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............ March 31, 1998
______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 March 31, 1998
Common stock, $.10 par value 1,594,939
Preferred stock, no par value, $14.25 stated value 159,016
Transitional Small Business Disclosure Format:
Yes No X
______ _______
Page 1
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Page 2
PART 1 - FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements (Unaudited) Page
Financial Highlights 3
Statements of Condition - March 31, 1998 and
December 31, 1997 4
Statements of Income - Three and Nine Months
Ended March 31, 1998 and 1997 5
Statement of Stockholders' Equity - Three
Months Ended March 31, 1998 6
Statements of Cash Flows - Three Months Ended
March 31, 1998 and 1997 7
Notes to Financial Statements 8
Item 2. Management's Discussion and Analysis or
Plan of Operation 9
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 15
Signatures 16
<PAGE>
<TABLE>
<CAPTION>
MIDSOUTH BANCORP, INC. AND SUBSIDIARIES
FINANCIAL HIGHLIGHTS (UNAUDITED)
Three Months Ended Year-Ended
March 31, December 31,
EARNINGS DATA 1998 1997 1997
______________________________________
<S> <C> <C> <C> <C>
Net interest income $2,691,722 $2,237,962 $9,882,223
Provision for loan losses 258,000 153,268 854,400
Non-interest income 778,840 596,489 2,899,461
Non-interest expense 2,507,256 2,183,167 9,585,788
Provision for income tax 152,798 116,594 586,804
Net income 552,508 381,422 1,754,692
Preferred dividend requirement 37,520 39,807 154,475
Income available to common shareholders $514,988 $341,615 $1,600,217
________________________________________________________________________________
PER COMMON SHARE DATA
Basic earnings per share $0.32 $0.22 $1.03
Diluted earnings per share $0.28 $0.20 $0.92
Book value at end of period $7.14 $5.79 $6.73
Market price at end of period $21.75 $9.89 $21.25
Market price of preferred stock at end
of period $46.25 $20.25 $40.50
Weighted average shares outstanding
Basic 1,587,674 1,543,731 1,554,968
Diluted 1,957,073 1,886,871 1,904,005
________________________________________________________________________________
AVERAGE BALANCE SHEET DATA
Total assets $222,213,579 $192,430,945 $204,727,014
Earning assets 201,167,815 173,353,447 184,959,588
Loans and leases 131,792,227 96,580,282 112,190,547
Interest-bearing deposits 151,749,614 132,328,642 139,336,476
Total deposits 204,842,701 177,893,056 187,816,405
Common stockholders' equity 10,986,163 9,058,302 9,732,616
Total stockholders' equity 13,265,037 11,507,606 12,134,210
________________________________________________________________________________
SELECTED RATIOS
Return on average assets (annualized) 1.01% 0.79% 0.78%
Return on average common equity
(annualized) 19.01% 15.09% 16.44%
Return on average total equity
(annualized) 16.89% 13.26% 14.46%
Leverage capital ratio 6.04% 5.95% 6.00%
Tier 1 risk-based capital ratio 9.38% 10.42% 9.19%
Total risk-based capital ratio 10.46% 11.45% 10.22%
Allowance for loan losses as a %
of total loans 1.15% 1.12% 1.08%
______________________________________________________________________________________________
PERIOD ENDING BALANCE SHEET DATA 3/31/98 3/31/97 Net Change % Change
Total assets $231,017,564 $204,130,715 $26,886,849 13.17%
Earning assets 208,467,198 182,378,190 $26,089,008 14.30%
Loans and leases, net 132,621,978 99,326,599 $33,295,379 33.52%
Interest-bearing deposits 158,797,089 142,055,176 $16,741,913 11.79%
Total deposits 213,303,319 189,946,741 $23,356,578 12.30%
Common stockholders' equity 11,371,014 8,997,545 $2,373,469 26.38%
Total stockholders' equity 13,636,992 11,443,643 $2,193,349 19.17%
______________________________________________________________________________________________
</TABLE>
All per share and shares outstanding data have been adjusted to reflect a
12.5% stock dividend payable on August 27, 1997 to common shareholders of
record on August 6, 1997.
3
<PAGE>
<TABLE>
<CAPTION>
MIDSOUTH BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CONDITION
_________________________________________________________________________________
March 31, December 31,
ASSETS 1998 1997
(unaudited) *
___________ ___________
<S> <C> <C>
Cash and due from banks $13,645,271 $15,774,024
Federal funds sold 16,400,000 8,060,000
___________ ___________
Total cash and cash equivalents 30,045,271 23,834,024
Interest bearing deposits in banks 131,796 48,928
Securities available-for-sale, at fair value
(cost of $40,769,293 in March 1998 and
$36,750,950 in December 1997) 41,042,293 36,884,465
Securities held-to-maturity (estimated market
value of $17,558,586 in March 1998 and
$17,459,865 in December 1997) 16,731,875 16,732,827
Loans, net of allowance for loan and lease
losses of $1,539,256 in March 1998 and
$1,414,826 in December 1997 132,621,978 129,473,318
Bank premises and equipment, net 7,343,359 6,973,150
Other real estate owned, net 53,137 45,100
Accrued interest receivable 1,631,936 1,638,931
Goodwill, net 233,246 241,902
Other assets 1,182,673 1,239,770
___________ ___________
Total assets $231,017,564 $217,112,415
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Non-interest bearing $54,506,230 $58,464,087
Interest bearing 158,797,089 141,603,664
___________ ___________
Total deposits 213,303,319 200,067,751
Securities sold under
repurchase agreements 70,119 69,443
Accrued interest payable 566,921 543,936
Notes payable 3,119,833 3,198,794
Other liabilities 320,380 301,181
___________ ___________
Total liabilities 217,380,572 204,181,105
___________ ___________
Commitments and contingencies - -
Stockholders' Equity:
Preferred Stock, no par value,
$14.25 stated value - 5,000,000
shares authorized, 159,016 and
160,756 issued and outstanding
on March 31, 1998 and December 31,
1997, respectively 2,265,978 2,290,773
Common stock, $.10 par value-
5,000,000 shares authorized,
1,593,006 and 1,581,053
issued and outstanding on
March 31, 1998 and December 31,
1997, respectively 159,301 158,106
Surplus 10,076,902 9,862,700
Unearned ESOP shares (132,566) (137,243)
Unrealized gains/losses on
securities available-for-sale,
net of deferred taxes of $100,000
in March 1998 and $51,505 in
December 1997 173,000 81,966
Retained earnings 1,094,377 675,008
___________ ___________
Total stockholders' equity 13,636,992 12,931,310
___________ ___________
Total liabilities and stockholders' equity $231,017,564 $217,112,415
============ ============
* The consolidated statement of condition at December 31, 1997 is taken
from the audited balance sheet on that date.
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
MIDSOUTH BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
_______________________________________________________________________________
Three Months Ended Year Ended
March 31, December 31,
1998 1997 1997 *
(unaudited)
___________________________ ____________
<S> <C> <C> <C>
INTEREST INCOME:
Loans, including fees $3,321,732 $2,459,748 $11,625,789
Securities
Taxable $588,511 747,289 2,886,273
Nontaxable 220,076 143,732 794,065
Federal funds sold 180,037 202,915 470,289
__________ __________ __________
TOTAL 4,310,356 3,553,684 15,776,416
__________ __________ __________
INTEREST EXPENSE:
Interest on deposits 1,554,300 1,284,195 5,655,770
Interest on note payable 64,334 31,527 238,423
__________ __________ __________
TOTAL 1,618,634 1,315,722 5,894,193
__________ __________ __________
NET INTEREST INCOME 2,691,722 2,237,962 9,882,223
PROVISION FOR LOAN LOSSES 258,000 153,268 854,400
__________ __________ __________
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES 2,433,722 2,084,694 9,027,823
__________ __________ __________
OTHER OPERATING INCOME:
Service charges on deposits 584,921 457,614 2,101,956
Gains (losses) on securities, net - - 94,913
Credit life insurance 27,118 50,595 190,590
Other charges and fees 166,801 88,280 512,002
__________ __________ __________
TOTAL OTHER INCOME 778,840 596,489 2,899,461
__________ __________ __________
OTHER EXPENSES:
Salaries and employee benefits 1,250,293 1,027,972 4,509,683
Occupancy expense 548,138 505,524 2,163,855
Other 708,825 649,671 2,912,250
__________ __________ __________
TOTAL OTHER EXPENSES 2,507,256 2,183,167 9,585,788
__________ __________ __________
INCOME BEFORE INCOME TAXES 705,306 498,016 2,341,496
PROVISION FOR INCOME TAXES 152,798 116,594 586,804
__________ __________ __________
NET INCOME $552,508 $381,422 $1,754,692
PREFERRED DIVIDEND REQUIREMENT 37,520 39,807 154,475
__________ __________ __________
INCOME AVAILABLE TO COMMON
SHAREHOLDERS $514,988 $341,615 $1,600,217
========== ========== ==========
BASIC EARNINGS PER COMMON SHARE $0.32 $0.22 $1.03
========== ========== ==========
DILUTED EARNINGS PER COMMON SHARE $0.28 $0.20 $0.92
========== ========== ==========
* The consolidated statement of income at December 31, 1997 is
taken from the audited income statement of that date.
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
MIDSOUTH BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE QUARTER ENDED MARCH 31, 1998 (UNAUDITED)
___________________________________________________________________________________________________________________________________
UNREALIZED
(GAINS) LOSSES
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, 1997 160,756 $2,290,773 1,581,053 $158,106 $9,862,700 ($137,243) $81,966 $675,008 $12,931,310
Issuance of common stock 8,479 848 189,754 190,602
Dividends paid on common
stock (95,549) (95,549)
Dividends paid on
preferred stock (37,520) (37,520)
Preferred stock
conversion (1,740) (24,795) 3,474 347 24,448 (70) (70)
Net income 552,508 552,508
ESOP obligation, net of
repayments 4,677 4,677
Net change in unrealized
Gain/loss on securities
available-for-sale,
net of tax 91,034 91,034
_______ __________ _________ ________ __________ __________ _________ ___________ ___________
BALANCE,
MARCH 31, 1998 159,016 $2,265,978 1,593,006 $159,301 $10,076,902 ($132,566) $173,000 $1,094,377 $13,636,992
======= ========== ========= ======== =========== ========= ======== ========== ===========
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
MIDSOUTH BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 31, 1998 and 1997
March 31, 1998 March 31, 1997
______________ ______________
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $552,508 $381,422
Adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation and amortization 227,282 197,155
Provision for loan losses 258,000 153,268
Provision for deferred income taxes 49,330 40,116
Provision for losses on other real estate owned - 33,718
Discount accretion (premium amortization), net (4,575) 13,795
Gain on sale of premises and equipment (750) -
Loss on sale of other real estate owned 1,000 -
Change in accrued interest receivable 6,995 (62,827)
Change in accrued interest payable 22,985 42,854
Change in other liabilities (51,740) 56,024
Change in other assets 30,256 30,493
__________ __________
NET CASH PROVIDED BY OPERATING ACTIVITIES 1,091,291 886,018
__________ __________
CASH FLOWS FROM INVESTING ACTIVITIES:
Net decrease (increase) in interest-bearing
deposits in banks (82,868) 400,056
Proceeds from maturities and calls of securities
available-for-sale 1,950,899 682,993
Purchases of securities held-to-maturity - (3,971,005)
Purchases of securities available-for-sale (5,963,716) (5,971,710)
Loan originations, net of repayments (3,416,020) (5,858,312)
Purchases of premises and equipment (608,736) (496,520)
Proceeds from sales of premises and equipment 20,651 -
Proceeds from sales of other real estate owned 5,000 -
__________ __________
NET CASH USED IN INVESTING ACTIVITIES (8,094,790) (15,214,498)
__________ __________
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in deposits 13,235,568 18,330,233
Net increase in securities sold under repurchase
agreements and federal funds purchased 676 246,175
Issuance of notes payable - 235,000
Repayments of notes payable (78,961) (33,410)
Proceeds from issuance of common stock 190,602 158,400
Payment of dividends (133,069) (121,914)
Payment of fractional shares resulting from
conversion of preferred stock (70) (47)
NET CASH PROVIDED BY FINANCING ACTIVITIES 13,214,746 18,814,437
__________ __________
NET DECREASE IN CASH & CASH EQUIVALENTS 6,211,247 4,485,957
CASH & CASH EQUIVALENTS AT BEGINNING OF YEAR 23,834,024 25,414,562
__________ __________
CASH & CASH EQUIVALENTS AT END OF QUARTER $30,045,271 $29,900,519
========== ==========
</TABLE>
7
MIDSOUTH BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. STATEMENT BY MANAGEMENT CONCERNING THE REVIEW OF UNAUDITED
FINANCIAL INFORMATION
The accompanying unaudited consolidated financial statements and
notes thereto contain all adjustments, consisting only of normal
recurring adjustments, necessary to present fairly the financial
position of MidSouth Bancorp, Inc. ("MidSouth") and its subsidiary
as of March 31, 1998 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
1997 annual consolidated report and Form 10-KSB.
The results of operations for the three month period ended March 31,
1998 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:
<TABLE>
<CAPTION>
Three Months Ended
March 31,
(in thousands) 1998 1997
<S> <C> <C>
______ ______
Balance at beginning of year $1,415 $1,087
Provision for loan losses 258 153
Recoveries 36 62
Loans charged off (170) (176)
______ ______
Balance at end of quarter $1,539 $1,126
====== ======
</TABLE>
3. NEW ACCOUNTING STANDARDS
MidSouth adopted Statement of Financial Accounting Standards No. 130
"Reporting Comprehensive Income" ("SFAS 130") effective January 1,
1998. SFAS 130 establishes standards for reporting and display of
comprehensive income and it components. Comprehensive income includes
net income and other comprehensive income which, in the case of
MidSouth, only includes unrealized gains and losses on securities
available-for-sale.
Following is a summary of MidSouth's comprehensive income for the
three months ended March 31, 1998 and 1997.
<TABLE>
<CAPTION>
1998 1997
________ ________
<S> <C> <C>
Net income $552,508 $381,422
Other comprehensive income,
net of tax 91,034 (215,225)
________ ________
Total comprehensive income $643,542 $166,197
======== ========
</TABLE>
8
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OR PLAN OF OPERATION
This review should be read in conjunction with MidSouth Bancorp Inc.'s
("MidSouth") consolidated financial statements and accompanying notes
contained herein, as well as with MidSouth's 1997 annual consolidated
financial statements, the notes thereto and the related Management's
Discussion and Analysis.
MidSouth Bancorp, Inc. announced net income of $552,508 for the first
quarter of 1998, an increase of 45% over net income of $381,422 reported
for the first quarter of 1997. Income available to common shareholders
totaled $514,988 for the first quarter of 1998, compared to $341,615 for
the first quarter of 1997. Basic earnings per share were $.32 and $.22 for
the quarters ended March 31, 1998 and 1997, respectively. Diluted
earnings per share were $.28 for the first quarter of 1998 compared to $.20
for the first quarter of 1997.
The increase in earnings resulted primarily from increased net interest
income due to a 36% increase in average loan volume between the two
quarters ended March 31, 1997 and 1998. Non-interest income, exclusive
of net gains on sales of investment securities, increased $182,351 during
the same period. Increases in service charges and fees on deposit accounts
contributed most of the increase to non-interest income. Additional
increases were recorded in fees earned through the finance company
(Financial Services of the South),Visa merchant and debit card programs
and through a third party lease agreement with an investment advisory
firm.
Quarterly balance sheet comparison reflects strong loan and deposit
growth as MidSouth continued to develop its new and exisiting markets in
a strong economy. Loans, net of Allowance for Loan Losses ("ALL"),
increased $33.3 million or 34%, from $99.3 million in the first quarter of
1997 to $132.6 million in the first quarter of 1998. Deposits grew $23.4
million or 12.3%, from $189.9 million at March 31, 1997 to $213.3
million at March 31, 1998. Of the $23.4 million increase, $16.7 million
represented interest bearing deposits.
Provisions for loan and lease losses increased $104,732, from $153,268 in
March 1997 to $258,000 in March 1998, primarily due to loan growth.
Nonperforming loans as a percentage of total loans decreased from .62%
in March of 1997 to .15% in March of 1998. The ALL represents 781%
of nonperforming loans as of March 31, 1998.
MidSouth's leverage ratio was 6.04% at March 31, 1998. Return on
average common equity was 19.01% and return on average assets was
1.01%. MidSouth's common and preferred stock are traded on the
American Stock Exchange under the symbols MSL and MSL.Pr,
respectively.
9
<PAGE>
Earnings Analysis
Net Interest Income
Average earning assets increased 16%, or $27.8 million, from $173.4
million for the three months ended March 31, 1997 to $201.2 million for
the three months ended March 31, 1998. A change in the mix of earning
assets increased net interest income as higher-yielding loans represented
65.5% of average earning assets in the first quarter of 1998 compared to
55.7% in the first quarter of 1997. The average yield on loans fell 11 basis
points, from 10.33% to 10.22% at March 31, 1998. Investment volume
decreased $5.0 million, from $60.7 million at March 31, 1997 to $55.7
million at March 31, 1998 due to increased loan funding. The average
taxable-equivalent yield on investments improved by 23 basis points for
the same period, from 6.38% to 6.61%. The net increase in the volume of
earning assets boosted the taxable-equivalent yield on average earning
assets 43 basis points, from 8.46% for the first quarter of 1997 to 8.89%
for the first quarter of 1998. These changes in earning assets resulted in
increased interest income of $756,672 in quarterly comparison.
An average volume increase of $20.8 million and a 26 basis point rate
increase on interest-bearing liabilities resulted in a $302,912 increase in
interest expense for the quarter ended March 31, 1998 compared to the
quarter ended March 31, 1997. The percentage of average interest-bearing
deposits to average total deposits remained constant at 74% in quarterly
comparison. The average rate paid on interest-bearing deposits increased
22 basis points, from 3.93% at March 31, 1997 to 4.15% at March 31,
1998, primarily due to higher yielding public fund deposits. In addition,
in February 1998 MidSouth introduced a new money market account
indexed to the 90-day Treasury bill less 50 basis points. The average rate
paid on the indexed account was 4.67% for the first quarter of 1998. The
average volume of notes payable increased $1.5 million in quarterly
comparison as MidSouth and its subsidiary, Financial Services of the
South, Inc. (the "Finance Company") increased borrowings against their
lines of credit during 1997. No additional funds were borrowed against
the lines of credit during the quarter ended March 31, 1998.
The net effect of changes in the volume and mix of earning assets and
interest-bearing liabilities increased net interest income $453,760 in
quarterly comparison. The net taxable-equivalent yield on average earning
assets increased 24 basis points, from 5.38% for the quarter ended March
31, 1997, to 5.62% for the quarter ended March 31, 1998.
Non-interest Income
MidSouth's primary source of non-interest income, service charges on
deposit accounts, increased $127,307 for the three months ended March
31, 1998 as compared to the same period in 1997. The increases resulted
primarily from additional insufficient funds fees and a change in the
monthly service charge balance calculation method from average collected
10
<PAGE>
balance to minimum balance. This change in method calculation resulted
in additional non-interest income despite the elimination of per check
charges and lowering of tiered fees on most consumer deposit accounts.
Other non-interest income increased $78,521 in quarterly comparison with
significant increases recorded in lease income from a third party
investment company and in VISA merchant and debit card income. A
significant decrease of $23,477 was recorded in income from the sale of
credit life insurance between the two quarters reviewed. Sales of credit
life insurance were higher in the first quarter of 1997 due to a retail loan
promotion held during that quarter.
Non-interest Expense
Non-interest expense increased $324,089 or 15% for the three months
ended March 31, 1998 compared to the three months ended March 31,
1997. Increases were recorded primarily in the categories of salaries and
employee benefits, occupancy expenses, VISA programs and ATM
processing fees, education and travel expenses, and accounting and
professional fees.
Salaries and employee benefits increased primarily due to the addition of
the Morgan City Office staff and an increase in incentive compensation.
The number of full-time equivalent ("FTE") employees increased by 9,
from 132 in March 1997 to 141 in March 1998.
Occupancy expense increased in the three month period ended March 31,
1998 compared to the same period of 1997 due to increases in building
lease expense, depreciation and maintenance expenses associated with
furniture and equipment, fuel and maintenance of bank autos and ad
valorem taxes. The increase in depreciation expense resulted primarily
from the Morgan City Office added in March 1997 and the upgrading of
computer equipment during 1997 to bring additional MidSouth Offices
into an existing computer network.
Balance Sheet Analysis
MidSouth ended the first quarter of 1998 with consolidated assets of
$231,017,564, an increase of $13.9 million or 6% from the $217,112,415
reported for December 31, 1997. Deposits increased over the three
months ended March 31, 1998 by $13.2 million. Of the $13.2 million
increase, $6.7 million was in public fund deposits, $2.3 million in
commercial deposits and $4.2 million in retail deposits. The introduction
of a money market account indexed to the 90 day Treasury bill resulted in
an increase in interest-bearing retail deposits of $1.8 million in the first
quarter of 1998.
Loans grew $3.4 million in the first quarter of 1998, with the majority of
the increase in real estate and construction loans. Due to a decrease in
loan fundings in the first three months of 1998, excess funds were used to
purchase additional securities and federal funds sold. Securities
available-for-sale increased $4.1 million, from $36.9 million at December
31, 1997 to $41.0 million at March 31, 1998. The increase reflects
purchases of $6.0 million and maturities and principal paydowns of $1.9
11
<PAGE>
million. Unrealized gains in the securities available-for-sale portfolio, net
of unrealized losses and tax effect, were $173,000 at March 31, 1998,
compared to a net unrealized gain of $81,966 at December 31, 1997.
These amounts result from interest 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.
Capital
As of March 31, 1998, MidSouth's leverage ratio was 6.04% as compared
to 6.00% at December 31, 1997. Tier 1 capital to risk-weighted assets was
9.38% and total capital to risk-weighted assets was 10.46% at the end of
the first quarter of 1998. At year-end 1997, Tier 1 capital to risk-weighted
assets was 9.19% and total capital to risk-weighted assets was 10.22%.
The introduction of a dividend reinvestment and direct stock purchase plan
late in the fourth quarter of 1997 yielded common stock purchases of
$153,462 in the first quarter of 1998.
The Year 2000 Issue
On May 16, 1997, the Office of the Comptroller of the Currency ("OCC")
issued an advisory letter addressing Year 2000 issues and their
examination approach. To maintain safe and sound banking practices,
institutions are required to take appropriate measures to insure efficient
operations of computer systems beyond the year 2000. Institutions should
commence testing for critical systems by September 1, 1998 and should be
substantially completed by December 31, 1998.
MidSouth's Board of Directors established a Year 2000 compliance
committee in June of 1997. The committee has inventoried MidSouth's
hardware and software programs and has forwarded letters to the providers
regarding Year 2000 compliance. Recommendations for changes to hardware
and software will be forwarded to the Board as they are identified.
Testing has been scheduled for the third quarter of 1998. In an effort
to educate and prepare commercial customers and community businesses,
MidSouth hosted Year 2000 seminars during the first week of May 1998.
In compliance with Year 2000 disclosure requirements, the committee is
currently analyzing the impact that compliance with the Year 2000 may
have on earnings, but the Company is unable at this time to state whether
the cost of addressing year 2000 issues will or will not be material.
12
<PAGE>
<TABLE>
<CAPTION>
Nonperforming Assets and Past Due Loans
Table 1 summarizes MidSouth's nonaccrual, past due and restructured
loans and nonperforming assets.
TABLE 1
Nonperforming Assets and
Loans Past Due 90 Days
March 31, December 31, March 31,
1998 1997 1997
<S> <C> <C> <C>
Nonperforming loans
Nonaccrual loans $195,501 $ 260,875 $620,618
Restructured loans - - 853
____________________________________________
Total nonperforming loans 195,501 260,875 621,471
Other real estate owned, net 53,137 45,100 146,552
Other assets repossessed 29,788 13,234 -
____________________________________________
Total nonperforming assets $278,426 $319,209 $768,023
============================================
Loans past due 90 days
or more and still accruing $147,604 $245,232 $239,767
Nonperforming loans as a
% of total loans .15% 0.20% 0.62%
Nonperforming assets as a
% of total loans, other real
estate owned and other assets
repossessed 0.21% 0.24% 0.76%
ALLL as a % of nonperforming loans 787.34% 542.30% 181.24%
</TABLE>
13
Nonperforming assets were $278,426 as of March 31, 1998, a decrease of
$40,783 from the $319,209 reported for December 31, 1997 and a
decrease of $489,597 from the $768,023 reported for March 31, 1997.
Loans past due 90 days or more increased from $237,767 in March 1997
to $245,232 in December 1997 and decreased to $147,604 as of March 31,
1998.
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 $1,539,256 in the reserve as of March 31, 1998 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 Number Document Description
3.1 Amended and Restated Articles of Incorporation
of MidSouth Bancorp, Inc. is included as Exhibit
3.1 to the MidSouth's Report on Form 10-K for
the year ended December 31, 1993, and is
incorporated herein by reference.
3.2 Articles of Amendment to Amended and Restated
Articles of Incorporation dated July 19, 1995
are included as Exhibit 4.2 to MidSouth's
Registration Statement on Form S-8 filed
September 20, 1995 and is incorporated herein
by reference.
3.3 Amended and Restated By-laws adopted by the
Board of Directors on April 12, 1995 are
included as Exhibit 3.2 to Amendment No. 1 to
MidSouth's Registration Statement on Form S-4
(Reg. No. 33-58499) filed on June 1, 1995.
10.1 MidSouth National Bank Lease Agreement with
Southwest Bank Building Limited Partnership is
included as Exhibit 10.7 to the Company's annual
report on Form 10-K for the Year Ended
December 31, 1992, and is incorporated herein
by reference.
10.2 First Amendment to Lease between MBL Life
Assurance Corporation, successor in interest to
Southwest Bank Building Limited Partnership in
Commendam, and MidSouth National Bank is included
as Exhibit 10.1 to Report on the Company's annual
report on Form 10-KSB for the year ended
December 31, 1994, and is incorporated herein by
reference.
10.3 Amended and Restated Deferred Compensation Plan
and Trust is included as Exhibit 10.3 to the
Company's annual report on Form 10-K for the year
ended December 31, 1992 and is incorporated herein
by reference.
10.4 Employment Agreements with C. R. Cloutier and
Karen L. Hail are included as Exhibit 5(c) to
MidSouth's Form 1-A and are incorporated
herein by reference.
Page 16
10.6 MidSouth Bancorp, Inc.'s 1997 Stock Incentive
Plan is included as a form of option agreement
in Exhibit 4.5 to MidSouth's definitive proxy
statement filed April 11, 1997, and is
incorporated herein by reference.
10.7 The MidSouth Bancorp, Inc. Dividend Reinvestment
and Stock Purchase Plan is included as Exhibit
4.6 to MidSouth Bancorp, Inc.'s Form S-3D
filed on July 25, 1997 and is incorporated herein
by reference.
10.8 Loan Agreements and Master Notes for lines of credit
established for MidSouth Bancorp, Inc. and Financial
Services of the South, Inc. are included as Exhibit
10.7 of MidSouth's Form 10-QSB filed on August
14, 1997 and is incorporated herein by reference.
11 Computation of earnings per share
27 Financial Data Schedule
(b) Reports Filed on Form 8-K
(none)
Signatures
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
MidSouth Bancorp, Inc.
(Registrant)
Date: May 14, 1998
___________________________
C. R. Cloutier, President & CEO
___________________________
Karen L. Hail, Executive Vice
President & CFO
___________________________
Teri S. Stelly, Senior Vice
President & Controller
<TABLE>
<CAPTION>
MIDSOUTH BANCORP, INC. AND SUBSIDIARIES EXHIBIT 11
COMPUTATION OF EARNINGS PER SHARE (Unaudited)
FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1997 AND
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 1997
First Quarter First Quarter Year-to-Date
March 31, March 31, December 31,
BASIC 1998 1997 1997
_____________ _____________ ____________
<S> <C> <C> <C>
Earnings:
Income applicable to common
stock $514,988 $341,615 $1,600,217
=========== ========== ==========
Shares:
Weighted average number of
common shares outstanding 1,587,674 1,543,731 1,554,968
=========== ========== ==========
Earnings per common share:
Income applicable to common
stock $0.32 $0.22 $1.03
=========== ========== ==========
DILUTED
Earnings:
Net income $552,508 $381,422 $1,754,692
=========== ========== ==========
Weighted average number of
common shares outstanding 1,587,674 1,543,731 1,554,968
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 51,526 - 16,491
Assuming conversion of
preferred stock at a
conversion rate of
1 to 1.999 shares 317,873 343,140 332,546
___________ __________ __________
Weighted average number of
common shares outstanding,
as adjusted 1,957,073 1,886,871 1,904,005
=========== ========== ==========
Fully diluted earnings per common
shares $0.28 $0.20 $0.92
=========== ========== ==========
</TALBE>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1998
<CASH> 13,645,271
<INT-BEARING-DEPOSITS> 131,796
<FED-FUNDS-SOLD> 16,400,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 41,042,293
<INVESTMENTS-CARRYING> 16,731,875
<INVESTMENTS-MARKET> 17,558,586
<LOANS> 134,161,234
<ALLOWANCE> 1,539,256
<TOTAL-ASSETS> 231,017,564
<DEPOSITS> 213,303,319
<SHORT-TERM> 70,119
<LIABILITIES-OTHER> 887,301
<LONG-TERM> 3,119,833
0
2,265,978
<COMMON> 159,301
<OTHER-SE> 11,211,713
<TOTAL-LIABILITIES-AND-EQUITY> 231,017,564
<INTEREST-LOAN> 3,321,732
<INTEREST-INVEST> 808,587
<INTEREST-OTHER> 180,037
<INTEREST-TOTAL> 4,310,356
<INTEREST-DEPOSIT> 1,554,300
<INTEREST-EXPENSE> 1,618,634
<INTEREST-INCOME-NET> 2,691,722
<LOAN-LOSSES> 258,000
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 2,507,256
<INCOME-PRETAX> 705,306
<INCOME-PRE-EXTRAORDINARY> 705,306
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 552,508
<EPS-PRIMARY> .32
<EPS-DILUTED> .28
<YIELD-ACTUAL> 5.24
<LOANS-NON> 195,501
<LOANS-PAST> 147,604
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 1,414,826
<CHARGE-OFFS> 170,120
<RECOVERIES> 36,551
<ALLOWANCE-CLOSE> 1,539,256
<ALLOWANCE-DOMESTIC> 80,000
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 1,459,256
</TABLE>
