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, 1999
_____ 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, 1999
Common stock, $.10 par value 2,444,306
Preferred stock, no par value, $14.25 stated value 156,177
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
Financial Highlights 3
Statements of Condition - March 31, 1999
and December 31, 1998 4
Statements of Income - Three Months Ended
March 31, 1999 and 1998 and Year
Ended December 31, 1998 5
Statement of Stockholders' Equity - Three Months
Ended March 31, 1999 6
Statements of Cash Flows - Three Months Ended
March 31, 1999 and 1998 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 16
Signatures 17
<PAGE>
<TABLE>
<CAPTION>
MIDSOUTH BANCORP, INC. AND SUBSIDIARIES
FINANCIAL HIGHLIGHTS (UNAUDITED)
Three Months Ended Year-ended
March 31, December 31,
EARNINGS DATA 1999 1998 1998
________________________________________
<S> <C> <C> <C>
Net interest income $3,022,140 $2,691,722 $11,824,208
Provision for loan losses 266,950 258,000 999,950
Non-interest income 909,140 778,840 3,486,937
Non-interest expense 2,903,093 2,507,256 11,023,245
Provision for income tax 164,387 152,798 842,167
Net income 596,850 552,508 2,445,783
Preferred dividend requirement 33,383 37,520 148,971
Income available to common sharehol $563,467 $514,988 $2,296,812
=============================================================================
PER COMMON SHARE DATA
Basic earnings per share $0.23 $0.21 $0.95
Diluted earnings per share $0.20 $0.19 $0.83
Book value at end of period $5.69 $4.76 $5.53
Market price at end of period $11.06 $14.50 $11.13
Market price of preferred stock at $33.00 $46.25 $32.50
Weighted average shares outstanding
Basic 2,439,256 2,381,511 2,410,926
Diluted 2,965,203 2,935,610 2,958,381
=============================================================================
AVERAGE BALANCE SHEET DATA
Total assets $259,152,871 $222,213,579 $235,766,986
Earning assets 235,583,534 201,167,815 214,572,581
Loans and leases 155,183,050 131,792,227 144,455,710
Interest-bearing deposits 180,383,947 151,749,614 162,504,644
Total deposits 239,070,515 204,842,701 217,105,614
Common stockholders' equity 13,532,186 10,986,163 11,988,753
Total stockholders' equity 15,762,518 13,265,037 14,246,948
=============================================================================
SELECTED RATIOS
Return on average assets (annualize 0.93% 1.01% 1.04%
Return on average common equity (an 16.89% 19.01% 19.16%
Return on average total equity ( an 15.36% 16.89% 17.17%
Leverage capital ratio 6.09% 6.04% 6.06%
Tier 1 risk-based capital ratio 9.25% 9.38% 9.13%
Total risk-based capital ratio 10.35% 10.46% 10.25%
Allowance for loan losses as a %
of total loans 1.21% 1.15% 1.20%
=============================================================================
PERIOD ENDING BALANCE SHEET DATA 3/31/99 3/31/98 Net Change
Total assets $270,432,493 $231,017,564 $39,414,929
Earning assets 247,726,379 208,467,198 $39,259,181
Loans and leases, net 153,914,963 132,621,978 $21,292,985
Interest-bearing deposits 191,352,663 158,797,089 $32,555,574
Total deposits 250,018,682 213,303,319 $36,715,363
Common stockholders' equity 13,910,065 11,371,014 $2,539,051
Total stockholders' equity 16,135,587 13,636,992 $2,498,595
=============================================================================
</TABLE>
3
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<TABLE>
<CAPTION>
MIDSOUTH BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CONDITION
___________________________________________________________________________________
March 31, December 31,
1999 1998 *
ASSETS (unaudited)
___________ ___________
<S> <C> <C>
Cash and due from banks $11,705,160 $14,003,536
Federal funds sold 18,600,000 6,600,000
___________ ___________
Total cash and cash equivalents 30,305,160 20,603,536
Interest bearing deposits in banks 16,237 16,125
Securities available-for-sale, at fair value
(cost of $53,791,536 in March 1999 and
$43,503,268 in December 1998) 54,065,885 43,938,965
Securities held-to-maturity (estimated market
value of $20,297,153 in March 1999 and
$20,421,920 in December 1998) 19,245,741 19,246,559
Loans, net of allowance for loan losses of
$1,883,553 in March 1999 and $1,860,490
in December 1998 153,914,963 153,616,773
Bank premises and equipment, net 9,614,097 9,054,201
Other real estate owned, net 39,100 48,100
Accrued interest receivable 1,771,447 1,740,514
Goodwill, net 198,625 207,281
Other assets 1,261,238 1,346,214
___________ ___________
Total assets $270,432,493 $249,818,268
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Non-interest bearing $58,666,019 $60,361,205
Interest bearing 191,352,663 169,563,097
___________ ___________
Total deposits 250,018,682 229,924,302
Securities sold under
repurchase agreements - -
Accrued interest payable 608,558 565,896
Notes payable 3,392,993 3,503,668
Other liabilities 276,673 138,280
___________ ___________
Total liabilities 254,296,906 234,132,146
___________ ___________
Commitments and contingencies - -
Stockholders' Equity:
Preferred Stock, no par value, $14.25
stated value - 5,000,000 shares authorized,
156,177 and 156,927 issued and outstanding
on March 31, 1999 and December 31, 1998,
respectively 2,225,522 2,236,210
Common stock, $.10 par value-
5,000,000 shares authorized, 2,444,306 and
2,432,016 issued and outstanding on
March 31, 1999 and December 31, 1998,
respectively 244,431 243,201
Surplus 10,639,529 10,521,020
Unearned ESOP shares (114,468) (119,051)
Unrealized gains/losses on securities
available-for-sale, net of deferred
taxes of $103,140 in March 1999 and $159,000
in December 1998 171,210 276,700
Retained earnings 2,969,363 2,528,042
___________ ___________
Total stockholders' equity 16,135,587 15,686,122
___________ ___________
Total liabilities and stockholders' equity $270,432,493 $249,818,268
=========== ===========
* The consolidated statement of condition at December 31, 1998 is taken
from the audited balance sheet on that date.
</TABLE>
4
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<TABLE>
<CAPTION>
MIDSOUTH BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
_______________________________________________________________________________
Three Months Ended Year Ended
March 31, December 31,
1999 1998 1998 *
(unaudited)
__________________________ ___________
<S> <C> <C> <C>
INTEREST INCOME:
Loans, including fees $3,757,538 $3,321,732 $14,803,065
Securities
Taxable 684,979 588,511 2,460,266
Nontaxable 260,682 220,076 924,669
Federal funds sold 158,633 180,037 567,764
__________ __________ ___________
TOTAL 4,861,832 4,310,356 18,755,764
__________ __________ ___________
INTEREST EXPENSE:
Interest on deposits 1,775,266 1,554,300 6,666,682
Interest on note payable 64,426 64,334 264,876
__________ __________ ___________
TOTAL 1,839,692 1,618,634 6,931,558
__________ __________ ___________
NET INTEREST INCOME 3,022,140 2,691,722 11,824,206
PROVISION FOR LOAN LOSSES 266,950 258,000 999,950
__________ __________ ___________
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES 2,755,190 2,433,722 10,824,256
__________ __________ ___________
OTHER OPERATING INCOME:
Service charges on deposits 705,997 584,921 2,606,903
Gains on securities, net - - -
Credit life insurance 16,167 27,118 133,217
Other charges and fees 186,976 166,801 746,817
__________ __________ ___________
TOTAL OTHER INCOME 909,140 778,840 3,486,937
__________ __________ ___________
OTHER EXPENSES:
Salaries and employee benefits 1,381,608 1,250,293 5,274,992
Occupancy expense 650,758 548,138 2,360,664
Other 870,727 708,825 3,387,588
__________ __________ ___________
TOTAL OTHER EXPENSES 2,903,093 2,507,256 11,023,244
__________ __________ ___________
INCOME BEFORE INCOME TAXES 761,237 705,306 3,287,949
PROVISION FOR INCOME TAXES 164,387 152,798 842,167
__________ __________ ___________
NET INCOME $596,850 $552,508 $2,445,782
PREFERRED DIVIDEND REQUIREMENT 33,383 37,520 148,971
__________ __________ ___________
INCOME AVAILABLE TO COMMON
SHAREHOLDERS $563,467 $514,988 $2,296,811
========== ========== ===========
BASIC EARNINGS PER COMMON SHARE $0.23 $0.21 $0.95
========== ========== ===========
DILUTED EARNINGS PER COMMON SHARE $0.20 $0.19 $0.83
========== ========== ===========
* The consolidated statement of income at December 31, 1998
is taken from the audited income statement of that date.
</TABLE>
5
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<TABLE>
<CAPTION>
MIDSOUTH BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE QUARTER ENDED MARCH 31, 1999 (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, 1998 156,927 $2,236,210 2,432,016 $243,201 $10,521,020 ($119,051) $276,700 $2,528,042 $15,686,122
Issuance of common
stock 10,043 1,005 108,046 109,051
Dividends paid on
common stock (122,146) (122,146)
Dividends paid on
preferred stock (33,383) (33,383)
Preferred stock
conversion (750) (10,688) 2,247 225 10,463 0
Net income 596,850 596,850
ESOP obligation,
net of repayments 4,583 4,583
Net change in
unrealized gain/loss
on securities
available-for-sale,
net of tax (105,490) (105,490)
_______ _________ _________ _______ __________ ________ _______ _________ __________
BALANCE,
March 31, 1999 156,177 $2,225,522 2,444,306 $244,431 $10,639,529 ($114,468) $171,210 $2,969,363 $16,135,587
======= ========= ========= ======= ========== ======== ======= ========= ==========
</TABLE>
6
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<TABLE>
<CAPTION>
MIDSOUTH BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 31, 1999 and 1998
__________________________________________________________________________________________
March 31, 1999 March 31, 1998
______________ ______________
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $596,850 $552,508
Adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation and amortization 268,220 227,282
Provision for loan losses 266,950 258,000
Provision for deferred income taxes 12,228 49,330
Discount accretion (premium amortization), net (4,737) (4,575)
Gain on sale of premises and equipment - (750)
Loss on sale of other real estate owned - 1,000
Change in accrued interest receivable (30,933) 6,995
Change in accrued interest payable 42,662 22,985
Change in other liabilities 138,393 (51,740)
Change in other assets 128,608 30,256
______________ ______________
NET CASH PROVIDED BY OPERATING ACTIVITIES 1,418,241 1,091,291
______________ ______________
CASH FLOWS FROM INVESTING ACTIVITIES:
Net decrease in interest-bearing deposits in banks (112) (82,868)
Proceeds from maturities and calls of securities
available-for-sale 2,775,453 1,950,899
Purchases of securities available-for-sale (13,058,167) (5,963,716)
Loan originations, net of repayments (571,181) (3,416,020)
Purchases of premises and equipment (819,460) (608,736)
Proceeds from sales of premises and equipment - 20,651
Proceeds from sales of other real estate owned 19,624 5,000
______________ ______________
NET CASH USED IN INVESTING ACTIVITIES (11,653,843) (8,094,790)
______________ ______________
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in deposits 20,094,380 13,235,568
Net (decrease) increase in securities sold under
repurchase agreements and federal funds purchased - 676
Issuance of notes payable 75,000 -
Repayments of notes payable (185,676) (78,961)
Proceeds from issuance of common stock 109,051 190,602
Payment of dividends (155,529) (133,069)
Payment of fractional shares resulting from conversion
of preferred stock and stock dividends - (70)
______________ ______________
NET CASH PROVIDED BY FINANCING ACTIVITIES 19,937,226 13,214,746
______________ ______________
NET DECREASE IN CASH & CASH EQUIVALENTS 9,701,624 6,211,247
CASH & CASH EQUIVALENTS AT BEGINNING OF PERIOD 20,603,536 23,834,024
______________ ______________
CASH & CASH EQUIVALENTS AT END OF PERIOD $30,305,160 $30,045,271
============== ==============
</TABLE>
7
<PAGE>
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 subsidiaries as of
March 31, 1999 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 1998
annual consolidated report and Form 10-KSB.
The results of operations for the three month period ended March 31,
1999 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)
1999 1998
_______ ______
<S> <C> <C>
Balance at beginning of year $1,860 $1,415
Provision for loan losses 267 258
Recoveries 40 36
Loans charged off (284) (170)
______ ______
Balance at end of quarter $1,883 $1,539
====== ======
</TABLE>
3. COMPREHENSIVE INCOME
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 its 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, 1999 and 1998.
<TABLE>
<CAPTION>
1998 1997
__________ __________
<S> <C> <C>
Net income $ 596,850 $ 552,580
Other comprehensive income,
net of tax (105,490) 91,034
__________ __________
Total comprehensive income $ 491,360 $ 643,614
========== ==========
</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 1998 annual consolidated
financial statements, the notes thereto and the related
Management's Discussion and Analysis.
MidSouth Bancorp, Inc. announced net income of $596,850
for the first quarter of 1999, an increase of 8% over net
income of $552,508 reported for the first quarter of 1998.
Income available to common shareholders totaled $563,467
for the first quarter of 1999, compared to $514,988 for the
first quarter of 1998. Basic earnings per share were $.23
and $.21 for the quarters ended March 31, 1999 and 1998,
respectively. Diluted earnings per share were $.20 for the
first quarter of 1999 compared to $.19 for the first quarter
of 1998.
The increase in earnings resulted primarily from a $34.4
million or 17% increase in the average volume of earning
assets between the two quarters ended March 31, 1998 and
1999. Loan growth contributed $23.4 million to the
increase in average earning assets. Accordingly, net interest
income increased $330,418 in quarterly comparison. Non-
interest income, exclusive of net gains on sales of
investment securities, added $130,300 to income during the
same period. Increases in total service charges and fees on
deposit accounts, due to an increased volume of accounts,
contributed most of the increase to non-interest income.
MidSouth enjoyed substantial deposit and loan growth
during the past twelve months. Deposits grew $36.7 million
or 17.2%, from $213.3 million at March 31, 1998 to $250.0
million at March 31, 1999. Of the $36.7 million increase,
$32.6 million represented interest-bearing deposits. The
deposit growth results primarily from deposits associated
with new loan relationships and from marketing efforts
directed to customers affected by merger activity within
MidSouth's market. In addition, a deposit promotion
designed to increase MidSouth's market share began March
1, 1999 and resulted in an increase of $6.6 million in
deposits for the month of March 1999.
Loans, net of Allowance for Loan Losses ("ALL"),
increased $21.3 million or 16.1%, from $132.6 million in
the first quarter of 1998 to $153.9 million in the first
quarter of 1999. The majority of the loan growth occurred
in the second and third quarters of 1998 and resulted primarily
from loan relationships developed by two new commercial
lenders hired in January 1998. Provisions for loan and
lease losses totaled $266,950 in March 1999 compared to
$258,000 in March 1998.
Nonperforming loans as a percentage of total loans
increased from .15% in March of 1998 to .41% in March of
1999. Nonaccrual loans increased $441,442 in quarterly
comparison, from $195,501 at March 31, 1998 to $636,943
9
<PAGE>
at March 31, 1999. The increase resulted from the addition
of a large real estate credit totaling approximately $360,000
in the first quarter of 1999. In addition, approximately
$110,000 of another commercial credit added to nonaccrual
loans in the second half of 1998 remained in the
nonperforming total as of March 31, 1999. The ALL
represented 296% of nonperforming loans as of March 31,
1999, as compared to 787% as of March 31, 1998.
MidSouth's leverage ratio was 6.09% at March 31, 1999.
Return on average common equity was 16.89% and return
on average assets was .93%.
Earnings Analysis
Net Interest Income
Average earning assets increased 17%, or $34.4 million,
from $201.2 million for the three months ended March 31,
1998 to $235.6 million for the three months ended March
31, 1999. The mix of average earning assets remained
relatively constant as loans represented 65.8% of average
earning assets in the first quarter of 1999 compared to
65.5% in the first quarter of 1998.
Average loan volume increased $23.4 million, from $131.8
million in the first quarter of 1998 to $155.2 million in the
first quarter of 1999. The average yield on loans fell 40
basis points, from 10.22% to 9.82% at March 31, 1999.
The decrease in loan yields resulted from a 50 basis point
decrease in the prime lending rate (both New York prime
and MidSouth's internal prime rate) in the fourth quarter of
1998. Investment volume, including federal funds sold,
increased $11.0 million, from $69.4 million at March 31,
1998 to $80.4 million at March 31, 1999 due to decreased
loan demand. The average taxable-equivalent yield on
investments declined by 13 basis points for the same
period, from 6.61% to 6.48%. Additionally, federal funds
sold yields decreased 74 basis points, from 5.32% to
4.58%. Lower yields resulted in a decrease in the taxable-
equivalent yield on average earning assets of 32 basis
points, from 8.89% in the first quarter of 1998 to 8.57% in
the first quarter of 1999. Volume increases in average
earning assets resulted in increased interest income of
$551,476 in quarterly comparison despite falling yields.
An average volume increase of $28.6 million in interest-
bearing liabilities resulted in a $220,966 increase in interest
expense for the quarter ended March 31, 1999 compared to
the quarter ended March 31, 1998. The percentage of
average interest-bearing deposits to average total deposits
increased from 74.1% in the first quarter of 1998 to 75.5%
in the first quarter of 1999. The average rate paid on
interest-bearing deposits decreased 16 basis points, from
4.15% at March 31, 1998 to 3.99% at March 31, 1999. The
average volume of notes payable increased $260,459 in
quarterly comparison as MidSouth and its subsidiary,
Financial Services of the South, Inc. (the "Finance
Company") had minimal borrowings against their lines of
credit during the twelve months ended March 31, 1999.
The net effect of changes in the yields and volume of
earning assets and interest-bearing liabilities increased net
interest income $330,418 in quarterly comparison. The net
taxable-equivalent yield on average earning assets
decreased 22 basis points, from 5.62% for the quarter ended
10
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March 31, 1998, to 5.40% for the quarter ended March 31,
1999.
Non-interest Income
MidSouth's primary source of non-interest income, service
charges on deposit accounts, increased $121,076 for the
three months ended March 31, 1999 as compared to the
same period in 1998. The increase resulted primarily from
additional insufficient funds fees and an increase in the
volume of accounts serviced. Other non-interest income
increased $20,175 in quarterly comparison. A new
mortgage origination program with a third party processor
contributed $11,023 to the increase in other non-interest
income. Visa debit card and merchant income increased
$16,912; however, Visa program expenses increased
$10,713, partially offsetting the benefit to income.
Decreases were recorded in income from the sale of credit
life insurance ($10,951) and lease income from a third party
investment firm ($10,662).
Non-interest Expense
Non-interest expense increased $395,837 or 16% for the
three months ended March 31, 1999 compared to the three
months ended March 31, 1998. Increases were recorded
primarily in the categories of salaries and employee
benefits, occupancy expenses, marketing expenses, and
data processing expenses.
Salaries and employee benefits increased primarily due to
the addition of the Lake Charles Office staff and
administrative staff, including a Training Director and
Internal Auditor. The number of full-time equivalent
("FTE") employees increased by 11, from 140 in
March 1998 to 151 in March 1999.
Occupancy expense increased in the three month period
ended March 31, 1999 compared to the same period of
1998 due to increases in depreciation and maintenance
expenses associated with buildings, furniture and equipment,
utilities and ad valorem taxes. The increase in depreciation
expense and utilities resulted primarily from the addition
of the Lake Charles office in June 1998.
Marketing expenses increased $82,169 due to production
costs and media costs associated with a promotional
campaign designed to appeal to customers impacted by
bank merger activity in the market.
Data processing expenses increased $24,729 primarily due
to increased software maintenance charges and increases
data processing training, support and supplies.
Balance Sheet Analysis
MidSouth ended the first quarter of 1999 with consolidated
assets of $270,432,493, an increase of $20.6 million or 8%
from the $249,818,268 reported for December 31, 1998.
Deposits increased over the three months ended March 31,
11
<PAGE>
1999 by $20.1 million, from $229,924,302 at December 31,
1998 to $250,018,682. Non-interest bearing deposits
declined $1.7 million and interest-bearing deposits
increased $21.8 million during the three month period. Of
the $20.1 million increase, $12.5 million was in savings
and money market deposits and $8.3 million in certificates
of deposit. A total of $6.6 million of the growth in deposits
resulted from a deposit promotion that began on March 1,
1999.
Loans remained relatively constant as new loan fundings
were offset by payoffs on existing credits. Loan growth
slowed in the past six months due to a decrease in demand
and competitive pricing for loan dollars in MidSouth's
market. Due to the decrease in loan fundings, excess funds
were used to purchase additional securities and federal
funds sold. Securities available-for-sale increased $10.1
million, from $43.9 million at December 31, 1998 to $54.0
million at March 31, 1999. The increase reflects purchases
of $13.1 million and maturities and principal paydowns of
$2.8 million. Unrealized gains in the securities available-
for-sale portfolio, net of unrealized losses and tax effect,
were $171,210 at March 31, 1999, compared to a net
unrealized gain of $276,700 at December 31, 1998. These
amounts result from interest rate fluctuations and do not
represent permanent adjustments 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, 1999, MidSouth's leverage ratio was
6.09% as compared to 6.06% at December 31, 1998. Tier 1
capital to risk-weighted assets was 9.25% and total capital
to risk-weighted assets was 10.35% at the end of the first
quarter of 1999. At year-end 1998, Tier 1 capital to risk-
weighted assets was 9.13% and total capital to risk-
weighted assets was 10.25%.
MidSouth's dividend reinvestment and direct stock
purchase plan yielded common stock purchases of $78,479
in the first quarter of 1999.
The Year 2000 Issue
The Year 2000 issue arises from the storage of data within
computer systems using a two digit field rather than a four
digit field to define the year. Consequently, computer
programs may recognize a date using "00" as the year 1900
instead of 2000. All companies and organizations that use
computer systems are affected by this issue. To maintain
safe and sound banking practices, financial institutions are
required to take appropriate measures to insure efficient
operations of computer systems beyond the year 2000.
MidSouth's Board of Directors established a Year 2000
compliance committee in June 1997. The committee
inventoried MidSouth's hardware and software programs,
identified mission critical systems and forwarded letters to
the providers regarding Year 2000 compliance. As of
March 31, 1999, testing and updating has been performed
on approximately 98% of MidSouth's mission critical
systems, including the core data processing hardware and
software. In addition, MidSouth has received a warranty
from the software provider as to the completion of internal
testing and readiness of their programs.
12
<PAGE>
To further reduce the risks associated with the Year 2000,
MidSouth held seminars for commercial customers and
community businesses in May 1998. MidSouth provided
seminar participants with software designed to help them
identify Year 2000 issues within their organizations. The
software guides the user through the vendor identification
and tracking process and provides assistance in other issues
such as contingency planning. As part of its own
contingency planning, MidSouth has agreements with and
has tested the capabilities of two vendors to provide short-
term and long-term processing.
In compliance with Year 2000 disclosure requirements, the
committee has analyzed the impact that compliance with
the Year 2000 may have on earnings. Costs totaling
approximately $82,000 have been identified or incurred for
testing and other expenses. Additional costs are expected,
but it is management's opinion that the costs will not be
material to MidSouth's earnings.
13
<PAGE>
Nonperforming Assets and Past Due Loans
Table 1 summarizes MidSouth's nonaccrual, past due and
restructured loans and nonperforming assets.
<TABLE>
<CAPTION>
TABLE 1
Nonperforming Assets and
Loans Past Due 90 Days
=========================================================================
March December March
31, 31, 31,
1999 1998 1998
=========================================================================
<S> <C> <C> <C>
Nonperforming loans $636,943 $533,107 $195,501
Other real estate owned, net 39,100 48,100 53,137
Other assets repossessed 5,039 26,533 29,788
______________________________________
Total nonperforming assets $681,082 $607,740 $278,426
======================================
Loans past due 90 days
or more and still accruing $596,072 $329,116 $147,604
Nonperforming loans as a
% of total loans .41% 0.34% 0.15%
Nonperforming assets as a
% of total loans, other real
estate owned and other assets
repossessed 0.44% 0.39% 0.21%
ALLL as a % of nonperforming
loans 295.72% 348.99% 787.34%
_____________________________________
</TABLE>
14
<PAGE>
Nonperforming assets were $681,082 as of March 31, 1999,
an increase of $73,342 from the $607,740 reported for
December 31, 1998 and an increase of $402,656 from the
$795,501 reported for March 31, 1998. The increase
resulted primarily from the addition of a large real estate
credit totaling approximately $360,000 in the first quarter
of 1999. In addition, approximately $110,000 of another
commercial credit added to nonaccrual loans in the second
half of 1998 remained in the nonperforming loan total as of
March 31, 1999. Loans past due 90 days or more increased
from $147,604 in March 1998 to $329,116 in December
1998 and increased to $596,072 as of March 31, 1999. Of
the $596,072 in loans past due 90 days or more at March
31, 1999, $189,819 were past due loans reported by the
Finance Company.
Specific reserves have been established in the ALL to cover
potential losses on nonperforming assets. The ALL is
analyzed quarterly and additional reserves, if needed, are
allocated at that time. Management believes the
$1,883,553 in the reserve as of March 31, 1999 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.
15
<PAGE>
Item 6. Exhibits and Reports on Form 8-K Page 16
(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.
10.6 MidSouth Bancorp, Inc.'s 1997 Stock Incentive Plan
is included as Exhibit 4.5 to MidSouth's definitive
Proxy Statement filed April 11, 1997, and
is incorporated herein by reference.
<PAGE>
Page 17
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 15, 1999
____________ _______________________________
C. R. Cloutier, President & CEO
_______________________________
Karen L. Hail, Executive Vice
President & CFO
_______________________________
Teri S. Stelly, Senior Vice
President & Controller
<PAGE>
<TABLE>
<CAPTION>
MIDSOUTH BANCORP, INC. AND SUBSIDIARIES EXHIBIT 11
COMPUTATION OF EARNINGS PER SHARE (Unaudited)
FOR THE THREE MONTHS ENDED MARCH 31, 1999 AND 1998 AND
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 1998
First Quarter First Quarter Year-to-Date
March 31, March 31, December 31,
BASIC 1999 1998 1998
_____________ _____________ ____________
<S> <C> <C> <C>
Earnings:
Income applicable to common
stock $563,467 $514,988 $2,296,812
========= ========= =========
Shares:
Weighted average number of
common shares outstanding 2,439,256 2,381,511 2,410,926
========= ========= =========
16593080
Earnings per common share:
Income applicable to common
stock $0.23 $0.21 $0.95
========= ========= =========
DILUTED
Earnings:
Net income $596,850 $552,508 $2,445,783
========= ========= =========
Weighted average number of
common shares outstanding 2,439,256 2,381,511 2,410,926
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 56,604 77,289 72,317
Assuming conversion of
preferred stock
at a conversion rate
of 1 to 2.998 469,343 476,810 475,138
_________ _________ _________
Weighted average number of
common shares outstanding,
as adjusted 2,965,203 2,935,610 2,958,381
========= ========= =========
Fully diluted earnings per common
share $0.20 $0.19 $0.83
========= ========= =========
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-31-1999
<CASH> 11,705,160
<INT-BEARING-DEPOSITS> 16,237
<FED-FUNDS-SOLD> 18,600,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 54,065,885
<INVESTMENTS-CARRYING> 19,245,741
<INVESTMENTS-MARKET> 20,297,153
<LOANS> 155,798,516
<ALLOWANCE> 1,883,553
<TOTAL-ASSETS> 270,432,493
<DEPOSITS> 250,018,682
<SHORT-TERM> 0
<LIABILITIES-OTHER> 885,231
<LONG-TERM> 3,392,993
0
2,225,522
<COMMON> 244,431
<OTHER-SE> 13,665,634
<TOTAL-LIABILITIES-AND-EQUITY> 270,432,493
<INTEREST-LOAN> 3,757,538
<INTEREST-INVEST> 945,661
<INTEREST-OTHER> 158,633
<INTEREST-TOTAL> 4,861,832
<INTEREST-DEPOSIT> 1,775,266
<INTEREST-EXPENSE> 1,839,692
<INTEREST-INCOME-NET> 3,022,140
<LOAN-LOSSES> 266,950
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 2,903,093
<INCOME-PRETAX> 761,237
<INCOME-PRE-EXTRAORDINARY> 596,850
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 596,850
<EPS-PRIMARY> .23
<EPS-DILUTED> .20
<YIELD-ACTUAL> 4.95
<LOANS-NON> 636,943
<LOANS-PAST> 596,072
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 1,860,490
<CHARGE-OFFS> 284,180
<RECOVERIES> 40,293
<ALLOWANCE-CLOSE> 1,883,553
<ALLOWANCE-DOMESTIC> 40,000
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 1,843,553
</TABLE>
