MidSouth Bancorp, Inc. (“MidSouth”) (NYSE: MSL) today reported a quarterly net loss available to common shareholders of $6.64 million for the three months ended March 31, 2019, compared to net loss available to common shareholders of $450,000 reported for the three months ended March 31, 2018 and $23.1 million in net loss available to common shareholders for the fourth quarter of 2018. The first quarter loss is primarily due to the $6.6 million impairment charge for a shared national healthcare credit. MidSouth has one additional pass rated shared national credit for $10.3 million with a company headquartered in the Acadiana market. The first quarter of 2018 included after-tax charges of $691,000 resulting from the transfer of loans to held for sale, $3.1 million for regulatory remediation costs, $115,000 related to branch closures during the quarter and $70,000 for legal fees related to a bulk loan sale. The fourth quarter of 2018 included an after-tax charge of $3.9 million for regulatory remediation costs, a $11.4 million tax-related charge for the establishment of a valuation allowance to fully reserve against net deferred tax assets given the company’s cumulative pretax loss position. Excluding 2018 non-operating expenses, a loss of $0.40 per diluted share was reported for the first quarter of 2019, compared to diluted loss per common share of $0.73 for the fourth quarter of 2018 and diluted income per share of $0.21 for the first quarter of 2018.

Balance Sheet

Consolidated assets decreased $112.4 million to $1.7 billion at March 31, 2019 from $1.9 billion at March 31, 2018 and essentially unchanged from $1.7 billion at December 31, 2018. Our stable core deposit base, which excludes time deposits, totaled $1.3 billion at March 31, 2019 and December 31, 2018 and accounted for 87.5% and 87.6% of deposits at March 31, 2019 and December 31, 2018, respectively. Net loans totaled $868.9 million at March 31, 2019, compared to $882.4 million at December 31, 2018 and $1.1 billion at March 31, 2018. Loans held for sale of $1.5 million at March 31, 2019 declined from $23.9 million at December 31, 2018, due to the successful execution of a $16.9 million loan sale in the first quarter of 2019.

MidSouth’s Tier 1 leverage capital ratio was 11.60% at March 31, 2019, compared to 11.45% at December 31, 2018. Tier 1 risk-based capital and total risk-based capital ratios were 18.22% and 19.49% at March 31, 2019, respectively, compared to 17.79% and 19.04% at December 31, 2018, respectively. Tier 1 common equity to total risk-weighted assets at March 31, 2019 was 12.48%, compared to 12.20% at December 31, 2018. Tangible common equity totaled $135.9 million at March 31, 2019, compared to $136.4 million at December 31, 2018. Tangible book value per share at March 31, 2019 was $8.13 compared to $8.20 at December 31, 2018.

Asset Quality

Nonperforming assets totaled $23.9 million at March 31, 2019, a decrease of $6.6 million compared to $30.5 million reported at December 31, 2018. The decrease is primarily attributable to the sale of $16.9 million of nonperforming loans offset by a $13.2 million increase in non-accrual loans due primarily to a $11.4 million shared national healthcare credit. Allowance coverage for nonperforming loans decreased to 106.85% at March 31, 2019, compared to 195.40% at December 31, 2018. The ALLL/total loans ratio was 2.77% at March 31, 2019 and 1.94% at December 31, 2018. The ratio of annualized net charge-offs to total loans decreased to 0.11% for the three months ended March 31, 2019 compared to 8.45% for the three months ended December 31, 2018, primarily as a result of the charge-offs taken in the fourth quarter due to the impending bulk loan sale.

Total nonperforming assets, excluding nonperforming loans held for sale to total loans plus ORE and other assets repossessed was 2.68% at March 31, 2019 compared to 3.39% at December 31, 2018. Loans classified as troubled debt restructurings, accruing (“TDRs, accruing”) totaled $713,000 at March 31, 2019 compared to $1.3 million at December 31, 2018. Total classified assets, including ORE, were $44.4 million at March 31, 2019 compared to $51.2 million at December 31, 2018. The balance of classified loans decreased as a result of principal reductions through payoffs and/or pay-downs and settlements and the completion of problem asset sales of $18.3 million offset by the downgrade of a shared national credit in the healthcare industry in the amount of $11.4 million. The classified assets to capital ratio at MidSouth Bank was 25% at March 31, 2019 versus 29% at December 31, 2018.

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.

First Quarter 2019 vs. Fourth Quarter 2018 Earnings Comparison

MidSouth reported a net loss available to common shareholders of $6.6 million for the three months ended March 31, 2019, compared to net loss available to common shareholders of $23.1 million for the three months ended December 31, 2018. Revenues from consolidated operations decreased $324,000 from $24.0 million in the fourth quarter of 2018 to $23.7 million in the first quarter 2019, primarily as a result of the gain on sale of loans of $1.3 million and gain on sale of securities of $373,000 offset by a decrease in loan income of $1.5 million.

The first quarter of 2019 did not include any remediation costs. The fourth quarter of 2018 included a non-recurring charge of $5.0 million of regulatory remediation costs. Excluding these non-operating expenses, noninterest expense increased $212,000 and consisted primarily of a continued investment in compliance staffing and an $805,000 offset due to lower professional fees.

The provision for loan losses decreased $4.4 million from the fourth quarter 2018 to the first quarter 2019. A $11.4 million tax-related charge was recorded during the fourth quarter of 2018 associated with the establishment of a valuation reserve against the net deferred tax assets. Excluding this adjustment, we recorded income tax expense of $7.6 million for the fourth quarter of 2018, compared to no income tax expense for the first quarter of 2019.

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 first quarter of 2019 and the fourth quarter of 2018 based on a dividend rate of 9%. Dividends on the Series C Preferred Stock issued with the December 28, 2012 acquisition of PSB Financial Corporation totaled $90,000 for the three months ended March 31, 2019 and December 31, 2018.

Fully taxable-equivalent (“FTE”) net interest income decreased $1.9 million from the fourth quarter 2018 to the first quarter 2019, primarily due to a decrease in interest income on loans and interest bearing deposits with other banks of $1.5 million and $360,000, respectively. Higher loan yields for the fourth quarter 2018 are reflective of management’s recognition of the remaining PSB loan accretion discounts into income. Excluding these purchase accounting adjustments, the loan yield decreased 11 bps, from 5.85% to 5.74% during the same period. The average yield on investment securities decreased 30 basis points, from 3.16% to 2.86%, due to a 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 decreased 54 bps for the same period, from 4.87% to 4.41%, respectively. The FTE net interest margin decreased 53 bps from 4.35% for the fourth quarter 2018 to 3.89% for the first quarter of 2019. Excluding purchase accounting adjustments, the FTE net interest margin decreased 22 bps, from 4.04% for the fourth quarter of 2018 to 3.89% for the first quarter of 2019.

First Quarter 2019 vs. First Quarter 2018 Earnings Comparison

MidSouth reported a net loss available to common shareholders of $6.6 million for the three months ended March 31, 2019, compared to net loss available to common shareholders of $450,000 for the three months ended March 31, 2018. Revenues from consolidated operations decreased $108,000 in quarterly comparison, from $23.8 million for the three months ended March 31, 2018 to $23.7 million for the three months ended March 31, 2019. Net interest income decreased $2.0 million in quarterly comparison, resulting from a $1.6 million decrease in interest income primarily driven by lower loan levels, in addition to a higher interest expense of $435,000 reflecting the impact of higher interest rates. Operating noninterest income decreased $203,000 which excludes $1.6 million gains on assets sales including loans and investments.

Excluding remediation expenses of $3.9 million for the first quarter of 2018, noninterest expenses increased $1.9 million in quarterly comparison and consisted primarily of a $2.0 million increase in salaries and employee benefits costs. The provision for loan losses increased $7.6 million in quarterly comparison, from $0 for the three months ended March 31, 2018 to $7.6 million the three months ended March 31, 2019. We recorded an income tax benefit of $34,000 for the first quarter of 2018 versus no benefit for the first quarter of 2019.

Dividends on preferred stock totaled $810,000 for the three months ended March 31, 2019 and 2018. Dividends on the Series B Preferred Stock were $720,000 for the three months ended March 31, 2019 and 2018. Dividends on the Series C Preferred Stock totaled $90,000 for the three months ended March 31, 2019 and 2018.

Interest income on loans decreased $3.0 million primarily due to a $255.4 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 $469.8 million, or 26.9% of total assets at March 31, 2019, versus $367.2 million, or 19.8% of total assets at March 31, 2018. The investment portfolio had an effective duration of 2.6 years and a net unrealized loss of $70,000 at March 31, 2019. FTE interest income on investments increased $947,000 in prior year quarterly comparison. The average volume of investment securities increased $90.0 million in prior year quarterly comparison, and the average tax equivalent yield on investment securities increased 32 basis points, from 2.54% to 2.86%.

The average yield on all earning assets decreased 15 basis points in prior year quarterly comparison, from 4.56% for the first quarter of 2018 to 4.41% for the first quarter of 2019, due to a less favorable mix of earning assets given the decline in loans on a year-over-year basis.

Interest expense increased $435,000 in prior year quarterly comparison primarily due to a $442,000 increase in interest expense on deposits and a $67,000 increase in interest expense on junior subordinated debt, which were partially offset by a $74,000 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 23 basis points, from 4.12% for the first quarter of 2018 to 3.89% for the first quarter 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 March 31, 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 ourstrategic 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; and other factors discussed under the heading “Risk Factors” in MidSouth’sAnnual 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
EARNINGS DATA         March 31     December 31     September 30     June 30     March 31
Total interest income $ 17,445 $ 19,340 $ 18,436 $ 18,739 $ 18,997
Total interest expense   2,062       2,097       1,970   1,814       1,627  
Net interest income   15,383       17,243       16,466   16,925       17,370  
Provision for loan losses   7,600       12,000       4,300   440       —  
Non-interest income 6,273 4,702 5,090 4,882 4,829
Non-interest expense   19,886       24,644       23,527   22,273       21,873  
(Loss) earnings before income taxes (5,830 ) (14,699 ) (6,271 ) (906 ) 326
Income tax (benefit) expense   —       7,610       (1,373 ) (237 )     (34 )
Net (loss) earnings (5,830 ) (22,309 ) (4,898 ) (669 ) 360
Dividends on preferred stock   810       809       810   810       810  
Net loss available to common shareholders   $ (6,640 )     $ (23,118 )     $ (5,708 ) $ (1,479 )     $ (450 )
 
PER COMMON SHARE DATA
Basic loss per share (0.40 ) (1.39 ) (0.34 ) (0.09 ) (0.03 )
Diluted loss per share (0.40 ) (1.39 ) (0.34 ) (0.09 ) —
Diluted (loss) earnings per share, operating (Non-GAAP)(*) (0.40 ) (0.66 ) (0.08 ) 0.17 0.21
Quarterly dividends per share 0.01 0.01 0.01 0.01 0.01
Book value per share at end of period 10.78 10.88 12.05 12.50 12.62
Tangible book value per share at period end (Non-GAAP)(*) 8.13 8.20 9.35 9.78 9.89
Market price per share at end of period 11.41 10.60 15.40 13.25 12.65
Shares outstanding at period end 16,715,671 16,641,017 16,641,105 16,619,894 16,621,811
Weighted average shares outstanding:
Basic 16,673,818 16,640,174 16,557,664 16,525,571 16,495,438
Diluted 16,673,818 16,640,174 16,557,664 16,525,571 16,495,438
AVERAGE BALANCE SHEET DATA
Total assets $ 1,742,686 $ 1,791,990 $ 1,830,834 $ 1,860,906 $ 1,860,070
Loans and leases 904,293 944,545 1,020,834 1,109,371 1,159,671
Total deposits 1,440,961 1,476,211 1,503,528 1,514,321 1,495,907
Total common equity 182,231 202,796 209,010 210,291 214,183
Total tangible common equity(*) 137,793 158,083 164,020 165,024 168,629
Total equity 223,203 243,768 249,997 251,278 255,170
SELECTED RATIOS
Return on average assets, operating(*)(**) (1.52 )% (2.70 )% (0.30 )% 0.59 % 0.76 %
Return on average common equity, operating(*)(**) (14.57 )% (23.83 )% (2.60 )% 5.22 % 6.59 %
Return on average tangible common equity, operating(*)(**) (19.28 )% (30.57 )% (3.31 )% 6.65 % 8.37 %
Efficiency ratio, operating(*) 91.83 % 89.35 % 83.36 % 77.38 % 75.57 %
Average loans to average deposits 62.76 % 63.98 % 67.90 % 73.26 % 77.52 %
Tier 1 leverage capital ratio 11.60 % 11.45 % 12.53 % 12.71 % 12.80 %
CREDIT QUALITY
Allowance for loan and lease losses (ALLL) as a % of total loans 2.77 % 1.94 % 2.54 % 2.22 % 2.23 %
Nonperforming assets to tangible equity + ALLL 14.89 % 6.44 % 23.75 % 32.99 % 36.86 %
Nonperforming assets to total loans, other real estate owned and other repossessed assets 2.67 % 1.12 % 5.45 % 7.07 % 7.47 %
QTD net charge-offs to total loans (**) 0.11 % 8.45 % 1.40 % 0.87 % 0.54 %
(**) Annualized
(*) See reconciliation of Non-GAAP financial measures on pages 18-20.
 
 
 
 
 
 
MIDSOUTH BANCORP, INC. and SUBSIDIARIES
Consolidated Balance Sheets (unaudited)
(in thousands)
               
March 31,     December 31, September 30, June 30,     March 31,
2019 2018 2018 2018 2018
Assets
Cash and cash equivalents $ 243,430 $ 205,371 $ 302,888 $ 278,776 $ 211,486
Securities available-for-sale 434,679 437,754 352,606 308,937 293,970
Securities held-to-maturity 35,107   37,759   64,893   67,777   73,255  
Total investment securities 469,786   475,513   417,499   376,714   367,225  
Other investments 17,083 16,614 16,508 14,927 12,896
Loans held for sale 1,511 23,876 — — 1,117
Total loans 893,650 899,785 962,743 1,057,963 1,137,255
Allowance for loan losses (24,779 ) (17,430 ) (24,450 ) (23,514 ) (25,371 )
Loans, net 868,871   882,355   938,293   1,034,449   1,111,884  
Premises and equipment 55,097 55,382 56,006 56,834 57,848
Lease right of use asset 8,263 — — — —
Goodwill and other intangibles 44,303 44,580 44,856 45,133 45,409
Deferred Tax Asset 11,207 11,373 8,452 6,659 4,854
Deferred Tax Asset Valuation Allowance (11,207 ) (11,373 ) — — —
Other assets 36,991   39,707   41,752   45,425   45,036  
Total assets $ 1,745,335   $ 1,743,398   $ 1,826,254   $ 1,858,917   $ 1,857,755  
 
Liabilities and Shareholders' Equity
Non-interest bearing deposits $ 418,321 $ 383,167 $ 425,696 $ 419,517 $ 427,504
Interest-bearing deposits 1,027,314   1,068,904   1,083,433   1,103,503   1,076,433  
Total deposits 1,445,635 1,452,071 1,509,129 1,523,020 1,503,937
Securities sold under agreements to repurchase 11,968 11,220 13,676 14,886 33,026
Lease liability 8,203 — — — —
FHLB advances 27,500 27,500 27,506 37,511 37,516
Junior subordinated debentures 22,167 22,167 22,167 22,167 22,167
Other liabilities 8,696   8,450   12,325   12,661   10,272  
Total liabilities 1,524,169   1,521,408   1,584,803   1,610,245   1,606,918  
Total shareholders' equity 221,166   221,990   241,451   248,672   250,837  
Total liabilities and shareholders' equity $ 1,745,335   $ 1,743,398   $ 1,826,254   $ 1,858,917   $ 1,857,755  
 
 
 
 
 
 
MIDSOUTH BANCORP, INC. and SUBSIDIARIES
Consolidated Statements of Operation (unaudited)
(in thousands except per share data)
                       
Three Months Ended
3/31/2019 12/31/2018 9/30/2018 6/30/2018 3/31/2018
Interest income:
Loans, including fees $ 12,987 $ 14,536 $ 14,590 $ 15,344 $ 16,015
Investment securities 3,326 3,230 2,429 2,370 2,363
Other interest income 1,132   1,574   1,417   1,025   619  
Total interest income 17,445   19,340   18,436   18,739   18,997  
Interest expense:
Deposits 1,680 1,669 1,602 1,410 1,238
Securities sold under agreement to repurchase 14 17 16 25 40
FHLB borrowings 81 136 81 120 129
Other borrowings 287   275   271   259   220  
Total interest expense 2,062   2,097   1,970   1,814   1,627  
Net interest income 15,383 17,243 16,466 16,925 17,370
Provision for loan losses 7,600   12,000   4,300   440   —  
Net interest income after provision for loan losses 7,783   5,243   12,166   16,485   17,370  
Noninterest income:
Service charges on deposit accounts 1,793 1,414 2,159 2,065 2,206
Gain (loss) on securities, net 373 (49 ) — — —
Gain on sale of loans, net 1,274 — — — —
ATM and debit card income 1,925 2,624 1,796 1,877 1,784
Other charges and fees 908   713   1,135   940   839  
Total noninterest income 6,273   4,702   5,090   4,882   4,829  
Noninterest expense:
Salaries and employee benefits 9,700 8,895 7,762 7,916 7,719
Occupancy expense 3,307 3,186 3,077 3,193 3,045
ATM and debit card 624 678 653 648 576
Legal and professional fees 1,883 3,457 2,543 1,100 1,689
Remediation expense — 4,970 5,502 5,323 3,926
Other non-interest expense 4,372   3,458   3,990   4,093   4,918  
Total noninterest expense 19,886   24,644   23,527   22,273   21,873  
Earnings (loss) before income taxes (5,830 ) (14,699 ) (6,271 ) (906 ) 326
Income tax (benefit)/expense —   7,610   (1,373 ) (237 ) (34 )
Net (loss) earnings (5,830 ) (22,309 ) (4,898 ) (669 ) 360
Dividends on preferred stock 810   809   810   810   810  
Net (loss) earnings available to common shareholders $ (6,640 ) $ (23,118 ) $ (5,708 ) $ (1,479 ) $ (450 )
(Loss) earnings per common share, diluted $ (0.40 ) $ (1.39 ) $ (0.34 ) $ (0.09 ) $ (0.03 )
Operating (loss) earnings per common share, diluted on pages 18-20 (Non-GAAP)(*) $ (0.40 ) $ (0.73 ) $ (0.08 ) $ 0.17   $ 0.21  
(*) See reconciliation of Non-GAAP financial measures.
 
 
 
 
 
 
MIDSOUTH BANCORP, INC. and SUBSIDIARIES
Loans, Deposits and Asset Quality (unaudited)
(in thousands)
 
COMPOSITION OF LOANS        

March 31,

2019

    

December 31,

2018

    

September 30,

2018

    

June 30,

2018

    

March 31,

2018

Commercial, financial, and agricultural $ 255,410 $ 267,340 $ 294,971 $ 354,944 $ 401,048
Real estate - construction 89,723 89,621 90,444 98,108 94,679
Real estate - commercial 376,523 368,449 394,416 414,526 438,779
Real estate - residential 130,700 130,320 136,151 141,104 145,671
Consumer and other 40,784 43,506 46,169 48,649 56,386
Lease financing receivable 510   549   592   632   692  
Total loans $ 893,650   $ 899,785   $ 962,743   $ 1,057,963   $ 1,137,255  
                 
COMPOSITION OF DEPOSITS

March 31,

2019

December 31,

2018

September 30,

2018

June 30,

2018

March 31,

2018

Noninterest bearing 418,321 $ 383,167 $ 425,696 $ 419,517 $ 427,504
NOW & other 410,792 400,625 442,487 461,726 459,394
Money market/savings 436,317 488,181 454,867 466,711 441,801
Time deposits of less than $100,000 121,460 121,703 125,363 111,758 113,665
Time deposits of $100,000 or more 58,745   58,395   60,716   63,308   61,573  
Total deposits $ 1,445,635   $ 1,452,071   $ 1,509,129   $ 1,523,020   $ 1,503,937  
                 
ASSET QUALITY DATA

March 31,

2019

December 31,

2018

September 30,

2018

June 30,

2018

March 31,

2018

Nonaccrual loans $ 23,191 $ 8,920 $ 51,476 $ 73,538 $ 82,275
Loans past due 90 days and over and accruing —   —   7   3   1  
Total nonperforming loans 23,191 8,920 51,483 73,541 82,276
Nonperforming loans held for sale — 20,441 — — 808
Other real estate 664 1,067 1,022 1,365 1,803
Other repossessed assets 66   55   —   —   194  
Total nonperforming assets $ 23,921 $ 30,483 $ 52,505 $ 74,906 $ 85,081
Troubled debt restructurings, accruing $ 713   $ 1,334   $ 896   $ 1,010   $ 1,153  
Nonperforming assets to total assets 1.37 % 1.75 % 2.88 % 4.03 % 4.58 %
Nonperforming assets to total loans 2.68 % 3.39 % 5.45 % 7.07 % 7.47 %
ALLL to nonperforming loans 106.85 % 195.4 % 47.49 % 31.97 % 30.84 %
ALLL to total loans 2.77 % 1.94 % 2.54 % 2.22 % 2.23 %
Quarter-to-date charge-offs 384 19,277 4,339 2,801 1,836
Quarter-to-date recoveries 133   258   974   505   319  
Quarter-to-date net charge-offs 251   19,019   3,365   2,296   1,517  
Annualized QTD net charge-offs to total loans 0.11 % 8.45 % 1.40 % 0.87 % 0.54 %
 
 
 
 
 
 
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,

2019

December 31,

2018

 
Total equity $ 221,166 $ 221,990
Less preferred equity 40,972   40,972  
Total common equity 180,194 181,018
Less goodwill 42,171 42,171
Less intangibles 2,132   2,409  
Tangible common equity $ 135,891   $ 136,438  
 
Total assets $ 1,745,335 $ 1,743,398
Less goodwill 42,171 42,171
Less intangibles 2,132   2,409  
Tangible assets $ 1,701,032   $ 1,698,818  
 
Tangible common equity to tangible assets 7.99 % 8.03 %
 
REGULATORY CAPITAL
 
Common equity tier 1 capital $ 135,696 $ 137,991
Tier 1 capital 198,167 201,130
Total capital 211,905 215,310
 
Regulatory capital ratios:
Common equity tier 1 capital ratio 12.48 % 12.20 %
Tier 1 risk-based capital ratio 18.22 % 17.79 %
Total risk-based capital ratio 19.49 % 19.04 %
Tier 1 leverage ratio 11.60 % 11.45 %
 
 
 
 
 
 
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, 2019 December 31, 2018 September 30, 2018 June 30, 2018 March 31, 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
Taxable securities $ 436,549 $ 3,071 2.81 % $ 375,467 $ 2,950 3.14 % $ 347,205 $ 2,156 2.48 % $ 340,080 $ 2,093 2.46 % $ 334,419 $ 2,047 2.45 %
Tax-exempt securities (*) 38,424 323 3.36 % 43,010 355 3.30 % 43,151 345 3.20 % 43,858 351 3.20 % 50,550 400 3.17 %
Total investment securities 474,973 3,394 2.86 % 418,477 3,305 3.16 % 390,356 2,501 2.56 % 383,938 2,444 2.54 % 384,969 2,447 2.54 %
Federal funds sold 5,493 32 2.33 % 5,878 33 2.25 % 7,250 32 1.77 % 5,008 21 1.63 % 4,978 18 1.45 %
Interest bearing deposits in other banks 185,418 1,004 2.17 % 208,001 1,364 2.62 % 250,349 1,279 2.04 % 201,281 912 1.79 % 132,940 514 1.55 %
Other investments 16,936 95 2.24 % 16,573 177 4.27 % 15,640 106 2.71 % 14,924 91 2.45 % 12,721 87 2.74 %
Loans 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 % 1,159,671 16,015 5.60 %
Total interest earning assets 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 % 1,695,279 19,081 4.56 %
Non-interest earning assets 155,573 198,515 146,405 146,384 164,791
Total assets $ 1,742,686 $ 1,791,990 $ 1,830,834 $ 1,860,906 $ 1,860,070
Interest-bearing liabilities:
Deposits $ 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 % $ 1,056,417 $ 1,238 0.47 %
Repurchase agreements 12,069 14 0.46 % 13,031 17 0.52 % 14,641 16 0.44 % 26,230 25 0.39 % 40,115 40 0.40 %
FHLB advances 27,500 81 1.18 % 27,500 135 1.96 % 29,139 81 1.11 % 37,514 120 1.28 % 38,741 129 1.33 %
Junior subordinated debentures 22,167 287 5.18 % 22,167 275 4.96 % 22,167 271 4.89 % 22,167 260 4.63 % 22,167 220 3.97 %
Total interest bearing liabilities 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 % 1,157,440 1,627 0.57 %
Non-interest bearing liabilities 414,829 419,202 431,486 435,971 447,460
Shareholders' equity 223,203 243,768 249,997 251,278 255,170
Total liabilities and shareholders' equity 1,742,686 1,791,990 1,830,834 1,860,906 1,860,070
Net interest income (TE) and spread $ 15,450 3.66 % $ 17,318 4.13 % $ 16,538 3.71 % $ 16,998 3.77 % $ 17,454 3.99 %
Net interest margin 3.89 % 4.35 % 3.93 % 3.97 % 4.12 %
(*) Reflects taxable equivalent adjustments using the federal statutory tax rate of 21% in adjusting interest on tax-exempt securities to a fully taxable basis. The taxable equivalent adjustments included above amount to $68,000 for 1Q19, $75,000 for 4Q18 $72,000 for 3Q18, $74,000 for 2Q18, and $84,000 for 1Q18.
 
 
 
 
 
 
MIDSOUTH BANCORP, INC. and SUBSIDIARIES
Reconciliation of Non-GAAP Financial Measures (unaudited)
(in thousands except per share data)
        Three Months Ended

March 31,

2019

    

December 31,

2018

    

September 30,

2018

    

June 30,

2018

    

March 31,

2018

Tangible common equity and tangible book value per share
 
Total shareholders' equity $ 221,166 $ 221,990 $ 241,451 $ 248,672 $ 250,837
Less:
Preferred common shareholders' equity 40,972 40,972 40,972 40,987 40,987
Total common equity 180,194 181,018 200,479 207,685 209,850
 
Less:
Goodwill $ 42,171 $ 42,171 $ 42,171 $ 42,171 $ 42,171
Other intangible assets $ 2,132   $ 2,409   $ 2,685 $ 2,962 $ 3,238
Total tangible common equity $ 135,891   $ 136,438   $ 155,623 $ 162,552 $ 164,441
 
Period end number of shares $ 16,715,671 $ 16,641,017 $ 16,641,105 $ 16,619,894 $ 16,621,811
Book value per share (period end) $ 10.78 $ 10.88 $ 12.05 $ 12.50 $ 12.62
Tangible book value per share (period end) $ 8.13 $ 8.20 $ 9.35 $ 9.78 $ 9.89
 
 
 
 
 
 
MIDSOUTH BANCORP, INC. and SUBSIDIARIES
Reconciliation of Non-GAAP Financial Measures (unaudited) (continued)
(in thousands except per share data)
         
Operating (loss) earnings per share

March 31,

2019

    

December 31,

2018

    

September 30,

2018

    

June 30,

2018

    

March 31,

2018

Net loss available to common shareholders' $ (6,640 ) $ (23,118 ) $ (5,708 ) $ (1,479 ) $ (450 )
Adjustment items:
Regulatory remediation costs — 4,970 5,502 5,323 3,926
Loans held for sale expense — — 4 20 963
Branch closure expenses — — — — 145
Discount accretion acceleration — (726 ) — — —
Tax effect of adjustments —       (891 )     (1,156 )     (1,122 )     (1,057 )
After tax adjustment items — 3,353 4,350 4,221 3,977
Tax expense adjustment item:
Attributable to valuation allowance on deferred tax —   7,685   —   —   —  
Adjusted net (loss) income $ (6,640 )     $ (12,080 )     $ (1,358 )     $ 2,742       $ 3,527  
 
Weighted average number of shares - diluted 16,673,818 16,640,174 16,557,664 16,525,571 16,495,438
Net (loss) earnings per diluted share $ (0.40 ) $ (1.39 ) $ (0.34 ) $ (0.09 ) $ (0.03 )
Operating net (loss) earnings per diluted share $ (0.40 ) $ (0.73 ) $ (0.08 ) $ 0.17 $ 0.21
 
Operating ratios
Return on average assets (1.52 )% (5.16 )% (1.25 )% (0.32 )% (0.10 )%
Effect of adjustment items — % 2.46 % 0.95 % 0.91 % 0.86 %
Operating return on average assets (1.52 )% (2.70 )% (0.30 )% 0.59 % 0.76 %
 
Return on average common equity (14.57 )% (45.60 )% (10.92 )% (2.81 )% (0.84 )%
Effect of adjustment items — % 21.77 % 8.32 % 8.03 % 7.43 %
Operating return on average common equity (14.57 )% (23.83 )% (2.60 )% 5.22 % 6.59 %
 
Return on average tangible common equity (19.28 )% (58.50 )% (13.92 )% (3.58 )% (1.07 )%
Effect of adjustment items — % 27.93 % 10.61 % 10.23 % 9.44 %
Operating return on average tangible common equity (19.28 )% (30.57 )% (3.31 )% 6.65 % 8.37 %
 
 
 
 
 
 
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)

March 31,

2019

December 31,

2018

September 30,

2018

June 30,

2018

March 31,

2018

Operating noninterest expense
Total Noninterest Expense $ 19,886 $ 24,644 $ 23,527 $ 22,273 $ 21,873
Adjustment items:
Regulatory remediation costs — $ (4,970 ) $ (5,502 ) $ (5,323 ) $ (3,926 )
Loans held for sale expense — — 4 (20 ) (963 )
Branch closure expenses —   —   —   —   (145 )
Operating noninterest expense $ 19,886   $ 19,674   $ 18,029   $ 16,930   $ 16,839  
 
Operating efficiency ratio
Net interest income (TE) 15,436 17,318 16,538 16,998 17,454
Noninterest income 6,273   4,702   5,090   4,882   4,829  
Total Revenue (TE) 21,709   22,020   21,628   21,880   22,283  
Adjustment items
Gain on sale of securities 373 — — — —
Gain on sale of loans 1,274   —   —   —   —  
Adjusted total revenue (TE) 20,062   22,020   21,628   21,880   22,283  
Efficiency ratio 91.83 % 112.30 % 109.14 % 102.14 % 98.53 %
Operating efficiency ratio 99.12 % 89.35 % 83.36 % 77.38 % 75.57 %