UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10QSB
__X___QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended..........September 30, 1996
_____TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ..... to .....
COMMISSION FILE NUMBER 2-91-000FW
MIDSOUTH BANCORP, INC.
Louisiana 72 -1020809
102 Versailles Boulevard, Lafayette, Louisiana
70501
(318) 237-8343
Check whether the issuer (1) filed all reports required to be
filed by Section 13 or 15(d) of the Exchange Act during the past
12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.YES __X__NO _____
State the number of shares outstanding of each of the issuer's
classes of common equity, as of the latest practicable date.
Outstanding as of September 30, 1996
Common stock, $.10 par value 1,336,033
Preferred stock, no par value, $14.25 stated value 179,756
Transitional Small Business Disclosure Format:
Yes _______ No ____ X ____
Page 1
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Page 2
PART 1 - FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited) Page
Statements of Condition - September 30, 1996 and 3
December 31, 1995
Statements of Income - Three and Nine Months Ended
September 30, 1996 and 1995 4
Statement of Stockholders' Equity - Nine Months
Ended September 30, 1996 5
Statements of Cash Flows - Nine Months Ended
September 30, 1996 and 1995 6
Notes to Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis or
Plan of Operation 8
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 15
Signatures 16
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MIDSOUTH BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CONDITION (UNAUDITED)
_______________________________________________________________________________________________
September 30, December 31,
ASSETS 1996 1995
___________ ____________
<S> <C> <C>
Cash and due from banks $9,275,527 $10,298,209
Federal funds sold 7,400,000 15,800,000
___________ ____________
Total cash and cash equivalents 16,675,527 26,098,209
Interest bearing deposits in banks 203,515 26,349
Securities available-for-sale, at fair value
(cost of $50,356,903 in September 1996
and $35,868,018 in December 1995) 49,698,403 36,058,587
Securities held-to-maturity (estimated market
value of $9,629,243 in September 1996 and
$4,735,344 in December 1995) 9,568,694 4,545,849
Loans, net of allowance for loan and lease losses
of $1,051,846 in September 1996 and $1,051,898
in December 1995 87,112,593 77,826,707
Bank premises and equipment, net 5,194,822 4,532,610
Other real estate owned, net 180,270 180,270
Accrued interest receivable 1,487,104 1,107,820
Goodwill, net 285,179 311,352
Other assets 1,375,058 495,488
___________ ____________
Total assets $171,781,165 $151,183,241
=========== ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Non-interest bearing $40,017,008 $40,471,206
Interest bearing 119,113,869 98,558,357
___________ ____________
Total deposits 159,130,877 139,029,563
Securities sold under
repurchase agreements 103,329 175,904
Accrued interest payable 400,759 322,891
Notes payable 1,201,346 972,617
Other liabilities 218,630 268,702
___________ ____________
Total liabilities 161,054,941 140,769,677
___________ ____________
Commitments and contingencies - -
Stockholders' Equity:
Preferred Stock, no par value, $14.25
stated value - 5,000,000 shares authorized, 179,756
and 187,286 issued and outstanding on
September 30, 1996 and December 31, 1995,
respectively 2,561,523 2,668,826
Common stock, $.10 par value-
5,000,000 shares authorized, 1,336,033 and 1,299,338
issued and outstanding on September 30, 1996 and
December 31, 1995, respectively 133,604 96,794
Surplus 6,508,774 6,164,443
Unearned ESOP shares (36,768) (54,157)
Unrealized gains/losses on securities available-
for-sale, net of deferred taxes of $197,200
in September 1996 and $91,619 in December, 1995 (461,300) 98,950
Retained earnings 2,020,391 1,438,708
___________ ____________
Total stockholders' equity 10,726,224 10,413,564
___________ ____________
Total liabilities and stockholders' equity $171,781,165 $151,183,241
=========== ============
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<CAPTION>
MIDSOUTH BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
_______________________________________________________________________________________________
Three Months Ended Nine Months Ended
September 30, September 30,
1996 1995 1996 1995
__________________________ __________________________
<S> <C> <C> <C> <C>
INTEREST INCOME:
Loans, including fees $2,266,637 $1,933,798 $6,433,531 $5,183,211
Securities 821,922 535,550 2,280,331 1,428,683
Federal funds sold 145,912 166,221 492,255 266,620
_________ _________ _________ _________
TOTAL 3,234,471 2,635,569 9,206,117 6,878,514
_________ _________ _________ _________
INTEREST EXPENSE:
Deposits 1,165,419 876,133 3,263,448 2,124,550
Notes payable 19,963 31,891 59,467 89,280
_________ _________ _________ _________
TOTAL 1,185,382 908,024 3,322,915 2,213,830
_________ _________ _________ _________
NET INTEREST INCOME 2,049,089 1,727,545 5,883,202 4,664,684
PROVISION FOR LOAN LOSSES 224,804 60,000 534,804 150,000
_________ _________ _________ _________
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES 1,824,285 1,667,545 5,348,398 4,514,684
_________ _________ _________ _________
NON-INTEREST INCOME:
Service charges on deposit
accounts 384,530 313,400 1,071,900 837,461
Gains on sales of
securities, net 1,175 - 1,175 -
Other charges and fees 177,679 99,938 495,149 322,640
_________ _________ _________ _________
TOTAL NON-INTEREST INCOME 563,384 413,338 1,568,224 1,160,101
_________ _________ _________ _________
NON-INTEREST EXPENSE:
Salaries and employee benefits 964,538 756,639 2,706,397 1,987,769
Occupancy expense 318,330 246,755 965,760 710,019
Professional fees 94,511 83,802 234,113 196,291
FDIC assessments 500 (8,823) 2,000 95,056
Marketing expenses 106,362 92,492 265,800 214,828
General and bond insurance 56,098 62,456 121,685 116,793
Data processing expenses 103,043 51,242 276,301 99,856
Postage 41,295 36,506 111,464 93,506
Director fees 24,967 21,682 73,972 69,789
Education and travel 34,959 33,030 112,449 81,405
Printing and supplies 60,962 40,315 168,858 114,258
Telephone 45,902 47,163 130,962 103,391
Expenses on other real estate
owned, net 4,606 1,325 6,419 29,307
Other 183,308 136,372 500,013 382,314
_________ _________ _________ _________
TOTAL NON-INTEREST EXPENSE 2,039,381 1,600,956 5,676,193 4,294,582
_________ _________ _________ _________
NET INCOME BEFORE INCOME TAXES 348,288 479,927 1,240,429 1,380,203
PROVISION FOR INCOME TAXES 95,280 153,996 362,761 456,839
_________ _________ _________ _________
NET INCOME $253,008 $325,931 $877,668 $923,364
_________ _________ _________ _________
PREFERRED DIVIDEND
REQUIREMENT $39,133 - $117,986 -
_________ _________ _________ _________
INCOME AVAILABLE TO COMMON
SHAREHOLDERS $213,875 $325,931 $759,682 $923,364
========= ========= ========= =========
EARNINGS PER COMMON SHARE:
PRIMARY $0.16 $0.25 $0.57 $0.71
========= ========= ========= =========
FULLY DILUTED $0.15 $0.21 $0.53 $0.67
========= ========= ========= =========
4
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MIDSOUTH BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 (UNAUDITED)
____________________________________________________________________________________________________________________________________
UNREALIZED
(GAINS)
LOSSES
RETAINED ON
SECURITIES
PREFERRED STOCK COMMON STOCK ESOP AVAILABLE RETAINED
SHARES AMOUNT SHARES AMOUNT SURPLUS OBLIGATION FOR SALE EARNINGS TOTAL
___________________ ________________ _________ __________ _________ _________ __________
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCE,
DECEMBER 31, 1995 187,286 $2,668,826 967,940 $96,794 $6,164,443 ($54,157) $98,950 $1,438,708 $10,413,564
Issuance of common stock 2,639 264 40,224 40,488
Dividends paid on common
stock (58,074) (58,074)
Dividends accrued on
preferred stock (39,720) (39,720)
Stock options exercised 3,000 300 29,265 29,565
Preferred stock conversion (5,530) (78,803) 7,371 737 78,066
Net income 288,247 288,247
ESOP obligation repayments 5,642 5,642
Net change in unrealized
gain/loss on securities
available-for-sale, net of tax (264,150) (264,150)
_______ _________ ________ _______ __________ _______ ________ _________ __________
BALANCE,
MARCH 31, 1996 181,756 $2,590,023 980,950 $98,095 $6,311,998 ($48,515)($165,200) $1,629,161 $10,415,562
_______ _________ ________ _______ __________ _______ ________ _________ __________
Issuance of common stock 2,574 258 38,233 38,491
Dividends paid on common
stock (58,857) (58,857)
Dividends accrued on
preferred stock (39,133) (39,133)
Stock options exercised 7,000 700 67,392 68,092
Preferred stock conversion (2,000) (28,500) 2,666 267 28,233
Net income 336,413 336,413
ESOP obligation repayments 5,806 5,806
Net change in unrealized
gain/loss on securities
available-for-sale, net of tax (379,600) (379,600)
_______ _________ ________ _______ __________ _______ ________ _________ __________
BALANCE,
JUNE 30, 1996 179,756 $2,561,523 993,190 $99,320 $6,445,856 ($42,709)($544,800) $1,867,584 $10,386,774
_______ _________ ________ _______ __________ _______ ________ _________ __________
Issuance of common stock 3,445 344 40,678 41,022
Dividends paid on common
stock (59,548) (59,548)
Dividends accrued on
preferred stock (39,133) (39,133)
Stock options exercised 8,000 800 55,380 56,180
Stock split and payment for
fractional shares 331,398 33,140 (33,140) (1,520) (1,520)
Net income 253,008 253,008
ESOP obligation repayments 5,941 5,941
Net change in unrealized
gain/loss on securities
available-for-sale, net of tax 83,500 83,500
_______ _________ ________ _______ __________ _______ ________ _________ __________
BALANCE,
SEPTEMBER 30, 1996 179,756 $2,561,523 1,336,033 $133,604 $6,508,774 ($36,768)($461,300) $2,020,391 $10,726,224
======= ========= ========= ======= ========= ====== ======= ========= ==========
5
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MIDSOUTH BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
_____________________________________________________________________________________
September 30,
1996 1995
________ ________
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $877,668 $923,364
Adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation and amortization 470,497 258,767
Provision for loan losses 534,804 150,000
Provision for deferred taxes (157,422) -
Premium amortization, net 127,065 91,927
Net (gain) loss on sale of fixed assets (22,129) -
Net (gain) loss on sale of other real estate owned (163) 2,135
Write-down of other real estate owned - 12,400
Change in accrued interest receivable (379,284) (202,542)
Change in accrued interest payable 77,868 103,815
Change in other liabilities 200,482 (307,022)
Change in other assets (767,091) (285,720)
__________ __________
NET CASH PROVIDED BY OPERATING ACTIVITIES 962,295 747,124
__________ __________
CASH FLOWS FROM INVESTING ACTIVITIES:
Net decrease in interest-bearing deposits (177,166) (71,085)
Proceeds from maturities and calls of securities
available-for-sale 3,814,768 5,894,922
Proceeds from sales of securities available-for-sale 1,992,457 2,101,484
Purchases of securities held-to-maturity (5,026,109) (4,070,764)
Purchases of securities available-for-sale (20,419,911) (6,281,324)
Loan originations, net of repayments (9,841,416) (8,426,640)
Purchases of premises and equipment (1,234,165) (1,351,670)
Proceeds from sales of other real estate owned 3,500 21,545
Proceeds from sales of fixed assets 149,758 -
Net cash received in connection with acquisition - 3,388,259
__________ __________
NET CASH USED IN INVESTING ACTIVITIES (30,738,284) (8,795,273)
__________ __________
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in deposits 20,101,314 23,046,386
Net decrease in repurchase agreements (72,575) (226,692)
Issuance of notes payable 354,293 1,000,000
Repayments of notes payable (125,564) (1,111,452)
Proceeds from issuance of common stock 120,001 83,861
Payment of common stock dividends (176,479) (57,676)
Payment of fractional shares resulting from stock
dividend (1,520) (782)
Proceeds from exercise of stock options 153,837 -
__________ __________
NET CASH PROVIDED BY FINANCING ACTIVITIES 20,353,307 22,733,645
__________ __________
NET (DECREASE) INCREASE IN CASH & CASH EQUIVALENTS (9,422,682) 14,685,496
CASH & CASH EQUIVALENTS AT BEGINNING OF YEAR 26,098,209 8,641,989
__________ __________
CASH & CASH EQUIVALENTS AT END OF QUARTER $16,675,527 $23,327,485
========== ==========
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MIDSOUTH BANCORP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. STATEMENT BY MANAGEMENT CONCERNING THE REVIEW OF UNAUDITED
FINANCIAL INFORMATION
The accompanying unaudited consolidated financial statements and notes
thereto contain all adjustments, consisting only of normal recurring
adjustments, necessary to present fairly the financial position of
MidSouth Bancorp, Inc. ("MidSouth") and its subsidiary as of
September 30, 1996 and the results of their operations and their
cash flows for the periods presented. The consolidated financial
statements should be read in conjunction with the annual consolidated
financial statements and the notes thereto included in MidSouth's
1995 annual report and Form 10-KSB.
The results of operations for the three and nine month periods ended
September 30, 1996 are not necessarily indicative of the results to
be expected for the entire year.
2. ALLOWANCE FOR LOAN AND LEASE LOSSES
An analysis of the activity in the allowance for loan and lease
losses is as follows:
Nine Months Ended
September 30,
1996 1995
_______ _______
Balance at beginning of year $1,052 $874
Provision for loan losses 535 150
Addition of Sugarland Bank reserve - 115
Recoveries 148 63
Loans charged off (683) (168)
_______ _______
Balance at end of quarter $1,052 $1,034
======= =======
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MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This review should be read in conjunction with MidSouth Bancorp
Inc.'s ("MidSouth") consolidated financial statements and
accompanying notes contained herein, as well as with MidSouth's
1995 consolidated financial statements, the notes thereto and the
related Management's Discussion and Analysis.
MidSouth reported net income for the third quarter of 1996 of
$253,008, a $72,923 decrease in net income compared to the third
quarter of 1995 of $325,931. Primary earnings per common share
for the third quarter of 1996 were $.16 compared to $.25 for the
third quarter of 1995. Fully diluted earnings per common share
were $.15 and $.21 for the same periods, respectively.
For the first nine months of 1996, net income totaled $877,668, a
decrease of $45,696 compared to $923,364 in the first nine months
of 1995. Primary earnings per common share were $.57 and $.71
for the nine month periods ending September 30, 1996 and
1995, respectively. Fully diluted earnings per common share were
$.52 and $.67 for the same periods, respectively. Net income
decreased in the third quarter and the nine months of 1996
primarily due to increased provisions to the Allowance for Loan
and Lease Losses ("ALLL") and start-up costs associated with
MidSouth's new finance company subsidiary, Financial Services of
the South, Inc. ("FSS").
MidSouth increased the provision for loan and lease losses during
the third quarter of 1996 by $164,804 more than the provision for
the third quarter of 1995, primarily due to $134,000 in charge-
offs of certain loans within a leasing program. Management is
continuing negotiations with the lease program customers and
expects partial recoveries of the $432,756 charged-off during the
nine month period ending September 30, 1996. For the same
period, recoveries of lease loan losses totaled $60,694.
On August 1, 1996, FSS opened for business in Lafayette,
Louisiana. Third quarter 1996 expenses attributed to FSS totaled
$54,428. A second location in Jennings, Louisiana began
operations on November 1, 1996. Management anticipates that FSS
will have a positive impact on earnings within the second quarter
of 1997.
As of September 30, 1996, total loans increased $9.3 million to
a total of $88.2 million, an increase of 12% from the $78.9
million reported at December 31, 1995. The ALLL totaled
$1,051,846, or 1.19% of total loans. Nonperforming loans totaled
$692,209 for the same period, representing .79% of total loans
and an increase of $304,756 from year-end 1995. The increase in
nonperforming loans results from the addition of one large
commercial credit placed on nonaccrual in September 1996. At
September 30, 1996, MidSouth's total consolidated assets were
$171,781,165, an increase of 14% over the $151,183,241 reported
at year-end 1995 and an 18% increase over the $145,780,65
6 reported at the end of the third quarter of 1995.
MidSouth's annualized return on average common equity was
10.31% and annualized return on average assets was .50%.
The leverage capital ratio was 6.53%.
8
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On October 16, 1996, MidSouth announced plans to expand bank
operations into Lake Charles, Louisiana with a loan
production office targeted to open in November of 1996.
Additionally, construction has begun on a full service branch of
MidSouth National Bank in Morgan City, Louisiana.
Earnings Analysis
Net Interest Income
Average earning assets increased $42.5 million from $104.8
million for the ninemonths ending September 30, 1995 to $147.3
million for the nine months ending September 30, 1996. An
increase in interest income resulting from the increase in
earning assets was partially offset by a 46 basis point decline
in the average yield on earning assets in addition to a $34.2
million volume increase and 15 basis point rate increase
associated with interest-bearing liabilities. Net interest
income increased $1.2 million over the comparable 1995 period.
Despite increased net interest income, the net interest margin
decreased 64 basis points, from 5.96% for the nine months ended
September 30, 1995 to 5.32% for the nine months ended September
30, 1996. The decrease in the net interest margin resulted
primarily from a change in the mix of earning assets. For the
first nine months of 1995, loans represented 63% of average
earning assets. As of September 30, 1996, the percentage of
loans to average earning assets fell to 57%. The volume of
federal funds sold increased during the same period, with an
average of $12.5 million earning a low average rate of 5.25%.
The change in mix occurred as the increase in deposits during the
past twelve months exceeded loan originations fundings and excess
funds were used to purchase securities or federal funds sold.
Although installment loan demand has remained constant for
MidSouth, competition for quality commercial loans has resulted
in slowed growth for the commercial and real estate loan
portfolios. The influx of deposits resulted from the Sugarland
acquisition, a public funds contract, deposit promotions and
increased commercial deposits.
An increase in the average rate paid on interest-bearing deposits
and a change in the mix of deposits also contributed to the
decline in the net interest margin. The deposit mix reflects a
greater percentage of interest-bearing deposits for the nine
months ending September 30, 1996 as compared to the same period
of 1995, primarily due to a public funds contract and increased
commercial deposits. Interest-bearing deposits averaged 73.5% of
total deposits at September 30, 1996 as compared to 71.8% at
September 30, 1995. The average rate paid on interest-bearing
deposits increased 20 basis points, from 3.73% to 3.93% for the
same period.
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Non-interest Income
MidSouth's primary source of non-interest income, service charges
on deposit accounts, increased $71,130 for the quarter and
$234,439 for the nine months ending September 30, 1996 as
compared to the same periods in 1995. The increases result
primarily from additional insufficient funds fees and fees
earned on deposit accounts, including ATM fees. In past filings,
ATM Fees have been reported as Other Non-Interest Income. For
the current quarterly report and future filings, ATM Fees will be
included in Service Charges on Deposit Accounts.
Other non-interest income increased $77,741 and $172,509 in
quarterly and year-to-date comparisons, respectively, primarily
due to increases in income earned on the sale of credit life
insurance, ATM transaction processing, check order processing and
a third party brokerage service. Additionally, FSS contributed
$15,455 to other non-interest income in the three and nine months
ended September 30, 1996.
Non-interest Expense
Non-interest expense increased 27.39% for the three months and
32.17% for the nine months ended September 30, 1996 as compared
to the same periods ended September 30, 1995. The increase
resulted primarily from start up and operational costs associated
with five new branch facilities, two of which were former
Sugarland banking offices, and a loan processing office which
produced significant increases in salaries and employee benefits,
occupancy expenses, data processing expenses, printing and
supplies, and marketing expenses. Additionally, start-up costs
associated with FSS totaled $54,428.
Salaries and employee benefits increased due the addition of 16
full-time equivalent ("FTE") employees from 106 in September 1995
to 122 in September 1996. Of the 106 FTE employees reported for
September 30, 1995, 26 joined MidSouth on August 1, 1995 with the
acquisition of Sugarland State Bank. Additional employees hired
during 1995 included six to staff the Opelousas branch and seven
for the Super 1 - New Iberia branch. In May 1996, seven employees
were added to staff the Super 1 - Lafayette branch. Salaries and
benefits associated with three full-time FSS employees totaled
$32,523 for quarter and year-to-date periods ending September 30,
1996.
Occupancy expense increased in the three and nine month periods
ending September 30, 1996 as compared to the same periods of 1995
due to increases in building lease expense, depreciation and
maintenance expenses associated with furniture and equipment,
utilities, insurance and ad valorem taxes. Building lease expense
increased due to the addition of leased branch facilities in
Opelousas, New Iberia, Morgan City and Lafayette. Depreciation
and maintenance expenses, in addition to utilities, insurance and
ad valorem taxes, increased due to these four leased branch
facilities and the two former Sugarland locations.
10
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Marketing and promotional expenses increased in quarterly and
year-to-date comparisons due to expenses related to quality
service programs and special loan and deposit promotions. Data
processing expense increased significantly due to a systems
upgrade in July of 1995, conversion of the Sugarland branches in
December 1995 and the addition of three branch locations during
the past twelve months.
In September of 1995, the FDIC revised its assessment fee
schedule and refunded $68,703 in assessment fees to MidSouth.
Subsequently, MidSouth's quarterly assessment fees, based on the
FDIC classification, have been minimal and resulted in
significant savings of $93,056 for the nine months ended
September 30, 1996.
Other non-interest expenses increased for the three and nine
month periods ending September 30, 1996 primarily due to
increases in bank auto expenses, ATM processing expense,
service charges on correspondent bank accounts, armored car
expense, and expenses associated with new product lines.
New products introduced during the past twelve months included
Visa debit and credit card services and direct leasing.
Balance Sheet Analysis
MidSouth ended the third quarter of 1996 with consolidated assets
of $171,781,165, an increase of 13.6% over the $151,183,241
reported for December 31, 1995. Total deposits increased $20.1
million to $159.1 million as compared to $139.0 million at
December 31, 1995. Approximately $7.2 million in additional
public fund deposits contributed to the increase. Favorable
economic conditions and increased business activity resulted in
an increase of $2.8 million in commerical transaction and money
market accounts and $5.1 million in commercial time deposits
during the first nine months of 1996. A certificate of deposit
promotion in the Jennings, Louisiana market contributed to the
$1.7 million increase in individual time deposits for the same
period.
Total loans increased $9.3 million during the nine months ended
September 30, 1996. The installment loan promotion held during
the months of March and April 1996 contributed $5.2 million to
the increase in loans. Agricultural loan activity in the third
quarter of 1996 resulted in the addition of $1.4 million to total
loans. Intense competition in MidSouth's market held growth in
the commercial and real estate portfolios to an increase of $2.7
million.
Securities available-for-sale increased $13.6 million, from $36.1
million at December 31, 1995 to $49.7 million at September 30,
1996. The increase reflects purchases of $ 20.4 million in U. S.
Treasury and mortgage-backed securities partially offset by sales
of $2.0 million and a net decrease of $849,069 in the market
value of the securities available-for-sale. Additionally, $3.8
million in maturities and principal paydowns were received on
securities available-for-sale during the first nine months of
1996. Unrealized losses in the securities available-for-sale
portfolio, net of unrealized gains and tax effect, were $461,300
at September 30, 1996, compared to a net unrealized gain of
$98,950 at December 31, 1995. These amounts result from interest
11
<PAGE>
rate fluctuations and do not represent permanent impairment of
value. Moreover, classification of securities as available-for-
sale does not necessarily indicate that the securities will be
sold prior to maturity. Tax-free municipal securities totaling
$5.0 million were purchased for the held-to-maturity portfolio
during the nine month period ending September 30, 1996.
During the first quarter of 1996, MidSouth's Board of Directors
approved the purchase of defined contribution retirement plans
for two executive officers and one senior officer. The single
premium paid of $575,000 constitutes an earning asset for
MidSouth and is included in the "Other Assets" category on the
balance sheet.
In July 1996, the Bank received approval from the Office of the
Comptroller of the Currency to acquire property in Morgan City,
Louisiana with plans to open a full service facility in 1996.
Construction began on the facility in October 1996. The Bank
currently operates a loan production office in a leased facility
in Morgan City. In October 1996, the Bank announced plans to
open a loan production office in Lake Charles, Louisiana in early
November 1996.
Capital Ratios
As of September 30, 1996, MidSouth's leverage ratio was 6.53% as
compared to 6.99% at December 31, 1995. Tier 1 capital to risk-
weighted assets was 11.85% and total capital to risk-weighted
assets was 12.96% at the end of the third quarter of 1996. At
year-end 1995, Tier 1 capital to risk-weighted assets was 12.11%
and total capital to risk-weighted assets was 13.36%.
On August 19, 1996, MidSouth effected a four for three stock
split by way of a stock dividend on its common stock for holders
of record as of July 31, 1996 payable. This follows a 5% stock
dividend declared in February 1994 and a four for three stock
split of September 1995. The annual dividend rate of $.24 per
common share will continue to be paid quarterly, resulting in a
33% increase in the dividend payable.
12
<PAGE>
Nonperforming Assets and Past Due Loans
Table 1 summarizes MidSouth's nonaccrual, past due and
restructured loans and nonperforming assets.
<TABLE>
<CAPTION>
Nonperforming Assets and
Loans Past Due 90 Days
_____________________________________________________________________
September September December
30, 31, 30,
1996 1995 1995
_____________________________________________________________________
<S> <C> <C> <C>
Nonperforming loans
Nonaccrual loans $691,711 $386,510 $203,844
Restructured loans 498 943 4,518
________ ________ _______
Total nonperforming
loans 692,209 387,453 208,362
Other real estate
owned, net 180,270 180,270 235,270
Other assets
repossessed 3,596 3,118 -
________ _______ ________
Total nonperforming
assets $876,075 $570,841 $443,632
======== ======== =========
Loans past due 90
days or more and
still accruing $318,604 $265,682 $279,112
Nonperforming loans
as a % of total
loans 0.79% 0.49% 0.27%
Nonperforming assets
as a % of total
loans, other real
estate owned and
assets repossessed 0.99% 0.72% 0.57%
ALLL as a % of
nonperforming loans 151.95% 271.49% 496.08%
</TABLE>
13
<PAGE>
Nonperforming assets were $876,075 as of September 30, 1996, an
increase of $305,234 from the $570,841 reported for December 31,
1995 and an increase of $432,443 from the $443,632 reported for
September 30, 1995. The increase resulted primarily from one
commercial credit placed on nonaccrual in September 1996.
The credit represents a pool of automobile loans for which
the initial servicer discontinued processing payments on the
pool. Subsequently, a new service provider has continued payments
on the pool and MidSouth has experienced no loss in payments as
of the date of this filing.
Loans past due 90 days or more and still accruing increased from
$279,112 in September 1995 to $265,682 in December 1995 and to
$318,604 as of September 30, 1996. Throughout the nine months
ended September 30, 1996, MidSouth experienced decreasing
payment streams in a group of lease loans. During the third
quarter of 1996, approximately $134,000 of these past due lease
loans were charged against the ALLL and approximately $98,000
remain past due. Management has focused its attention on
resolving these loans and believes it has provided adequately
for future losses and recoveries. However, no assurance can be
given that these loans will not deteriorate further.
Specific reserves have been established in the ALLL to cover
potential losses on nonperforming assets. The ALLL is analyzed
quarterly and additional reserves, if needed, are allocated at
that time. Management believes the $1,051,846 in the ALLL as
of September 30, 1996 is sufficient to cover potential losses in
nonperforming assets and in the loan and lease portfolios. Loans
classified for regulatory purposes but not included in Table 1 do
not represent material credits about which management has serious
doubts as to the ability of the borrower to comply with loan
repayment terms.
14
<PAGE>
Item 6. Exhibits and Reports on Form 8-K Page 15
(a) Exhibits
Exihibit NumberDocument Description
3.1 Amended and Restated Articles of Incorporation of
MidSouth Bancorp, Inc. is included as Exhibit 3.1
to the Report on Form 10-K for the year
ended December 31, 1993, and is incorporated
herein by reference.
3.2 Articles of Amendment to Amended and Restated
Articles of Incorporation dated July 19, 1995
are included as Exhibit 4.2 to MidSouth's
Registration Statement on Form S-8 filed
September 20, 1995 and is incorporated herein
by reference.
3.3 Amended and Restated By-laws adopted by the Board
of Directors on April 12, 1995 are included as
Exhibit 3.2 to Amendment No. 1 to MidSouth's
Registration Statement on Form S-4
(Reg. No. 33-58499) filed on June 1, 1995.
10.1 MidSouth National Bank Lease Agreement with
Southwest Bank Building Limited Partnership
is included as Exhibit 10.7 to the Company's
annual report on Form 10-K for the Year Ended
December 31, 1992, and is incorporated herein
by reference.
10.2 First Amendment to Lease between MBL Life
Assurance Corporation, successor in interest
to Southwest Bank Building Limited Partnership in
Commendam, and MidSouth National Bank is included
as Exhibit 10.1 to Report on the Company's annual
report on Form 10-KSB for the yearended December 31,
1994, and is incorporated herein by reference.
10.3 Amended and Restated Deferred Compensation Plan
and Trust is included as Exhibit 10.3 to the
Company's annual report on Form 10-K for the year
ended December 31, 1992 and is incorporated herein
by reference.
10.4 Employment Agreements with C. R. Cloutier and
Karen L. Hail are included as Exhibit 5(c) to
MidSouth's Form 1-A and are incorporated
herein by reference.
10.5 Description of the Incentive Compensation Plan for
Officers of MidSouth National Bank is included as
Exhibit 10.5 to the Company's annual report
on Form 10-K for the year ended December 31, 1993,
and is incorporated herein by reference.
<PAGE>
Page 16
10.6 Agreement and Plan of Merger between MidSouth
Bancorp, Inc. and MidSouth National Bank and
Sugarland Bancshares, Inc. and Sugarland
State Bank is included as Exhibit 10.5 to the
Company's annual report on Form 10-KSB for the
year ended December 31, 1994, and is incorporated
herein by reference
11 Computation of earnings per share
(b) Reports Filed on Form 8-K
(none)
Signatures
In accordance with the requirements of the Exchange Act, the
registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
MidSouth Bancorp, Inc.
(Registrant)
Date: November 13, 1996
_________________
_______________________________
C. R. Cloutier, President & CEO
________________________________
Karen L. Hail, Executive
Vice President & CFO
________________________________
Teri S. Stelly, Vice President &
Controller
<PAGE>
<TABLE>
<CAPTION>
MIDSOUTH BANCORP, INC. AND SUBSIDIARY EXHIBIT 11
COMPUTATION OF EARNINGS PER SHARE (Unaudited)
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
Third Quarter Third Quarter Year-to-Date Year-to-Date
September 30, September 30, September 30, September 30,
PRIMARY 1996 1995 1996 1995
_____________ _____________ _____________ _____________
<S> <C> <C> <C> <C>
Earnings:
Income applicable to common
stock $213,875 $325,931 $759,682 $923,364
============= ============= ============= =============
Shares:
Weighted average number of
common shares outstanding 1,330,036 1,291,810 1,317,781 1,289,188
============= ============= ============= =============
Earnings per common share:
Income applicable to common
stock $0.16 $0.25 $0.58 $0.72
============= ============= ============= =============
Weighted average number of
common shares outstanding 1,330,036 1,291,810 1,317,781 1,289,188
============= ============= ============= =============
Assuming exercise of options,
reduced by the number of
shares which could have
been purchased with the
proceeds from exercise of
such options at the average
issue price 5,195 9,770 5,469 7,644
_____________ _____________ _____________ _____________
Weighted average number of
common shares outstanding,
as adjusted 1,335,231 1,301,580 1,323,250 1,296,832
============= ============= ============= =============
Primary earnings per common share:
Income applicable to common
stock $0.16 $0.25 $0.57 $0.71
============= ============= ============= =============
FULLY DILUTED
Earnings:
Net income $253,008 $325,931 $877,668 $923,364
============= ============= ============= =============
Weighted average number of
common shares outstanding 1,330,036 1,291,810 1,317,781 1,289,188
Assuming exercise of options,
reduced by the number of
shares which could have
been purchased with the
proceeds from exercise of
such options at the higher
of the average issue price
or period end price 5,288 16,809 5,288 16,809
Assuming conversion of preferred
stock at a conversion rate of
1 to 1.776 shares 319,246 220,540 319,246 74,050
_____________ _____________ _____________ _____________
Weighted average number of
common shares outstanding,
as adjusted 1,654,570 1,529,159 1,642,315 1,380,047
============= ============= ============= =============
Fully diluted earnings per common
share:
Income applicable to common
stock $0.15 $0.21 $0.53 $0.67
============= ============= ============= =============
17
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1996
<CASH> 9,275,527
<INT-BEARING-DEPOSITS> 203,515
<FED-FUNDS-SOLD> 7,400,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 49,698,403
<INVESTMENTS-CARRYING> 9,568,694
<INVESTMENTS-MARKET> 9,629,243
<LOANS> 88,164,439
<ALLOWANCE> 1,051,846
<TOTAL-ASSETS> 171,781,165
<DEPOSITS> 159,130,877
<SHORT-TERM> 103,329
<LIABILITIES-OTHER> 619,389
<LONG-TERM> 1,201,346
<COMMON> 133,604
0
2,561,523
<OTHER-SE> 8,031,097
<TOTAL-LIABILITIES-AND-EQUITY> 10,726,224
<INTEREST-LOAN> 2,266,637
<INTEREST-INVEST> 821,922
<INTEREST-OTHER> 145,912
<INTEREST-TOTAL> 3,234,471
<INTEREST-DEPOSIT> 1,165,419
<INTEREST-EXPENSE> 1,185,382
<INTEREST-INCOME-NET> 2,049,089
<LOAN-LOSSES> 224,804
<SECURITIES-GAINS> 1,175
<EXPENSE-OTHER> 2,039,381
<INCOME-PRETAX> 348,288
<INCOME-PRE-EXTRAORDINARY> 253,008
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 253,008
<EPS-PRIMARY> .16
<EPS-DILUTED> .15
<YIELD-ACTUAL> 5.32
<LOANS-NON> 691,711
<LOANS-PAST> 318,604
<LOANS-TROUBLED> 1
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 1,051,898
<CHARGE-OFFS> 683,195
<RECOVERIES> 148,339
<ALLOWANCE-CLOSE> 1,051,846
<ALLOWANCE-DOMESTIC> 155,000
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 896,846
</TABLE>
