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MidSouth Bancorp, Inc. Reports Third Quarter 2017 Results and Declares Quarterly Dividends

LAFAYETTE, La., Oct. 24, 2017 /PRNewswire/ -- MidSouth Bancorp, Inc. ("MidSouth") (NYSE:MSL) today reported quarterly net earnings available to common shareholders of $856,000 for the third quarter of 2017, compared to net earnings available to common shareholders of $1.6 million reported for the third quarter of 2016 and a net loss available to common shareholders of $6.2 million reported for the second quarter of 2017. The third quarter of 2017 included an after-tax gain on sales of securities of $220,000 and a non-recurring after-tax expense of $587,000 related to the branch closures during the quarter. The second quarter 2017 net loss included an after-tax charge of $872,000 for severance and retention accruals, an after-tax charge of $371,000 resulting from the write-down of assets held for sale, and a one-time after-tax charge of $302,000 related to discontinued branch projects. Excluding these non-operating income and expenses, diluted earnings for the third quarter of 2017 were $0.07 per common share, compared to a loss of $0.38 per diluted share for the second quarter of 2017 and earnings of $0.14 per diluted share for the third quarter of 2016.

Jim McLemore, President and CEO, remarked, "We are pleased to report operating earnings for the quarter of $0.07 per share. We remain very focused on our priorities of reducing credit risk, improving our risk culture, pre-tax pre-provision earnings and overall efficiency, and positioning ourselves to repay SBLF. While quantifiable measures of progress like earnings, classified assets, non-performing assets, energy exposure, net charge-offs and loan loss provision all reflected improvement this quarter, we are also working very diligently to improve the underlying processes and organizational capabilities, including investing in talent, that are essential to the long-term success of the Bank. We continue to rationalize our distribution system as we closed 7 branches at the end of September and have 2 more branches under contract to sell in December.

"We are extremely focused on strengthening our risk management capabilities that target root causes including credit risk management staffing, policies, procedures, systems and practices. While the buildout of these core capabilities will require substantial time and resources, this commitment to improve our credit culture is vital to reduce risk and improve the quality of our earnings over the longer term. Our employees have embraced the need for these changes, and we appreciate their dedication, hard work and support."

Energy Lending Update

MidSouth Bank defines an energy loan as any loan where the borrower's ability to repay is disproportionately impacted by a prolonged downturn in energy prices. Under this definition, the Bank includes direct Commercial and Industrial (C&I) loans to energy borrowers, as well as Commercial Real Estate (CRE) loans, Residential Real Estate loans and loans to energy-related borrowers where the loan's primary collateral is cash and marketable securities.

Other comments on the Bank's energy lending:

  • Total energy loans, as defined above, decreased $11.0 million during 3Q17 to $197.8 million, or 16.0% of total loans, from 16.8% at June 30, 2017 primarily due to $8.9 million of payoffs during the quarter as well as $862,000 of charge-offs of energy loans.
  • Direct C&I energy loans were $161.3 million or 13.0% of total loans and had a weighted average maturity of 3.1 years at September 30, 2017.
  • Energy-related CRE and residential real estate loans were $36.3 million or 2.9% of total loans at September 30, 2017.
  • Total criticized energy-related loans decreased $5.1 million, or 5.5%, during 3Q17 to $88.4 million and represented 44.7% of energy loans at September 30, 2017, unchanged from 44.7% at June 30, 2017.
  • Seven energy loan relationships had rating changes during the quarter.
    • Two loan relationships totaling $3.6 million were downgraded to Special Mention
    • Five loan relationships totaling $1.8 million were downgraded to Substandard
  • Three energy-related charge-offs totaled $862,000.
  • Cycle to date net charge-offs totaled $10.8 million, or 4.08% of December 31, 2014 energy loans, which was when the effects of declining oil prices began to surface.
  • One new energy-related impairment totaling $103,000 was identified during 3Q17 and two additional impairment charges of $104,000 were recorded related to existing impaired loans identified prior to 3Q17.
  • The energy reserve as a percentage of total energy loans, as defined, was 5.5% at September 30, 2017. The reserve attributable to C&I energy loans was approximately 5.7%. The reserve on all other energy loans was 4.5%.
  • The Bank has two Shared National Credits (SNCs) totaling $12.7 million in the energy portfolio at September 30, 2017 and both are rated as Substandard.
  • To date, during the month of October 2017, the Bank has had one rating related change to its energy portfolio:
    • One credit in the amount of $2.6 million was upgraded to Special Mention from Classified.

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.

Balance Sheet

Consolidated assets totaled $1.9 billion at September 30, 2017 and June 30, 2017, compared to $2.0 billion at September 30, 2016. Our stable core deposit base, which excludes time deposits, totaled $1.4 billion at September 30, 2017 and June 30, 2017 and accounted for 87.5% and 90.3% of deposits at September 30, 2017 and June 30, 2017, respectively. Net loans totaled $1.211 billion at September 30, 2017, compared to $1.216 billion at June 30, 2017 and $1.250 billion at September 30, 2016.

MidSouth's Tier 1 leverage capital ratio was 12.84% at September 30, 2017, compared to 12.66% at June 30, 2017. Tier 1 risk-based capital and total risk-based capital ratios were 17.01% and 18.27% at September 30, 2017, compared to 16.48% and 17.73% at June 30, 2017, respectively. Tier 1 common equity to total risk-weighted assets at September 30, 2017 was 12.68%, compared to 12.15% at June 30, 2017. Tangible common equity totaled $180.7 million at September 30, 2017, compared to $174.2 million at June 30, 2017. Tangible book value per share at September 30, 2017 was $10.92 versus $10.87 at June 30, 2017. During the third quarter, MidSouth completed the sale of 516,700 shares of common stock pursuant to the partial exercise of the option to purchase additional shares granted from the capital raise in the second quarter, resulting in additional common equity of approximately $5.8 million.

Asset Quality

Nonperforming assets totaled $53.9 million at September 30, 2017, a decrease of $2.5 million compared to $56.4 million reported at June 30, 2017. The decrease is primarily attributable to the payoffs/paydowns of $8.8 million of non-accrual loans and the charge-off of $1.8 million of non-accrual loans. These decreases were partially offset by $7.1 million of loans placed on non-accrual during the quarter. Allowance coverage for nonperforming loans increased to 48.47% at September 30, 2017, compared to 44.88% at June 30, 2017. The ALLL/total loans ratio was 2.03% at September 30, 2017 and 1.99% at June 30, 2017. Including valuation accounting adjustments on acquired loans, the total valuation accounting adjustment plus ALLL was 2.13% of loans at September 30, 2017. The ratio of annualized net charge-offs to total loans decreased to 1.26% for the three months ended September 30, 2017 compared to 4.01% for the three months ended June 30, 2017.

Total nonperforming assets to total loans plus ORE and other assets repossessed was 4.35% at September 30, 2017 compared to 4.54% at June 30, 2017. Loans classified as troubled debt restructurings, accruing ("TDRs, accruing") totaled $1.6 million at September 30, 2017 compared to $1.7 million at June 30, 2017. Classified assets, including ORE, were $139.7 million at September 30, 2017 compared to $148.8 million at June 30, 2017. Payoffs/paydowns of $15.8 million and charge-offs of $2.5 million of loans rated as classified at June 30, 2017 were partially offset by downgrades to classified loans of $8.7 million during the quarter. The classified to capital ratio at MidSouth Bank was 66.8% at September 30, 2017 versus 72.0% at June 30, 2017.


Mr. McLemore noted "We are pleased to see progress across all of our credit quality metrics this quarter. We continue to work to aggressively identify problem loans through improvement in our internal processes and to identify and appropriately recognize loan loss content in a timely manner. We are also working with our borrowers to improve the Bank's position on problem loans. With our recent capital raise of $61 million, we are in a position of strength to deal with our problem loans. At the same time, we are committed to be as judicious as possible in preserving capital as we resolve problem loans.

"Although pleased with our progress in the third quarter and to date in the fourth quarter, with our elevated level of classified assets, the ongoing weaknesses in the energy services sector and our efforts to more aggressively identify and resolve problem loans, we believe it is appropriate to measure progress over multiple quarters."

Third Quarter 2017 vs. Second Quarter 2017 Earnings Comparison

Net earnings available to common shareholders totaled $856,000 for the three months ended September 30, 2017, compared to a net loss available to common shareholders of $6.2 million for the three months ended June 30, 2017. The third and second quarters of 2017 included $338,000 and $3,000, respectively, in gain on sales of securities. Excluding these non-operating revenues, revenues from consolidated operations increased $495,000 in sequential-quarter comparison. Net interest income increased $567,000 and noninterest income decreased $72,000 in sequential-quarter comparison.

The third quarter of 2017 included a non-recurring charge of $903,000 related to branch closures. The second quarter of 2017 included non-operating expenses totaling $2.4 million which consisted of $1.3 million of severance and retention accruals, a $570,000 write-down on assets held for sale and a $465,000 non-recurring charge related to discontinued branch projects. Excluding these non-operating expenses, noninterest expense decreased $372,000 in sequential-quarter comparison. Decreases of $261,000 in salaries and benefits costs, $148,000 in provision for unfunded lines/letters of credit, $88,000 in directors fees and $77,000 in expenses on ORE were primarily offset by an increase of $468,000 in legal and professional fees. The increase in legal and professional fees is primarily due to increased outsourcing expenses to enhance risk management as well as to address the provisions of our written agreement with the OCC. The provision for loan losses decreased $8.2 million in sequential-quarter comparison. Income tax expense of $574,000 was reported for the third quarter of 2017, compared to a $3.2 million income tax benefit for the second quarter of 2017.

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 ("SBLF") totaled $720,000 for the third quarter of 2017 based on a dividend rate of 9%, unchanged from $720,000 for the second quarter of 2017. Dividends on the Series C Preferred Stock issued with the December 28, 2012 acquisition of PSB Financial Corporation ("PSB") totaled $90,000 for the three months ended September 30, 2017 and $91,000 for the three months ended June 30, 2017.

Fully taxable-equivalent ("FTE") net interest income increased $561,000 in sequential-quarter comparison, primarily due to an increase in interest income on loans of $598,000 as well as a $155,000 increase in interest income on time and interest-bearing deposits in other banks. These increases were partially offset by a $157,000 decrease in FTE interest income on investment securities. Interest income on loans increased in sequential-quarter comparison due to an increase in the average yield on loans of 13 basis points, from 5.35% to 5.48%. Excluding purchase accounting adjustments, the loan yield increased 14 basis points, from 5.25% to 5.39% during the same period. The average yield on investment securities decreased 4 basis points, from 2.69% to 2.65%, and the average balance of investment securities decreased $16.3 million. The average yield on total earning assets increased 3 basis points for the same period, from 4.52% to 4.55%, respectively. The FTE net interest margin increased 2 basis points in sequential-quarter comparison, from 4.18% for the second quarter of 2017 to 4.20% for the third quarter of 2017. Excluding purchase accounting adjustments, the FTE net interest margin increased 3 basis points, from 4.09% for the second quarter of 2017 to 4.12% for the third quarter of 2017.

Third Quarter 2017 vs. Third Quarter 2016 Earnings Comparison

Third quarter 2017 net earnings available to common shareholders totaled $856,000 compared to $1.6 million for the third quarter of 2016. The third quarter of 2017 included $338,000 of gain on sales of securities. Excluding these non-operating revenues, revenues from consolidated operations increased $556,000 in quarterly comparison, from $23.4 million for the three months ended September 30, 2016 to $24.0 million for the three months ended September 30, 2017. Net interest income increased $560,000 in quarterly comparison, resulting from a $712,000 increase in interest income, which was partially offset by a $152,000 increase in interest expense. Operating noninterest income decreased $4,000 in quarterly comparison.

Excluding non-operating expenses of $903,000 for the third quarter of 2017, noninterest expenses decreased $258,000 in quarterly comparison and consisted primarily of a $192,000 decrease in occupancy expense, a $206,000 decrease in corporate development, a $185,000 decrease in salaries and benefits costs, a $140,000 decrease in marketing costs, a $110,000 decrease in printing and supplies, a $67,000 decrease in recruiting expense, a $77,000 decrease in losses on check/wire processing and a $69,000 decrease in shares taxes, which were partially offset by an $888,000 increase in legal and professional fees and a $113,000 increase in data processing costs. Several other smaller decreases in other non-interest expense categories contributed to the overall decrease from the third quarter of 2016. A reclass of certain hosted services subscriptions from corporate development into data processing at the beginning of 2017 caused the fluctuations in those two expense categories. The provision for loan losses increased $1.4 million in quarterly comparison, from $2.9 million for the three months ended September 30, 2016 to $4.3 million for the three months ended September 30, 2017. Income tax expense decreased $419,000 in quarterly comparison.

Dividends on preferred stock totaled $810,000 for the three months ended September 30, 2017 and $811,000 for the three months ended September 30, 2016. Dividends on the Series B Preferred Stock were $720,000 for the third quarter of 2017, unchanged from $720,000 for the third quarter of 2016. Dividends on the Series C Preferred Stock totaled $90,000 for the three months ended September 30, 2017 and $91,000 for the three months ended September 30, 2016.

FTE net interest income increased $531,000 in prior year quarterly comparison. Interest income on loans increased $242,000 due to an increase in the average yield on loans of 12 basis points. The average balance of loans decreased $13.4 million in prior year quarterly comparison. Purchase accounting adjustments added 9 basis points to the average yield on loans for the third quarter of 2017 and 14 basis points to the average yield on loans for the third quarter of 2016. Excluding the impact of the purchase accounting adjustments, average loan yields increased 17 basis points in prior year quarterly comparison, from 5.22% to 5.39%.

Investment securities totaled $410.0 million, or 21.0% of total assets at September 30, 2017, versus $440.1 million, or 22.6% of total assets at December 31, 2016. The investment portfolio had an effective duration of 3.1 years and a net unrealized gain of $1.2 million at September 30, 2017. FTE interest income on investments increased $211,000 in prior year quarterly comparison. The average volume of investment securities increased $12.5 million in prior year quarterly comparison, and the average tax equivalent yield on investment securities increased 13 basis points, from 2.52% to 2.65%.

The average yield on all earning assets increased 6 basis points in prior year quarterly comparison, from 4.49% for the third quarter of 2016 to 4.55% for the third quarter of 2017. Excluding the impact of purchase accounting adjustments, the average yield on total earning assets increased 10 basis points, from 4.39% to 4.49% for the three-month periods ended September 30, 2016 and 2017, respectively.

Interest expense increased $152,000 in prior year quarterly comparison. Increases in interest expense included a $179,000 increase in interest expense on deposits and a $42,000 increase in interest expense on variable rate junior subordinated debentures. These increases were partially offset by an $87,000 decrease in interest expense on repurchase agreements. Excluding purchase accounting adjustments on acquired certificates of deposit and FHLB borrowings, the average rate paid on interest-bearing liabilities was 0.53% for the three months ended September 30, 2017 and 0.46% for the three months ended September 30, 2016.

As a result of these changes in volume and yield on earning assets and interest-bearing liabilities, the FTE net interest margin increased 3 basis points, from 4.17% for the third quarter of 2016 to 4.20% for the third quarter of 2017. Excluding purchase accounting adjustments on loans, deposits and FHLB borrowings, the FTE margin increased 7 basis points, from 4.05% for the third quarter of 2016 to 4.12% for the third quarter of 2017.

Year-To-Date Earnings Comparison

MidSouth reported a net loss available to common shareholders of $3.7 million for the nine months ended September 30, 2017, compared to net earnings available to common shareholders of $5.2 million for the nine months ended September 30, 2016. The first nine months of 2017 included $347,000 of gain on sales of securities. The first nine months of 2016 included $20,000 of gain on sales of securities. Excluding these non-operating revenues, revenues from consolidated operations increased $1.4 million in year-over-year comparison, from $69.1 million for the nine months ended September 30, 2016 to $70.5 million for the nine months ended September 30, 2017. Net interest income increased $1.0 million in year-over-year comparison, resulting from a $1.3 million increase in interest income, which was partially offset by a $312,000 increase in interest expense. Operating noninterest income increased $391,000 in year-over-year comparison and consisted primarily of a $259,000 increase in ATM/debit card income.

Excluding non-operating expenses of $3.3 million for the first nine months of 2017, noninterest expenses increased $400,000 in year-over-year comparison and consisted primarily of a $442,000 increase in salaries and benefits costs, a $1.4 million increase in legal and professional fees and a $465,000 increase in data processing costs, which were partially offset by decreases of $405,000 in occupancy expense, $330,000 in marketing costs, $391,000 in corporate development, $322,000 in ATM/debit card expense, $203,000 in printing and supplies and $144,000 in expenses on ORE. The increase in legal and professional fees in year-to-date comparison is primarily due to legal costs related to management transition issues and increased outsourcing expenses to enhance risk management. A reclass of certain hosted services subscriptions from corporate development into data processing at the beginning of 2017 caused the fluctuations in those two expense categories. The provision for loan losses increased $11.6 million in year-over-year comparison, from $8.0 million for the nine months ended September 30, 2016 to $19.6 million for the nine months ended September 30, 2017, primarily due to the high level of charge-offs and additional impairment charges on nonperforming loans in 2017. A $2.1 million income tax benefit was reported for the first nine months of 2017, compared to income tax expense of $3.0 million for the first nine months of 2016.

In year-to-date comparison, FTE net interest income increased $939,000 primarily due to an $829,000 increase in FTE interest income from investment securities. The average volume of investment securities increased $21.7 million in year-over-year comparison, and the average yield on investment securities increased 13 basis points for the same period. Interest income on loans increased $157,000 in year-over-year comparison. The average volume of loans increased $2.0 million in year-over-year comparison, and the average yield on loans increased 1 basis point, from 5.36% to 5.37%. The average yield on earning assets increased 6 basis points in year-over-year comparison, from 4.47% at September 30, 2016 to 4.53% at September 30, 2017. The purchase accounting adjustments added 8 basis points to the average yield on loans for the nine months ended September 30, 2017 and 13 basis points for the nine months ended September 30, 2016. Net of purchase accounting adjustments, the average yield on earning assets increased 9 basis points, from 4.38% at September 30, 2016 to 4.47% at September 30, 2017.

Interest expense increased $312,000 in year-over-year comparison. Increases in interest expense included a $277,000 increase in interest expense on deposits and a $125,000 increase in interest expense on junior subordinated debentures. These increases were partially offset by an $83,000 decrease in interest expense on repurchase agreements. The average rate paid on interest-bearing liabilities was 0.48% for the nine months ended September 30, 2017, compared to 0.43% for the nine months ended September 30, 2016. Net of purchase accounting adjustments, the average rate paid on interest-bearing liabilities increased 5 basis points, from 0.46% for the nine months ended September 30, 2016 to 0.51% for the nine months ended September 30, 2017. The FTE net interest margin increased 4 basis points, from 4.15% for the nine months ended September 30, 2016 to 4.19% for the nine months ended September 30, 2017. Net of purchase accounting adjustments, the FTE net interest margin increased 7 basis points, from 4.04% to 4.11% for the nine months ended September 30, 2016 and 2017.

Dividends

MidSouth's Board of Directors announced a cash dividend was declared in the amount of $0.01 per share to be paid on its common stock on January 2, 2018 to shareholders of record as of the close of business on December 15, 2017. Additionally, a quarterly cash dividend of 1.00% per preferred share on its 4.00% Non-Cumulative Perpetual Convertible Preferred Stock, Series C was declared payable on January 15, 2018 to shareholders of record as of the close of business on January 2, 2018.

About MidSouth Bancorp, Inc.

MidSouth Bancorp, Inc. is a financial holding company headquartered in Lafayette, Louisiana, with assets of $1.9 billion as of September 30, 2017. MidSouth Bancorp, Inc. trades on the NYSE under the symbol "MSL." Through its wholly owned subsidiary, MidSouth Bank, N.A., MidSouth offers a full range of banking services to commercial and retail customers in Louisiana and Texas. MidSouth Bank currently has 50 locations in Louisiana and Texas and is connected to a worldwide ATM network that provides customers with access to more than 55,000 surcharge-free ATMs. Additional corporate information is available at MidSouthBank.com.

Forward-Looking Statements

Certain statements contained herein are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 and subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, which involve risks and uncertainties. These statements include, among others, statements regarding the strength of the Company's balance sheet and its positioning to address problem assets and achieve operating efficiencies and the implementation of the provisions of the formal agreement with the OCC.

Actual results may differ materially from the results anticipated in these forward-looking statements. Factors that might cause such a difference include, among other matters, changes in interest rates and market prices that could affect the net interest margin, asset valuation, and expense levels; changes in local economic and business conditions 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 recently announced strategic initiatives; costs and expenses associated with our strategic initiatives and possible changes in the size and components of the expected costs and charges associated with our strategic initiatives; 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 our strategic initiatives to adequately address the anticipated concerns of the Office of the Comptroller of the Currency (the "OCC") in its current examination of us and the ability of the Company to comply with the terms of the formal agreement with the OCC; credit losses due to loan concentration, particularly our energy lending and legacy commercial real estate portfolios; a deviation in actual experience from the underlying assumptions used to determine and establish our allowance for loan 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 conditions on our operations 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; 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's Annual Report on Form 10-K for the year ended December 31, 2016 filed with the SEC on March 16, 2017 and in its other filings with the SEC.

MidSouth does not undertake any obligation to publicly update or revise any of these forward-looking statements, whether to reflect new information, future events or otherwise, except as required by law.


MIDSOUTH BANCORP, INC. and SUBSIDIARIES

Condensed Consolidated Financial Information (unaudited)

(in thousands except per share data)









Quarter


Quarter


Quarter


Quarter


Quarter



Ended


Ended


Ended


Ended


Ended

EARNINGS DATA


9/30/2017


6/30/2017


3/31/2017


12/31/2016


9/30/2016

Total interest income


$ 20,379


$ 19,758


$ 19,531


$ 19,694


$ 19,667

Total interest expense


1,566


1,512


1,465


1,459


1,414

Net interest income


18,813


18,246


18,066


18,235


18,253

FTE net interest income


19,003


18,442


18,279


18,478


18,472

Provision for loan losses


4,300


12,500


2,800


2,600


2,900

Non-interest income


5,486


5,223


5,044


5,071


5,152

Non-interest expense


17,759


19,604


17,230


17,636


17,114

Earnings (loss) before income taxes


2,240


(8,635)


3,080


3,070


3,391

Income tax expense (benefit)


574


(3,221)


589


871


993

Net earnings (loss)


1,666


(5,414)


2,491


2,199


2,398

Dividends on preferred stock


810


811


811


812


811

Net earnings (loss) available to common shareholders


$ 856


$ (6,225)


$ 1,680


$ 1,387


$ 1,587












PER COMMON SHARE DATA











Basic earnings (loss) per share


$ 0.05


$ (0.51)


$ 0.15


$ 0.12


$ 0.14

Diluted earnings (loss) per share


0.05


(0.51)


0.15


0.12


0.14

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


0.07


(0.38)


0.15


0.12


0.14

Quarterly dividends per share


0.01


0.09


0.09


0.09


0.09

Book value at end of period


13.70


13.76


15.37


15.25


15.58

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


10.92


10.87


11.28


11.13


11.44

Market price at end of period


12.05


11.75


15.30


13.60


10.40

Shares outstanding at period end


16,548,829


16,026,355


11,383,914


11,362,716


11,362,716

Weighted average shares outstanding











Basic


16,395,317


12,227,456


11,264,394


11,271,948


11,262,282

Diluted


16,395,740


12,237,299


11,282,491


11,273,302


11,262,710












AVERAGE BALANCE SHEET DATA











Total assets


$1,954,343


$1,926,408


$1,932,818


$ 1,960,436


$1,927,351

Loans and leases


1,254,885


1,254,402


1,274,213


1,277,555


1,268,270

Total deposits


1,546,837


1,551,498


1,569,188


1,591,814


1,562,193

Total common equity


227,948


187,762


174,785


176,747


177,866

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


181,851


141,389


128,124


129,821


130,662

Total equity


269,035


228,871


215,895


217,857


218,976












SELECTED RATIOS











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


0.25%


-0.97%


0.35%


0.28%


0.33%

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


2.13%


-10.00%


3.89%


3.12%


3.55%

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


2.67%


-13.28%


5.31%


4.25%


4.83%

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


1.44%


1.30%


1.23%


1.15%


1.30%

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


70.43%


73.11%


74.51%


75.67%


73.04%

Average loans to average deposits


81.13%


80.85%


81.20%


80.26%


81.19%

Taxable-equivalent net interest margin


4.20%


4.18%


4.18%


4.09%


4.17%

Tier 1 leverage capital ratio


12.84%


12.66%


10.27%


10.11%


10.27%












CREDIT QUALITY











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


2.03%


1.99%


1.93%


1.90%


1.83%

Nonperforming assets to tangible equity + ALLL


21.83%


23.50%


30.34%


33.88%


32.98%

Nonperforming assets to total loans, other real estate owned and other repossessed assets


4.35%


4.54%


4.62%


5.06%


5.03%

Annualized QTD net charge-offs to total loans


1.26%


4.01%


0.83%


0.46%


0.32%












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

MIDSOUTH BANCORP, INC. and SUBSIDIARIES

Condensed Consolidated Balance Sheets (unaudited)

(in thousands)



















BALANCE SHEET


September 30,


June 30,


March 31,


December 31,


September 30,



2017


2017


2017


2016


2016

Assets











Cash and cash equivalents


$ 163,123


$ 131,437


$ 78,471


$ 82,228


$ 126,667

Securities available-for-sale


326,222


348,580


357,803


341,873


316,145

Securities held-to-maturity


83,739


87,462


91,242


98,211


103,412

Total investment securities


409,961


436,042


449,045


440,084


419,557

Other investments


12,200


11,666


11,362


11,355


11,339

Total loans


1,235,969


1,240,253


1,272,000


1,284,082


1,272,800

Allowance for loan losses


(25,053)


(24,674)


(24,578)


(24,372)


(23,268)

Loans, net


1,210,916


1,215,579


1,247,422


1,259,710


1,249,532

Premises and equipment


64,969


65,739


68,216


68,954


69,778

Goodwill and other intangibles


45,963


46,239


46,516


46,792


47,069

Other assets


39,934


38,867


33,907


34,217


29,978

Total assets


$ 1,947,066


$1,945,569


$1,934,939


$ 1,943,340


$ 1,953,920























Liabilities and Shareholders' Equity











Non-interest bearing deposits


$ 428,183


$ 428,419


$ 426,998


$ 414,921


$ 403,301

Interest-bearing deposits


1,127,752


1,107,801


1,145,946


1,164,509


1,181,906

Total deposits


1,555,935


1,536,220


1,572,944


1,579,430


1,585,207

Securities sold under agreements to repurchase


54,875


90,799


89,807


94,461


95,210

Short-term FHLB advances


12,500


-


-


-


-

Long-term FHLB advances


25,110


25,211


25,318


25,424


25,531

Junior subordinated debentures


22,167


22,167


22,167


22,167


22,167

Other liabilities


8,836


9,602


8,641


7,482


7,679

Total liabilities


1,679,423


1,683,999


1,718,877


1,728,964


1,735,794

Total shareholders' equity


267,643


261,570


216,062


214,376


218,126

Total liabilities and shareholders' equity


$ 1,947,066


$1,945,569


$1,934,939


$ 1,943,340


$ 1,953,920

MIDSOUTH BANCORP, INC. and SUBSIDIARIES

Condensed Consolidated Income Statements (unaudited)

(in thousands except per share data)
























Percent Change







EARNINGS STATEMENT


Three Months Ended


3Q17 vs.
2Q17


3Q17 vs.
3Q16


Nine Months Ended


Percent



9/30/2017


6/30/2017


9/30/2016




9/30/2017


9/30/2016


Change


















Interest income:

















Loans, including fees


$ 17,064


$ 16,440


$ 16,688


3.8%


2.3%


$ 49,941


$ 49,424


1.0%

Investment securities


2,639


2,790


2,399


-5.4%


10.0%


8,163


7,253


12.5%

Accretion of purchase accounting adjustments


265


291


399


-8.9%


-33.6%


741


1,101


-32.7%

Other interest income


411


237


181


73.4%


127.1%


823


558


47.5%

Total interest income


20,379


19,758


19,667


3.1%


3.6%


59,668


58,336


2.3%


















Interest expense:

















Deposits


1,094


973


919


12.4%


19.0%


3,002


2,753


9.0%

Borrowings


350


416


419


-15.9%


-16.5%


1,177


1,269


-7.2%

Junior subordinated debentures


212


212


170


0.0%


24.7%


632


507


24.7%

Accretion of purchase accounting adjustments


(90)


(89)


(94)


1.1%


-4.3%


(268)


(298)


-10.1%

Total interest expense


1,566


1,512


1,414


3.6%


10.7%


4,543


4,231


7.4%


















Net interest income


18,813


18,246


18,253


3.1%


3.1%


55,125


54,105


1.9%

Provision for loan losses


4,300


12,500


2,900


-65.6%


48.3%


19,600


8,000


145.0%

Net interest income after provision for loan losses


14,513


5,746


15,353


152.6%


-5.5%


35,525


46,105


-22.9%


















Noninterest income:

















Service charges on deposit accounts


2,463


2,396


2,584


2.8%


-4.7%


7,339


7,404


-0.9%

ATM and debit card income


1,687


1,766


1,620


-4.5%


4.1%


5,156


4,897


5.3%

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


338


3


-


11166.7%


-


347


20


1635.0%

Mortgage lending


155


167


190


-7.2%


-18.4%


465


422


10.2%

Other charges and fees


843


891


758


-5.4%


11.2%


2,446


2,292


6.7%

Total non-interest income


5,486


5,223


5,152


5.0%


6.5%


15,753


15,035


4.8%


















Noninterest expense:

















Salaries and employee benefits


7,849


8,110


8,034


-3.2%


-2.3%


24,648


24,206


1.8%

Occupancy expense


3,443


3,428


3,635


0.4%


-5.3%


10,494


10,899


-3.7%

ATM and debit card


654


713


833


-8.3%


-21.5%


2,088


2,410


-13.4%

Legal and professional fees


1,404


936


516


50.0%


172.1%


2,726


1,335


104.2%

FDIC premiums


448


430


365


4.2%


22.7%


1,275


1,214


5.0%

Marketing


302


262


442


15.3%


-31.7%


844


1,174


-28.1%

Corporate development


189


253


395


-25.3%


-52.2%


758


1,149


-34.0%

Data processing


640


667


527


-4.0%


21.4%


1,928


1,463


31.8%

Printing and supplies


81


135


191


-40.0%


-57.6%


399


602


-33.7%

Expenses on ORE, net


15


92


100


-83.7%


-85.0%


186


330


-43.6%

Amortization of core deposit intangibles


277


276


277


0.4%


0.0%


830


830


0.0%

Severance and retention accruals (non-operating)(*)


-


1,341


-


-100.0%


-


1,341


-


-

One-time charge related to discontinued branch projects (non-operating)(*)


-


465


-


-100.0%


-


465


-


-

One-time charge related to closure of branches (non-operating)(*)


903


-


-






903


-


-

Write-down of assets held for sale (non-operating)(*)


-


570


-


-100.0%


-


570


-


-

Other non-interest expense


1,554


1,926


1,799


-19.3%


-13.6%


5,138


5,302


-3.1%

Total non-interest expense


17,759


19,604


17,114


-9.4%


3.8%


54,593


50,914


7.2%

Earnings (loss) before income taxes


2,240


(8,635)


3,391


-125.9%


-33.9%


(3,315)


10,226


-132.4%

Income tax expense


574


(3,221)


993


-117.8%


-42.2%


(2,058)


2,986


-168.9%

Net earnings (loss)


1,666


(5,414)


2,398


-130.8%


-30.5%


(1,257)


7,240


-117.4%

Dividends on preferred stock


810


811


811


-0.1%


-0.1%


2,432


2,049


18.7%

Net earnings (loss) available to common shareholders


$ 856


$ (6,225)


$ 1,587


-113.8%


-46.1%


$ (3,689)


$ 5,191


-171.1%


















Earnings (loss) per common share, diluted


$ 0.05


$ (0.51)


$ 0.14


-109.8%


-64.3%


$ (0.28)


$ 0.46


-160.9%


















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


$ 0.07


$ (0.38)


$ 0.14


-118.4%


-50.0%


$ (0.13)


$ 0.46


-128.3%


















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


















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

MIDSOUTH BANCORP, INC. and SUBSIDIARIES

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

(in thousands)





COMPOSITION OF LOANS


September 30,


June 30,


Sep 17 vs Jun 17 %
Change


March 31,


December 31,


September 30,


Sep 17 vs Sep 16 %
Change


2017


2017



2017


2016


2016


Commercial, financial, and agricultural


$ 447,482


$ 451,767


-0.9%


$ 469,815


$ 459,574


$ 463,031


-3.4%

Lease financing receivable


760


866


-12.2%


969


1,095


1,449


-47.6%

Real estate - construction


90,088


98,695


-8.7%


100,248


100,959


96,365


-6.5%

Real estate - commercial


473,046


461,064


2.6%


464,859


481,155


464,853


1.8%

Real estate - residential


155,676


156,394


-0.5%


159,426


157,872


155,653


0.0%

Installment loans to individuals


63,148


70,031


-9.8%


75,258


82,660


88,537


-28.7%

Other


5,769


1,436


301.7%


1,425


767


2,912


98.1%
















Total loans


$ 1,235,969


$1,240,253


-0.3%


$1,272,000


$ 1,284,082


$ 1,272,800


-2.9%
















COMPOSITION OF DEPOSITS
















September 30,


June 30,


Sep 17 vs Jun 17 %
Change


March 31,


December 31,


September 30,


Sep 17 vs Sep 16 %
Change



2017


2017



2017


2016


2016


Noninterest bearing


$ 428,183


$ 428,419


-0.1%


$ 426,998


$ 414,921


$ 403,301


6.2%

NOW & other


461,740


465,505


-0.8%


489,789


472,484


465,850


-0.9%

Money market/savings


473,023


493,232


-4.1%


505,669


539,815


557,068


-15.1%

Time deposits of less than $100,000


120,685


75,196


60.5%


75,579


75,940


78,785


53.2%

Time deposits of $100,000 or more


72,304


73,868


-2.1%


74,909


76,270


80,203


-9.8%
















Total deposits


$ 1,555,935


$1,536,220


1.3%


$1,572,944


$ 1,579,430


$ 1,585,207


-1.8%
















ASSET QUALITY DATA
















September 30,


June 30,




March 31,


December 31,


September 30,





2017


2017



2017


2016


2016



Nonaccrual loans


$ 51,289


$ 54,810




$ 56,443


$ 62,580


$ 60,522



Loans past due 90 days and over


402


165




775


268


968



Total nonperforming loans


51,691


54,975




57,218


62,848


61,490



Other real estate


1,931


1,387




1,643


2,175


2,317



Other repossessed assets


234


36




30


16


283



Total nonperforming assets


$ 53,856


$ 56,398




$ 58,891


$ 65,039


$ 64,090


















Troubled debt restructurings, accruing


$ 1,557


$ 1,653




$ 1,995


$ 152


$ 153

































Nonperforming assets to total assets


2.77%


2.90%




3.04%


3.35%


3.28%


















Nonperforming assets to total loans + ORE + other repossessed assets


4.35%


4.54%




4.62%


5.06%


5.03%



ALLL to nonperforming loans


48.47%


44.88%




42.96%


38.78%


37.84%



ALLL to total loans


2.03%


1.99%




1.93%


1.90%


1.83%


















Quarter-to-date charge-offs


$ 4,381


$ 12,659




$ 2,906


$ 1,835


$ 1,161



Quarter-to-date recoveries


460


255




312


339


151



Quarter-to-date net charge-offs


$ 3,921


$ 12,404




$ 2,594


$ 1,496


$ 1,010



Annualized QTD net charge-offs to total loans


1.26%


4.01%




0.83%


0.46%


0.32%



MIDSOUTH BANCORP, INC. and SUBSIDIARIES

Loan Portfolio - Quarterly Roll Forward (unaudited)

(in thousands)










Three Months Ended



September 30,


June 30,


September 30,



2017


2017


2016

LOAN ACTIVITY














Loans originated


$ 87,377


$ 72,316


$ 87,991

Repayments


(91,856)


(116,885)


(65,871)

Increases on renewals


5,773


2,531


4,749

Change in lines of credit


(6,931)


9,151


(20,079)

Change in allowance for loan losses


(379)


(96)


(1,890)

Other


1,353


1,140


3,621

Net change in loans


$ (4,663)


$ (31,843)


$ 8,521


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






September 30,


September 30,



2017


2016

Total equity


$ 267,643


$ 218,126

Less preferred equity


40,987


41,110

Total common equity


226,656


177,016

Less goodwill


42,171


42,171

Less intangibles


3,792


4,898

Tangible common equity


$ 180,693


$ 129,947






Total assets


$ 1,947,066


$ 1,953,920

Less goodwill


42,171


42,171

Less intangibles


3,792


4,898

Tangible assets


$ 1,901,103


$ 1,906,851






Tangible common equity to tangible assets


9.50%


6.81%






REGULATORY CAPITAL










Common equity tier 1 capital


$ 182,768


$ 130,349

Tier 1 capital


245,254


192,958

Total capital


263,365


211,468






Regulatory capital ratios:





Common equity tier 1 capital ratio


12.68%


8.83%

Tier 1 risk-based capital ratio


17.01%


13.07%

Total risk-based capital ratio


18.27%


14.33%

Tier 1 leverage ratio


12.84%


10.27%

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


September 30, 2017


June 30, 2017


March 31, 2017


December 31, 2016


September 30, 2016


























Tax






Tax






Tax






Tax






Tax





Average


Equivalent


Yield/


Average


Equivalent


Yield/


Average


Equivalent


Yield/


Average


Equivalent


Yield/


Average


Equivalent


Yield/



Balance


Interest


Rate


Balance


Interest


Rate


Balance


Interest


Rate


Balance


Interest


Rate


Balance


Interest


Rate
































Taxable securities


$ 372,648


$ 2,276


2.44%


$ 387,441


$ 2,416


2.49%


$ 382,105


$ 2,327


2.44%


$ 348,673


$ 1,965


2.25%


$ 354,770


$ 1,983


2.24%

Tax-exempt securities


55,129


553


4.01%


56,622


570


4.03%


60,618


620


4.09%


66,549


705


4.24%


60,544


635


4.20%

Total investment securities


427,777


2,829


2.65%


444,063


2,986


2.69%


442,723


2,947


2.66%


415,222


2,670


2.57%


415,314


2,618


2.52%

Federal funds sold


4,319


13


1.18%


3,573


9


1.00%


3,571


6


0.67%


3,261


5


0.60%


2,703


3


0.43%

Time and interest bearing deposits in other banks


94,675


305


1.26%


55,331


150


1.07%


41,785


85


0.81%


90,527


125


0.54%


64,444


83


0.50%

Other investments


12,098


93


3.07%


11,493


78


2.71%


11,355


84


2.96%


11,342


78


2.75%


11,253


95


3.38%

Loans


1,254,885


17,329


5.48%


1,254,402


16,731


5.35%


1,274,213


16,622


5.29%


1,277,555


17,059


5.31%


1,268,270


17,087


5.36%

Total interest earning assets


1,793,754


20,569


4.55%


1,768,862


19,954


4.52%


1,773,647


19,744


4.51%


1,797,907


19,937


4.41%


1,761,984


19,886


4.49%

Non-interest earning assets


160,589






157,546






159,171






162,529






165,367





Total assets


$1,954,343






$1,926,408






$1,932,818






$1,960,436






$1,927,351




































Interest-bearing liabilities:































Deposits


$1,118,593


$ 1,094


0.39%


$1,125,482


$ 973


0.35%


$1,155,407


$ 935


0.33%


$1,179,174


$ 929


0.31%


$1,170,660


$ 915


0.31%

Repurchase agreements


75,654


149


0.78%


90,807


236


1.04%


92,571


234


1.03%


94,609


241


1.01%


88,560


236


1.06%

Short-term FHLB advances


6,522


19


1.14%


-


-


0.00%


-


-


0.00%


-


-


0.00%


0


-


0.00%

Long-term FHLB advances


25,155


92


1.43%


25,260


91


1.43%


25,370


88


1.39%


25,474


92


1.41%


25,581


93


1.42%

Junior subordinated debentures


22,167


212


3.74%


22,167


212


3.78%


22,167


208


3.75%


22,167


197


3.48%


22,167


170


3.00%

Total interest bearing liabilities


1,248,091


1,566


0.50%


1,263,716


1,512


0.48%


1,295,515


1,465


0.46%


1,321,424


1,459


0.44%


1,306,968


1,414


0.43%

Non-interest bearing liabilities


437,217






433,821






421,408






421,155






401,407





Shareholders' equity


269,035






228,871






215,895






217,857






218,976





Total liabilities and shareholders' equity


$1,954,343






$1,926,408






$1,932,818






$1,960,436






$1,927,351




































Net interest income (TE) and spread




$ 19,003


4.05%




$ 18,442


4.04%




$ 18,279


4.05%




$ 18,478


3.97%




$ 18,472


4.06%
































Net interest margin






4.20%






4.18%






4.18%






4.09%






4.17%
































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






4.12%






4.09%






4.11%






3.98%






4.05%































































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


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

MIDSOUTH BANCORP, INC. and SUBSIDIARIES

Reconciliation of Non-GAAP Financial Measures (unaudited)

(in thousands except per share data)












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


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

























Three Months Ended



September 30,


June 30,


March 31,


December 31,


September 30,



2017


2017


2017


2016


2016

AVERAGE BALANCE SHEET DATA






















Total average assets

A

$ 1,954,343


$ 1,926,408


$ 1,932,818


$ 1,960,436


$ 1,927,351












Total equity


$ 269,035


$ 228,871


$ 215,895


$ 217,857


$ 218,976

Less preferred equity


41,087


41,109


41,110


41,110


41,110

Total common equity

B

$ 227,948


$ 187,762


$ 174,785


$ 176,747


$ 177,866

Less intangible assets


46,097


46,373


46,661


46,926


47,204

Tangible common equity

C

$ 181,851


$ 141,389


$ 128,124


$ 129,821


$ 130,662

MIDSOUTH BANCORP, INC. and SUBSIDIARIES

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

(in thousands except per share data)














Three Months Ended



September 30,


June 30,


March 31,


December 31,


September 30,

CORE NET INTEREST MARGIN


2017


2017


2017


2016


2016












Net interest income (FTE)


$ 19,003


$ 18,442


$ 18,279


$ 18,478


$ 18,472

Less purchase accounting adjustments


(355)


(380)


(274)


(458)


(493)

Core net interest income, net of purchase accounting adjustments

D

$ 18,648


$ 18,062


$ 18,005


$ 18,020


$ 17,979












Total average earnings assets


$ 1,793,754


$ 1,768,862


$ 1,773,647


$ 1,797,907


$ 1,761,984

Add average balance of loan valuation discount


1,504


1,720


1,964


2,316


2,634

Average earnings assets, excluding loan valuation discount

E

$ 1,795,258


$ 1,770,582


$ 1,775,611


$ 1,800,223


$ 1,764,618












Core net interest margin

D/E

4.12%


4.09%


4.11%


3.98%


4.05%














Three Months Ended



September 30,


June 30,


March 31,


December 31,


September 30,

RETURN RATIOS


2017


2017


2017


2016


2016












Net earnings (loss) available to common shareholders


$ 856


$ (6,225)


$ 1,680


$ 1,387


$ 1,587

Severance and retention accruals, after-tax


-


872


-


-


-

One-time charge related to discontinued branch projects, after-tax


-


302


-


-


-

One-time charge related to closure of branches, after-tax


587


-


-


-


-

Write-down of assets held for sale, after-tax


-


371


-


-


-

Net gain on sale of securities, after-tax


(220)


(2)


(4)


-


-

Net earnings (loss) available to common shareholders, operating

F

$ 1,223


$ (4,682)


$ 1,676


$ 1,387


$ 1,587












Earnings (loss) before income taxes


$ 2,240


$ (8,635)


$ 3,080


$ 3,070


$ 3,391

Severance and retention accruals


-


1,341


-


-


-

One-time charge related to discontinued branch projects


-


465


-


-


-

One-time charge related to closure of branches


903


-


-


-


-

Write-down of assets held for sale


-


570


-


-


-

Net gain on sale of securities


(338)


(3)


(6)


-


-

Provision for loan losses


4,300


12,500


2,800


2,600


2,900

Pre-tax, pre-provision earnings, operating

G

$ 7,105


$ 6,238


$ 5,874


$ 5,670


$ 6,291












Annualized return on average assets, operating

F/A

0.25%


-0.97%


0.35%


0.28%


0.33%

Annualized return on average common equity, operating

F/B

2.13%


-10.00%


3.89%


3.12%


3.55%

Annualized return on average tangible common equity, operating

F/C

2.67%


-13.28%


5.31%


4.25%


4.83%

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

G/A

1.44%


1.30%


1.23%


1.15%


1.30%

MIDSOUTH BANCORP, INC. and SUBSIDIARIES

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





(in thousands except per share data)


















Three Months Ended


Nine Months Ended



September 30,


June 30,


March 31,


December 31,


September 30,


September 30,


September 30,

PER COMMON SHARE DATA


2017


2017


2017


2016


2016


2017


2016
















Diluted earnings (loss) per share


$ 0.05


$ (0.51)


$ 0.15


$ 0.12


$ 0.14


$ (0.28)


$ 0.46

Effect of severance and retention accruals


-


0.08


-


-


-


0.07


-

Effect of one-time charge related to discontinued branch projects


-


0.02


-


-


-


0.02


-

Effect of one-time charge related to closure of branches


0.03


-


-


-


-


0.04



Effect of write-down of assets held for sale


-


0.03


-


-


-


0.03


-

Effect of gain on sales of securities


(0.01)


-


-


-


-


(0.01)


-

Diluted earnings (loss) per share, operating


$ 0.07


$ (0.38)


$ 0.15


$ 0.12


$ 0.14


$ (0.13)


$ 0.46
















Book value per common share


$ 13.70


$ 13.76


$ 15.37


$ 15.25


$ 15.58





Effect of intangible assets per share


2.78


2.89


4.09


4.12


4.14





Tangible book value per common share


$ 10.92


$ 10.87


$ 11.28


$ 11.13


$ 11.44






















Three Months Ended







September 30,


June 30,


March 31,


December 31,


September 30,





EFFICIENCY RATIO


2017


2017


2017


2016


2016




















Net interest income


$ 18,813


$ 18,246


$ 18,066


$ 18,235


$ 18,253




















Noninterest income


5,486


5,223


5,044


5,071


5,152





Net gain on sale of securities


(338)


(3)


(6)


-


-





Noninterest income (non-GAAP)


$ 5,148


$ 5,220


$ 5,038


$ 5,071


$ 5,152




















Total revenue

H

$ 24,299


$ 23,469


$ 23,110


$ 23,306


$ 23,405





Total revenue (non-GAAP)

I

$ 23,961


$ 23,466


$ 23,104


$ 23,306


$ 23,405




















Noninterest expense

J

$ 17,759


$ 19,604


$ 17,230


$ 17,636


$ 17,114





Severance and retention accruals


-


(1,341)


-


-


-





One-time charge related to discontinued branch projects


-


(465)


-


-


-





One-time charge related to closure of branches


(903)


-


-


-


-





Write-down of assets held for sale


-


(570)


-


-


-





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


19


(72)


(15)


-


(19)





Noninterest expense (non-GAAP)

K

$ 16,875


$ 17,156


$ 17,215


$ 17,636


$ 17,095




















Efficiency ratio (GAAP)

J/H

73.09%


83.53%


74.56%


75.67%


73.12%




















Efficiency ratio (non-GAAP)

K/I

70.43%


73.11%


74.51%


75.67%


73.04%





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SOURCE MidSouth Bancorp, Inc.