our
ALLL and the amount of loan loss provisions required in future
periods including the impact of implementation of the new CECL
(current expected credit loss) methodology; future examinations by
our regulatory authorities, including the possibility that the
regulatory authorities may, among other things, impose additional
enforcement actions or conditions on our operations, require
additional regulatory remediation efforts or require us to increase
our allowance for loan losses or write-down assets; changes in the
availability of funds resulting from reduced liquidity or increased
costs; the timing and impact of future acquisitions or
divestitures, the success or failure of integrating acquired
operations, and the ability to capitalize on growth opportunities
upon entering new markets; the ability to acquire, operate, and
maintain effective and efficient operating systems; the identified
material weaknesses in our internal control over financial
reporting; increased asset levels and changes in the composition of
assets that would impact capital levels and regulatory capital
ratios; loss of critical personnel and the challenge of hiring
qualified personnel at reasonable compensation levels; legislative
and regulatory changes, including the impact of regulations under
the Dodd-Frank Wall Street Reform and Consumer Protection Act of
2010 and other 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; regulations
and restrictions resulting from our participation in
government-sponsored programs such as the U.S. Treasury’s Small
Business Lending Fund, including potential retroactive changes in
such programs; changes in accounting principles, policies, and
guidelines applicable to financial holding companies and banking;
increases in cybersecurity risk, including potential business
disruptions or financial losses; acts of war, terrorism, cyber
intrusion, weather, or other catastrophic events beyond our
control; the effect of divestitures that may be required by
regulatory authorities due to the proposed merger in certain
markets in which MidSouth competes; the outcome of pending or
threatened litigation, or of matters before regulatory agencies,
whether currently existing or commencing in the future, including
litigation related to the merger; changes in the monetary and
fiscal policies of the U.S. government, including policies of the
U.S. Department of the Treasury and the Federal Reserve Board; and
other factors discussed under the heading “Risk Factors” in
MidSouth’s Annual Report on Form 10-K for the year ended December
31, 2018 filed with the SEC on March 18, 2019 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
June 30
March 31
December 31
September 30
June 30
EARNINGS DATA
2019
2019
2018
2018
2018
Total interest income
$
17,946
$
17,445
$
19,340
$
18,436
$
18,739
Total interest expense
2,031
2,062
2,097
1,970
1,814
Net interest income
15,915
15,383
17,243
16,466
16,925
Provision for loan losses
4,759
7,600
12,000
4,300
440
Non-interest income
4,790
6,273
4,702
5,090
4,882
Non-interest expense
18,849
19,886
24,644
23,527
22,273
(Loss) earnings before income taxes
(2,903
)
(5,830
)
(14,699
)
(6,271
)
(906
)
Income tax (benefit) expense
—
—
7,610
(1,373
)
(237
)
Net (loss) earnings
(2,903
)
(5,830
)
(22,309
)
(4,898
)
(669
)
Dividends on preferred stock
810
810
809
810
810
Net loss available to common
shareholders
$
(3,713
)
$
(6,640
)
$
(23,118
)
$
(5,708
)
$
(1,479
)
PER COMMON SHARE DATA
Basic loss per share
(0.22
)
(0.40
)
(1.39
)
(0.34
)
(0.09
)
Diluted loss per share
(0.22
)
(0.40
)
(1.39
)
(0.34
)
(0.09
)
Diluted (loss) earnings per share,
operating (Non-GAAP)(*)
(0.17
)
(0.40
)
(0.66
)
(0.08
)
0.17
Quarterly dividends per share
0.01
0.01
0.01
0.01
0.01
Book value per share at end of period
10.76
10.78
10.88
12.05
12.50
Tangible book value per share at period
end (Non-GAAP)(*)
8.13
8.13
8.20
9.35
9.78
Market price per share at end of
period
11.85
11.41
10.60
15.40
13.25
Shares outstanding at period end
16,733,569
16,715,671
16,641,017
16,641,105
16,619,894
Weighted average shares outstanding:
Basic
16,724,143
16,673,818
16,640,174
16,557,664
16,525,571
Diluted
16,724,143
16,673,818
16,640,174
16,557,664
16,525,571
AVERAGE BALANCE SHEET DATA
Total assets
$
1,728,634
$
1,742,686
$
1,791,990
$
1,830,834
$
1,860,906
Loans and leases
890,214
904,293
944,545
1,020,834
1,109,371
Total deposits
1,433,935
1,440,961
1,476,211
1,503,528
1,514,321
Total common equity
181,418
182,231
202,796
209,010
210,291
Total tangible common equity(*)
137,258
137,793
158,083
164,020
165,024
Total equity
222,390
223,203
243,768
249,997
251,278
SELECTED RATIOS
Return on average assets,
operating(*)(**)
(0.86
)%
(1.52
)%
(2.70
)%
(0.30
)%
0.59
%
Return on average common equity,
operating(*)(**)
(6.09
)%
(14.57
)%
(23.83
)%
(2.60
)%
5.22
%
Return on average tangible common equity,
operating(*)(**)
(8.02
)%
(19.28
)%
(30.57
)%
(3.31
)%
6.65
%
Efficiency ratio, operating(*)
91.04
%
99.12
%
89.37
%
83.36
%
77.38
%
Average loans to average deposits
62.08
%
62.76
%
63.98
%
67.90
%
73.26
%
Tier 1 leverage capital ratio
11.53
%
11.60
%
11.45
%
12.53
%
12.71
%
CREDIT QUALITY
Allowance for loan and lease losses (ALLL)
as a % of total loans
3.20
%
2.77
%
1.94
%
2.54
%
2.22
%
Nonperforming assets to tangible equity +
ALLL
14.43
%
14.89
%
6.44
%
23.75
%
32.99
%
Nonperforming assets to total loans
2.69
%
2.68
%
3.39
%
5.45
%
7.08
%
QTD net charge-offs to total loans
(**)
0.64
%
0.11
%
8.45
%
1.40
%
0.87
%
(**) Annualized
(*) See reconciliation of Non-GAAP
financial measures on pages 23-25.
MIDSOUTH BANCORP, INC. and
SUBSIDIARIES
Consolidated Balance Sheets
(unaudited)
(in thousands)
June 30,
March 31,
December 31,
September 30,
June 30,
2019
2019
2018
2018
2018
Assets
Cash and cash equivalents
$
232,452
$
243,430
$
205,371
$
302,888
$
278,776
Securities available-for-sale
425,638
434,679
437,754
352,606
308,937
Securities held-to-maturity
33,219
35,107
37,759
64,893
67,777
Total investment securities
458,857
469,786
475,513
417,499
376,714
Other investments
18,261
17,083
16,614
16,508
14,927
Loans held for sale
10,304
1,511
23,876
—
—
Total loans
880,037
893,650
899,785
962,743
1,057,963
Allowance for loan losses
(28,129
)
(24,779
)
(17,430
)
(24,450
)
(23,514
)
Loans, net
851,908
868,871
882,355
938,293
1,034,449
Premises and equipment
54,221
55,097
55,382
56,006
56,834
Lease right of use asset
7,865
8,263
—
—
—
Goodwill and other intangibles
44,026
44,303
44,580
44,856
45,133
Deferred Tax Asset
10,932
11,207
11,373
8,452
6,659
Deferred Tax Asset Valuation Allowance
(10,932
)
(11,207
)
(11,373
)
—
—
Other assets
37,212
36,991
39,707
41,752
45,425
Total assets
$
1,715,106
$
1,745,335
$
1,743,398
$
1,826,254
$
1,858,917
Liabilities and Shareholders'
Equity
Non-interest bearing deposits
$
399,619
$
418,321
$
383,167
$
425,696
$
419,517
Interest-bearing deposits
1,023,770
1,027,314
1,068,904
1,083,433
1,103,503
Total deposits
1,423,389
1,445,635
1,452,071
1,509,129
1,523,020
Securities sold under agreements to
repurchase
5,456
11,968
11,220
13,676
14,886
Lease liability
7,816
8,203
—
—
—
FHLB advances
27,500
27,500
27,500
27,506
37,511
Junior subordinated debentures
22,167
22,167
22,167
22,167
22,167
Other liabilities
7,786
8,696
8,450
12,325
12,661
Total liabilities
1,494,114
1,524,169
1,521,408
1,584,803
1,610,245
Total shareholders' equity
220,992
221,166
221,990
241,451
248,672
Total liabilities and shareholders'
equity
$
1,715,106
$
1,745,335
$
1,743,398
$
1,826,254
$
1,858,917
MIDSOUTH BANCORP, INC. and
SUBSIDIARIES
Consolidated Statements of Operation
(unaudited)
(in thousands except per share
data)
Three Months Ended
Six Months
6/30/2019
3/31/2019
6/30/2018
6/30/2019
6/30/2018
Interest income:
Loans, including fees
$
13,023
$
12,987
$
15,344
$
26,010
$
31,359
Investment securities
3,260
3,326
2,370
6,586
4,733
Other interest income
1,663
1,132
1,025
2,795
1,644
Total interest income
17,946
17,445
18,739
35,391
37,736
Interest expense:
Deposits
1,665
1,680
1,410
3,345
2,647
Securities sold under agreement to
repurchase
9
14
25
23
66
FHLB borrowings
74
81
120
155
249
Other borrowings
283
287
259
570
479
Total interest expense
2,031
2,062
1,814
4,093
3,441
Net interest income
15,915
15,383
16,925
31,298
34,295
Provision for loan losses
4,759
7,600
440
12,359
440
Net interest income after provision for
loan losses
11,156
7,783
16,485
18,939
33,855
Noninterest income:
Service charges on deposit accounts
1,854
1,793
2,065
3,647
4,271
Gain (loss) on securities, net
202
373
—
575
(51
)
Gain on sale of loans, net
—
1,274
—
1,274
—
ATM and debit card income
2,044
1,925
1,877
3,969
3,661
Other charges and fees
690
908
940
1,598
1,830
Total noninterest income
4,790
6,273
4,882
11,063
9,711
Noninterest expense:
Salaries and employee benefits
8,940
9,700
7,916
18,638
15,635
Occupancy expense
2,962
3,307
3,193
6,269
6,238
ATM and debit card
682
624
648
1,306
1,223
Legal and professional fees
1,163
1,883
1,100
3,046
2,789
Remediation expense
—
—
5,323
—
9,249
Merger-related expense
1,149
—
—
1,149
—
Other non-interest expense
3,953
4,372
4,093
8,327
9,011
Total noninterest expense
18,849
19,886
22,273
38,735
44,145
Loss before income taxes
(2,903
)
(5,830
)
(906
)
(8,733
)
(579
)
Income tax (benefit)/expense
—
—
(237
)
—
(271
)
Net loss
(2,903
)
(5,830
)
(669
)
(8,733
)
(308
)
Dividends on preferred stock
810
810
810
1,620
1,620
Net loss available to common
shareholders
$
(3,713
)
$
(6,640
)
$
(1,479
)
$
(10,353
)
$
(1,928
)
Loss per common share, diluted
$
(0.22
)
$
(0.40
)
$
(0.09
)
$
(0.62
)
$
(0.12
)
Operating (loss) income per common share,
diluted on pages 18-20 (Non-GAAP)(*)
$
(0.17
)
$
(0.40
)
$
0.17
$
(0.62
)
$
(0.12
)
(*) See reconciliation of Non-GAAP
financial measures.
MIDSOUTH BANCORP, INC. and
SUBSIDIARIES
Loans, Deposits and Asset Quality
(unaudited)
(in thousands)
COMPOSITION OF LOANS
June 30,
2019
March 31,
2019
December 31,
2018
September 30,
2018
June 30,
2018
Commercial, financial, and
agricultural
$
226,871
$
255,410
$
267,340
$
294,971
$
354,944
Real estate - construction
77,482
89,723
89,621
90,444
98,108
Real estate - commercial
409,694
376,523
368,449
394,416
414,526
Real estate - residential
126,043
130,700
130,320
136,151
141,104
Consumer and other
39,476
40,784
43,506
46,169
48,649
Lease financing receivable
471
510
549
592
632
Total loans
$
880,037
$
893,650
$
899,785
$
962,743
$
1,057,963
COMPOSITION OF
DEPOSITS
June 30,
2019
March 31,
2019
December 31,
2018
September 30,
2018
June 30,
2018
Noninterest bearing
399,619
$
418,321
$
383,167
$
425,696
$
419,517
NOW & other
403,026
410,792
400,625
442,487
461,726
Money market/savings
446,795
436,317
488,181
454,867
466,711
Time deposits of less than $100,000
121,399
121,460
121,703
125,363
111,758
Time deposits of $100,000 or more
52,550
58,745
58,395
60,716
63,308
Total deposits
$
1,423,389
$
1,445,635
$
1,452,071
$
1,509,129
$
1,523,020
ASSET QUALITY DATA
June 30,
2019
March 31,
2019
December 31,
2018
September 30,
2018
June 30,
2018
Nonaccrual loans
$
23,287
$
23,191
$
8,920
$
51,476
$
73,538
Loans past due 90 days and over and
accruing
—
—
—
7
3
Total nonperforming loans
23,287
23,191
8,920
51,483
73,541
Nonperforming loans held for sale
—
—
20,441
—
—
Other real estate
387
664
1,067
1,022
1,365
Other repossessed assets
8
66
55
—
—
Total nonperforming assets
$
23,682
$
23,921
$
30,483
$
52,505
$
74,906
Troubled debt restructurings, accruing
$
593
$
713
$
1,334
$
896
$
1,010
Nonperforming assets to total assets
1.38
%
1.37
%
1.75
%
2.88
%
4.03
%
Nonperforming assets to total loans
2.69
%
2.68
%
3.39
%
5.45
%
7.08
%
ALLL to nonperforming loans
120.79
%
106.85
%
195.4
%
47.49
%
31.97
%
ALLL to total loans
3.20
%
2.77
%
1.94
%
2.54
%
2.22
%
Quarter-to-date charge-offs
1,558
384
19,277
4,339
2,801
Quarter-to-date recoveries
150
133
258
974
505
Quarter-to-date net charge-offs
1,408
251
19,019
3,365
2,296
Annualized QTD net charge-offs to total
loans
0.64
%
0.11
%
8.45
%
1.40
%
0.87
%
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,
2019
December 31,
2018
Total equity
$
220,992
$
221,990
Less preferred equity
40,972
40,972
Total common equity
180,020
181,018
Less goodwill
42,171
42,171
Less intangibles
1,855
2,409
Tangible common equity
$
135,994
$
136,438
Total assets
$
1,715,106
$
1,743,398
Less goodwill
42,171
42,171
Less intangibles
1,855
2,409
Tangible assets
$
1,671,080
$
1,698,818
Tangible common equity to tangible
assets
8.14
%
8.03
%
REGULATORY CAPITAL
Common equity tier 1 capital
$
132,053
$
137,991
Tier 1 capital
194,524
201,130
Total capital
208,053
215,310
Regulatory capital ratios:
Common equity tier 1 capital ratio
12.37
%
12.20
%
Tier 1 risk-based capital ratio
18.23
%
17.79
%
Total risk-based capital ratio
19.50
%
19.04
%
Tier 1 leverage ratio
11.53
%
11.45
%
MIDSOUTH BANCORP, INC. and
SUBSIDIARIES
Quarterly Yield Analysis
(unaudited)
(in thousands)
Three Months Ended
Three Months Ended
Three Months Ended
Three Months Ended
Three Months Ended
YIELD ANALYSIS
June 30, 2019
March 31, 2019
December 31, 2018
September 30, 2018
June 30, 2018
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
Investment securities (1)
Taxable
$
452,396
$
3,100
2.74
%
$
436,549
$
3,071
2.81
%
$
375,467
$
2,950
3.14
%
$
347,205
$
2,156
2.48
%
$
340,080
$
2,093
2.46
%
Tax-exempt (2)
22,368
203
3.63
%
38,424
323
3.36
%
43,010
355
3.30
%
43,151
345
3.20
%
43,858
351
3.20
%
Total investment securities
474,764
3,303
2.78
%
474,973
3,394
2.86
%
418,477
3,305
3.16
%
390,356
2,501
2.56
%
383,938
2,444
2.54
%
Federal funds sold
4,370
30
2.75
%
5,493
32
2.33
%
5,878
33
2.25
%
7,250
32
1.77
%
5,008
21
1.63
%
Interest bearing deposits in other
banks
209,254
1,224
2.34
%
185,418
1,004
2.17
%
208,001
1,364
2.62
%
250,349
1,279
2.04
%
201,281
912
1.79
%
Other investments
17,629
409
9.28
%
16,936
95
2.24
%
16,573
177
4.27
%
15,640
106
2.71
%
14,924
91
2.45
%
Loans
890,214
13,023
5.85
%
904,293
12,987
5.74
%
944,546
14,536
6.16
%
1,020,834
14,590
5.72
%
1,109,371
15,344
5.55
%
Total interest earning assets
1,596,231
17,989
4.51
%
1,587,113
17,512
4.41
%
1,593,475
19,415
4.87
%
1,684,429
18,508
4.40
%
1,714,522
18,812
4.39
%
Non-interest earning assets
132,403
155,573
198,515
146,405
146,384
Total assets
$
1,728,634
$
1,742,686
$
1,791,990
$
1,830,834
$
1,860,906
Interest-bearing liabilities:
Deposits
$
1,032,778
$
1,665
0.64
%
$
1,042,918
$
1,680
0.64
%
$
1,066,322
$
1,670
0.63
%
$
1,083,404
$
1,602
0.59
%
$
1,087,746
$
1,409
0.52
%
Repurchase agreements
7,356
8
0.44
%
12,069
14
0.46
%
13,031
17
0.52
%
14,641
16
0.44
%
26,230
25
0.39
%
FHLB advances
27,500
74
1.08
%
27,500
81
1.18
%
27,500
135
1.96
%
29,139
81
1.11
%
37,514
120
1.28
%
Junior subordinated debentures
22,167
283
5.11
%
22,167
287
5.18
%
22,167
275
4.96
%
22,167
271
4.89
%
22,167
260
4.63
%
Total interest bearing liabilities
1,089,801
2,030
0.75
%
1,104,654
2,062
0.75
%
1,129,020
2,097
0.74
%
1,149,351
1,970
0.69
%
1,173,657
1,814
0.62
%
Non-interest bearing liabilities
416,443
414,829
419,202
431,486
435,971
Shareholders' equity
222,390
223,203
243,768
249,997
251,278
Total liabilities and shareholders'
equity
$
1,728,634
$
1,742,686
$
1,791,990
$
1,830,834
$
1,860,906
Net interest income (TE) and spread
$
15,959
3.76
%
$
15,450
3.66
%
$
17,318
4.13
%
$
16,538
3.71
%
$
16,998
3.77
%
Net interest margin
4.00
%
3.89
%
3.93
%
3.97
%
4.12
%
(1) Securities classified as
available-for-sale are included in average balances. Interest
income figures reflect interest earned on such securities.
(2)Reflects taxable-equivalent adjustments using the federal
statutory rate of 21% in adjusting interest on tax-exempt
securities to a fully taxable basis. The taxable equivalent
adjustments included above are $43,000 for 2Q19, $68,000 for 1Q19,
$75,000 for 4Q18, $72,000 for 3Q18, and $74,000 for 2Q18 for the
quarter ended. (3) Interest income includes loan fees of $588,000
for 2Q19, $632,000 for 1Q19, $832,000 for 4Q18, $686,000 for 3Q18,
and $1.1 million for 2Q18 for the quarter ended. Nonaccrual loans
are included in average balances and income on such loans is
recognized on a cash basis
MIDSOUTH BANCORP, INC. and
SUBSIDIARIES
Yearly Yield Analysis
(unaudited)
(in thousands)
YIELD ANALYSIS
Six Months Ended
June 30, 2019
June 30, 2018
Tax
Tax
Average
Equivalent
Yield/
Average
Equivalent
Yield/
Balance
Interest
Rate
Balance
Interest
Rate
Investment securities (1)
Taxable
$
409,653
$
5,755
2.81
%
$
336,221
$
4,140
2.46
%
Tax-exempt (2)
21,240
526
4.95
%
47,186
746
3.16
%
Total investment securities
430,893
6,281
2.92
%
383,407
4,886
2.55
%
Federal funds sold
4,928
61
2.48
%
4,993
39
1.56
%
Time and interest bearing deposits in
other banks
191,497
2,229
2.33
%
167,299
1,426
1.70
%
Other investments
17,284
505
5.84
%
14,853
179
2.41
%
Loans (3)
895,806
26,010
5.81
%
1,134,382
31,359
5.53
%
Total interest earning assets
1,540,408
35,086
4.56
%
1,704,934
37,889
4.44
%
Non-interest earning assets
193,947
155,556
Total assets
$
1,734,355
$
1,860,490
Interest-bearing liabilities:
Deposits
$
1,037,056
$
3,345
0.65
%
$
1,079,660
$
2,647
0.49
%
Repurchase agreements
9,699
23
0.47
%
33,134
66
0.40
%
FHLB advances
27,500
155
1.13
%
38,124
249
1.31
%
Junior subordinated debentures
22,167
570
5.14
%
22,167
479
4.32
%
Total interest bearing liabilities
1,096,422
4,093
0.75
%
1,173,085
3,441
0.59
%
Non-interest bearing liabilities
415,997
434,192
Shareholders' equity
221,936
253,213
Total liabilities and shareholders'
equity
$
1,734,355
$
1,860,490
Net interest income (TE) and spread
$
30,993
3.81
%
$
34,448
3.85
%
Net interest margin
4.02
%
4.04
%
(1) Securities classified as
available-for-sale are included in average balances. Interest
income figures reflect interest earned on such securities.
(2)Reflects taxable-equivalent adjustments using the federal
statutory rate of 21% in adjusting interest on tax-exempt
securities to a fully taxable basis. The taxable equivalent
adjustments included above are $110,000 for 2019 and $152,000 for
2018. (3) Interest income includes loan fees of $1.1 million for
2019 and $2,073,000 for 2018. Nonaccrual loans are included in
average balances and income on such loans is recognized on a cash
basis.
MIDSOUTH BANCORP, INC. and
SUBSIDIARIES
Reconciliation of Non-GAAP Financial
Measures (unaudited)
(in thousands except per share
data)
Three Months Ended
June 30,
2019
March 31,
2019
December 31,
2018
September 30,
2018
June 30,
2018
Tangible common equity and tangible
book value per share
Total shareholders' equity
$
220,992
$
221,166
$
221,990
$
241,451
$
248,672
Less:
Preferred common shareholders' equity
40,972
40,972
40,972
40,972
40,987
Total common equity
180,020
180,194
181,018
200,479
207,685
Less:
Goodwill
$
42,171
$
42,171
$
42,171
$
42,171
$
42,171
Other intangible assets
$
1,855
$
2,132
$
2,409
$
2,685
$
2,962
Total tangible common equity
$
135,994
$
135,891
$
136,438
$
155,623
$
162,552
Period end number of shares
$
16,733,569
$
16,715,671
$
16,641,017
$
16,641,105
$
16,619,894
Book value per share (period end)
$
10.76
$
10.78
$
10.88
$
12.05
$
12.5
Tangible book value per share (period
end)
$
8.13
$
8.13
$
8.20
$
9.35
$
9.78
MIDSOUTH BANCORP, INC. and
SUBSIDIARIES
Reconciliation of Non-GAAP Financial
Measures (unaudited) (continued)
(in thousands except per share
data)
Operating (loss) earnings per
share
June 30, 2019
March 31, 2019
December 31, 2018
September 30, 2018
June 30, 2018
Net loss available to common
shareholders'
$
(3,713
)
$
(6,640
)
$
(23,118
)
$
(5,708
)
$
(1,479
)
Adjustment items:
Merger-related expenses
1,149
—
—
—
—
Regulatory remediation costs
—
—
4,970
5,502
5,323
Loans held for sale expense
—
—
—
4
20
Discount accretion acceleration
—
—
(726
)
—
—
Tax effect of adjustments
(241
)
—
(891
)
(1,156
)
(1,122
)
After tax adjustment items
908
—
3,353
4,350
4,221
Tax expense adjustment item:
Attributable to valuation allowance on
deferred tax
—
—
7,685
—
—
Adjusted net (loss) income
$
(2,805
)
$
(6,640
)
$
(12,080
)
$
(1,358
)
$
2,742
Weighted average number of shares -
diluted
16,724,143
16,673,818
16,640,174
16,557,664
16,525,571
Net loss per diluted share
$
(0.22
)
$
(0.40
)
$
(1.39
)
$
(0.34
)
$
(0.09
)
Operating net (loss) earnings per diluted
share
$
(0.17
)
$
(0.40
)
$
(0.73
)
$
(0.08
)
$
0.17
Operating ratios
Return on average assets
(0.86
)%
(1.52
)%
(5.16
)%
(1.25
)%
(0.32
)%
Effect of adjustment items
0.21
%
—
%
2.46
%
0.95
%
0.91
%
Operating return on average assets
(0.65
)%
(1.52
)%
(2.70
)%
(0.30
)%
0.59
%
Return on average common equity
(8.07
)%
(14.57
)%
(45.60
)%
(10.92
)%
(2.81
)%
Effect of adjustment items
1.97
%
—
%
21.77
%
8.32
%
8.03
%
Operating return on average common
equity
(6.09
)%
(14.57
)%
(23.83
)%
(2.60
)%
5.22
%
Return on average tangible common
equity
(10.61
)%
(19.28
)%
(58.50
)%
(13.92
)%
(3.58
)%
Effect of adjustment items
2.60
%
—
%
27.93
%
10.61
%
10.23
%
Operating return on average tangible
common equity
(8.02
)%
(19.28
)%
(30.57
)%
(3.31
)%
6.65
%
MIDSOUTH BANCORP, INC. and
SUBSIDIARIES
Reconciliation of Non-GAAP Financial
Measures (unaudited) (continued)
(in thousands except per share
data)
Three Months Ended
OPERATING EFFICIENCY RATIO (TE)
June 30,
2019
March 31,
2019
December 31,
2018
September 30,
2018
June 30,
2018
Operating noninterest expense
Total Noninterest Expense
$
18,849
$
19,886
$
24,644
$
23,527
$
22,273
Adjustment items:
Merger-related expenses
(1,149
)
—
$
—
$
—
$
—
Regulatory remediation costs
—
$
—
$
(4,970
)
$
(5,502
)
$
(5,323
)
Loans held for sale expense
—
—
—
4
(20
)
Operating noninterest expense
$
17,700
$
19,886
$
19,674
$
18,029
$
16,930
Operating efficiency ratio
Net interest income (TE)
15,959
15,436
17,318
16,538
16,998
Noninterest income
4,790
6,273
4,702
5,090
4,882
Total Revenue (TE)
20,749
21,709
22,020
21,628
21,880
Adjustment items
Gain on sale of securities
202
373
—
—
—
Gain on sale of loans
—
1,274
—
—
—
Adjusted total revenue (TE)
20,547
20,062
22,020
21,628
21,880
Efficiency ratio
91.04
%
91.83
%
112.30
%
109.14
%
102.14
%
Operating efficiency ratio
86.14
%
99.12
%
89.35
%
83.36
%
77.38
%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190725005857/en/
Investor Contacts: Jim McLemore, CFA President & CEO
337.237.8343
Lorraine Miller, CFA EVP & CFO 337.593.3143
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