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, 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 October 31, 1999
Common stock, $.10 par value 2,474,439
Preferred stock, no par value, $14.25 stated value 152,736
Transitional Small Business Disclosure Format:
Yes _______ No ____X____
Page 1
Page 2
PART 1 - FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited) Page
Financial Highlights 3
Statements of Condition - September 30, 1999 and
December 31, 1998 4
Statements of Income - Three and Nine Months Ended
September 30, 1999 and 1998 5
Statement of Stockholders' Equity - Nine Months
Ended September 30, 1999 6
Statements of Cash Flows - Nine Months Ended
September 30, 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 Nine Months Ended
September 30, September 30,
EARNINGS DATA 1999 1998 1999 1998
___________________________________________________
<S> <C> <C> <C> <C>
Net interest income $3,461,043 $3,107,465 $9,780,160 $8,741,013
Provision for loan losses 173,100 260,450 678,050 756,450
Non-interest income 1,048,458 907,162 2,936,793 2,558,176
Non-interest expense 3,360,250 2,888,022 9,388,608 8,024,476
Provision for income tax 263,175 242,050 672,612 662,998
Net income 712,976 624,105 1,977,683 1,855,265
Preferred dividend requirement 32,648 37,003 98,934 111,967
Income available to common
shareholders $680,328 $587,102 $1,878,749 $1,743,298
=======================================================================================
PER COMMON SHARE DATA
Basic earnings per share $0.28 $0.24 $0.77 $0.72
Diluted earnings per share $0.24 $0.21 $0.67 $0.63
Book value at end of period $5.94 $5.41 $5.94 $5.41
Market price at end of period $9.69 $13.25 $9.69 $13.25
Market price of preferred stock
at end of period $32.25 $40.00 $32.25 $40.00
Weighted average shares outstanding
Basic 2,448,731 2,417,457 2,435,075 2,404,799
Diluted 2,957,899 2,963,618 2,953,762 2,956,588
=======================================================================================
AVERAGE BALANCE SHEET DATA
Total assets $272,931,156 $240,301,904 $270,967,649 $230,966,203
Earning assets 247,978,295 219,123,358 246,082,219 210,198,283
Loans and leases 164,582,595 150,018,325 159,434,500 140,539,477
Interest-bearing deposits 183,787,961 166,025,394 187,751,988 158,773,155
Total deposits 243,919,986 220,753,040 247,546,397 212,517,851
Common stockholders' equity 14,690,259 12,638,818 14,109,208 11,744,457
Total stockholders' equity 16,870,940 14,889,712 16,317,784 14,009,428
=======================================================================================
SELECTED RATIOS
Return on average assets
(annualized) 1.04% 1.03% 0.98% 1.07%
Return on average common equity
(annualized) 18.37% 18.43% 17.80% 19.85%
Return on average total equity
(annualized) 16.77% 16.63% 16.20% 17.71%
Leverage capital ratio 6.10% 6.10% 6.10% 6.10%
Tier 1 risk-based capital ratio 9.18% 8.90% 9.18% 8.90%
Total risk-based capital ratio 10.25% 9.98% 10.25% 9.98%
Allowance for loan losses as a %
of total loans 1.14% 1.20% 1.14% 1.20%
=======================================================================================
PERIOD ENDING BALANCE SHEET DATA 9/30/99 9/30/98 Net Change % Change
Total assets $275,777,727 $250,386,189 $25,391,538 10.14%
Earning assets 250,673,950 227,224,601 $23,449,349 10.32%
Loans and leases, net 168,186,278 154,320,174 $13,866,104 8.99%
Interest-bearing deposits 180,445,483 173,626,200 $6,819,283 3.93%
Total deposits 240,213,936 230,445,040 $9,768,896 4.24%
Common stockholders' equity 14,662,603 13,108,743 $1,553,860 11.85%
Total stockholders' equity 16,839,091 15,341,476 $1,497,615 9.76%
=======================================================================================
</TABLE>
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
MIDSOUTH BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CONDITION
September 30, December 31,
1999 1998 *
ASSETS (unaudited)
____________ ____________
<S> <C> <C>
Cash and due from banks $11,568,998 $14,003,536
Federal funds sold - 6,600,000
____________ ____________
Total cash and cash equivalents 11,568,998 20,603,536
Interest bearing deposits in banks 13,338 16,125
Securities available-for-sale, at fair value
(cost of $59,798,679 in September 1999 and
$43,503,268 in December 1998) 59,214,729 43,938,965
Securities held-to-maturity (estimated market
value of $21,191,494 in September 1999 and
$20,421,920 in December 1998) 21,312,220 19,246,559
Loans, net of allowance for loan losses of
$1,947,385 in September 1999 and
$1,860,490 in December 1998 168,186,278 153,616,773
Bank premises and equipment, net 10,710,638 9,054,201
Other real estate owned, net 369,049 48,100
Accrued interest receivable 2,016,295 1,740,514
Goodwill, net 588,301 207,281
Other assets 1,797,881 1,346,214
____________ ____________
Total assets $275,777,727 $249,818,268
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Non-interest bearing $59,768,453 $60,361,205
Interest bearing 180,445,483 169,563,097
____________ ____________
Total deposits 240,213,936 229,924,302
Securities sold under
repurchase agreements 602,514 -
Federal funds purchased 1,700,000 -
Other FHLB borrowings 12,000,000 -
Accrued interest payable 669,336 565,896
Notes payable 3,355,597 3,503,668
Other liabilities 397,253 138,280
Total liabilities 258,938,636 234,132,146
____________ ____________
Commitments and contingencies - -
Stockholders' Equity:
Preferred Stock, no par value, $14.25 stated
value - 5,000,000 shares authorized,
152,736 and 156,927 issued and outstanding
on September 30, 1999 and December 31, 1998,
respectively 2,176,488 2,236,210
Common stock, $.10 par value- 5,000,000 shares
authorized, 2,470,373 and 2,432,016 issued
and outstanding on September 30, 1999 and
December 31, 1998, respectively 247,037 243,201
Surplus 10,873,886 10,521,020
Unearned ESOP shares (98,062) (119,051)
Unrealized gains(losses) on securities
available-for-sale, net of deferred taxes
(credit) of ($185,300) in September 1999
and $159,000 in December 1998 (398,650) 276,700
Retained earnings 4,038,392 2,528,042
____________ ____________
Total stockholders' equity 16,839,091 15,686,122
____________ ____________
Total liabilities and stockholders' equity $275,777,727 $249,818,268
============ ============
* The consolidated statement of condition at December 31, 1998 is taken
from the audited balance sheet on that date.
__________________________________________________________________________________
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
MIDSOUTH BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
================================================================================================
Three Months Ended Nine Months Ended
September 30, September 30,
1999 1998 1999 1998
___________________________ ____________________________
<S> <C> <C> <C> <C>
INTEREST INCOME:
Loans, including fees $4,199,753 $3,927,708 $11,957,997 $10,889,514
Securities
Taxable 899,759 646,521 2,416,762 1,836,947
Nontaxable 283,383 236,571 821,172 680,824
Federal funds sold 10,633 91,567 382,932 441,304
___________ ___________ ___________ ____________
TOTAL 5,393,528 4,902,367 15,578,863 13,848,589
___________ ___________ ___________ ____________
INTEREST EXPENSE:
Interest on deposits 1,797,777 1,727,004 5,535,132 4,910,000
Interest on notes payable 134,708 67,898 263,571 197,576
___________ ___________ ___________ ____________
TOTAL 1,932,485 1,794,902 5,798,703 5,107,576
___________ ___________ ___________ ____________
NET INTEREST INCOME 3,461,043 3,107,465 9,780,160 8,741,013
PROVISION FOR LOAN LOSSES 173,100 260,450 678,050 756,450
___________ ___________ ___________ ____________
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES 3,287,943 2,847,015 9,102,110 7,984,563
___________ ___________ ___________ ____________
OTHER OPERATING INCOME:
Service charges on deposits 759,445 673,266 2,189,811 1,887,540
Gains on securities, net - - - -
Credit life insurance 66,271 30,417 107,611 98,488
Other charges and fees 222,742 203,479 639,371 572,148
___________ ___________ ___________ ____________
TOTAL OTHER INCOME 1,048,458 907,162 2,936,793 2,558,176
___________ ___________ ___________ ____________
OTHER EXPENSES:
Salaries and employee benefits 1,635,085 1,396,623 4,496,013 3,930,527
Occupancy expense 691,414 612,721 2,016,803 1,726,329
Other 1,033,751 878,678 2,875,792 2,367,620
___________ ___________ ___________ ____________
TOTAL OTHER EXPENSES 3,360,250 2,888,022 9,388,608 8,024,476
___________ ___________ ___________ ____________
INCOME BEFORE INCOME TAXES 976,151 866,155 2,650,295 2,518,263
PROVISION FOR INCOME TAXES 263,175 242,050 672,612 662,998
___________ ___________ ___________ ____________
NET INCOME $712,976 $624,105 $1,977,683 $1,855,265
PREFERRED DIVIDEND REQUIREMENT 32,648 37,003 98,934 111,967
___________ ___________ ___________ ____________
INCOME AVAILABLE TO COMMON
SHAREHOLDERS $680,328 $587,102 $1,878,749 $1,743,298
=========== =========== ===========
BASIC EARNINGS PER COMMON SHARE $0.28 $0.24 $0.77 $0.72
=========== =========== ===========
DILUTED EARNINGS PER COMMON SHARE $0.24 $0.21 $0.67 $0.63
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
MIDSOUTH BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 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 25,797 2,580 276,900 279,480
Dividends paid on common
stock (368,399) (368,399)
Dividends paid on
preferred stock (98,934) (98,934)
Preferred stock
conversion (4,191) (59,722) 12,560 1,256 58,466
Net income 1,977,683 1,977,683
ESOP obligation, net
of repayments 20,989 20,989
Excess of market value
over book value of
ESOP shares released 17,500 17,500
Net change in unrealized
gain/loss on securities
available-for-sale,
net of tax (675,350) (675,350)
_______ __________ _________ ________ ___________ ________ _________ __________ ___________
BALANCE,
September 30, 1999 152,736 $2,176,488 2,470,373 $247,037 $10,873,886 ($98,062) ($398,650) $4,038,392 $16,839,091
======= ========== ========= ======== =========== ======== ========= ========== ===========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
MIDSOUTH BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999 and 1998
____________________________________________________________________________________________
September 30, 1999 September 30, 1998
__________________ __________________
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $1,977,683 $1,855,265
Adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation and amortization 878,710 710,730
Provision for loan losses 678,050 756,450
Provision for deferred income taxes 12,228 49,330
Discount accretion (premium amortization), net 39,887 (22,678)
Gain on sale of premises and equipment (2,926) (750)
Loss on sale of other real estate owned - 3,037
Change in accrued interest receivable (275,781) (284,286)
Change in accrued interest payable 103,440 903
Change in other liabilities 258,972 (4,205)
Change in other assets (119,595) (285,089)
____________ ____________
NET CASH PROVIDED BY OPERATING ACTIVITIES 3,550,668 2,778,707
____________ ____________
CASH FLOWS FROM INVESTING ACTIVITIES:
Net decrease (increase) in interest-bearing deposits 2,787 47,201
Proceeds from maturities and calls of securities hel 25,000 -
Proceeds from maturities and calls of securities ava 10,704,344 8,480,926
Purchases of securities available-for-sale (27,037,460) (17,670,041)
Purchases of securities held-to-maturity (2,092,845) (300,000)
Loan originations, net of repayments (12,516,626) (25,603,826)
Purchases of premises and equipment (2,524,357) (2,394,579)
Proceeds from sales of premises and equipment 25,000 29,961
Proceeds from sales of other real estate owned 58,724 17,000
Purchase of insurance premium financing company (3,503,497) -
____________ ____________
NET CASH USED IN INVESTING ACTIVITIES (36,858,930) (37,393,358)
____________ ____________
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in deposits 10,289,634 30,377,289
Net (decrease) increase in securities sold under repurchase
agreements and federal funds purchased 2,302,514 (69,443)
Increase in other borrowings 12,000,000 -
Issuance of notes payable 75,000 435,000
Repayments of notes payable (223,071) (100,875)
Proceeds from issuance of common stock 279,480 597,678
Payment of dividends (467,333) (424,725)
Other 17,500 -
Cost of capital through dividend reinvestment plan - (13,845)
Payment of fractional shares resulting from conversion
of preferred stock and stock dividends - (1,758)
____________ ____________
NET CASH PROVIDED BY FINANCING ACTIVITIES 24,273,724 30,799,321
NET DECREASE IN CASH & CASH EQUIVALENTS (9,034,538) (3,815,330)
CASH & CASH EQUIVALENTS AT BEGINNING OF PERIOD 20,603,536 23,834,024
____________ ____________
CASH & CASH EQUIVALENTS AT END OF PERIOD $11,568,998 $20,018,694
============ ============
<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
September 30, 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 nine month
period ended September 30, 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>
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
1999 1998
_________ __________
<S> <C> <C>
Balance at beginning of period $1,860,490 $1,414,826
Provision for loan losses 678,050 756,450
Recoveries 109,387 122,378
Loans charged off (700,542) (506,524)
_________ __________
Balance at end of period $1,947,385 $1,787,130
========= ==========
</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 (losses) 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 nine months
ended September 30, 1999 and 1998.
<TABLE>
<CAPTION>
1999 1998
__________ _________
<S> <C> <C>
Net income $1,977,683 $1,855,265
Other comprehensive income
(losses), net of tax (675,350) 384,034
__________ _________
Total comprehensive income $1,302,333 $2,239,299
========== =========
</TABLE>
<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.
Net income totaled $712,976 for the third quarter of 1999,
compared to net income of $624,105 for the third quarter of
1998. Income available to common shareholders totaled
$680,328 for the third quarter of 1999, compared to
$587,102 for the third quarter of 1998. Basic earnings per
share were $.28 and $.24 for the quarters ended September
30, 1999 and 1998, respectively. Diluted earnings per
share were $.24 for the third quarter of 1999 compared to
$.21 for the third quarter of 1998. Earnings improved in
quarterly and year-to date comparisons due to increased net
interest income, increased non-interest income and a
decrease in the provision for loan losses. System upgrades,
staff development and market penetration campaigns
increased operating expenses in quarterly and year-to-date
comparisons, but resulted in a 10% growth in assets over
the past twelve months.
Net income for the nine months ended September 30, 1999
totaled $1,977,683 compared to $1,855,265 for the nine
months ended September 30, 1998. Basic earnings per
share were $.77 and $.72 for the nine-month periods ended
September 30, 1999 and 1998, respectively. Year-to-date
diluted earnings per share were $.67 for September 30,
1999 and $.63 for September 30, 1998.
In both quarterly and year-to-date comparisons, net interest
income increased over 11% due to a higher volume of
earning assets. Non-interest income increased 16% in
quarterly comparison and 15% in year-to-date comparison,
primarily due to increases in service charges on deposit
accounts and insufficient funds fees. The increased net
interest income and non-interest income was substantially
offset by increases in non-interest expense for the three and
nine months periods ended September 30, 1999 as
compared to the three and nine months periods ended
September 30, 1998. Increased expenses were recorded
primarily in salaries and benefits and occupancy expenses.
These increases reflect MidSouth's investment to
strengthen its infrastructure in order to support recent and
anticipated growth. MidSouth added its sixteenth location
during the third quarter of 1999 in the Lafayette market at
the corner of Ambassador Caffery and Dulles. In addition,
MidSouth purchased two branch facilities from Bank One,
one in New Iberia and the other in Sulphur. These offices
should begin operating in the first half of the year 2000. A
loan production office is scheduled to open in Thibodeaux
on November 1, 1999.
1
<PAGE>
MidSouth recorded a 4% increase in deposits during the
past twelve months. Deposits totaled $240.2 million at
September 30, 1999, up $9.8 million from $230.4 million at
September 30, 1998, but down $21.1 million from the
$261.3 million reported for June 30, 1999. The majority of
the growth over the past twelve months resulted from a
deposit promotion designed to increase MidSouth's market
share. The promotion resulted in additional deposits
totaling $27.5 million as of the end of the promotion on
May 31, 1999. Cash flows from the increase in deposits
were used to fund loans and securities purchases.
However, approximately $18.2 million in deposits held
under a public fund contract were withdrawn the first week
of July 1999 when the two-year contract expired.
MidSouth borrowed from the Federal Home Loan Bank in
Dallas, Texas to fund the withdrawal. These borrowings
totaled $12 million as of September 30, 1999.
Loans, net of Allowance for Loan Losses ("ALL"),
increased $13.9 million or 9%, from $154.3 million at
September 30, 1998 to $168.2 million at September 30,
1999. The majority of the loan growth occurred in the
commercial and real estate portfolios. Provisions for loan
and lease losses totaled $678,050 for the nine months ended
September 30, 1999 compared to $756,450 for the nine
months ended September 30, 1998.
Nonperforming loans as a percentage of total loans
decreased from .39% in September of 1998 to .15% in
September of 1999 primarily due to the transfer of two
commercial real estate credits totaling $357,575 to other
real estate owned. Total nonperforming assets increased
$2,851 in quarterly comparison, from $659,670 at
September 30, 1998 to $662,521 at September 30, 1999.
The ALL represented 315.71% of nonperforming loans and
other real estate owned as of September 30, 1999, as
compared to 275.02% as of September 30, 1998.
MidSouth's leverage ratio was 6.10% for the quarter ended
September 30, 1999. Return on average common equity
was 18.37% and return on average assets was 1.04%.
Earnings Analysis
Net Interest Income
Average earning assets increased 13%, or $28.9 million,
from $219.1 million for the three months ended September
30, 1998 to $248.0 million for the three months ended
September 30, 1999. The mix of earning assets shifted
from 69% of average earning assets in loans for the third
quarter of 1998 down to 66% in the third quarter of 1999.
The average yield on loans decreased 27 basis points, from
10.39% to 10.12% at September 30, 1999. Yields on
commercial and real estate loans declined 43 basis points,
while consumer loan yields rose 38 basis points.
Market competition for quality credits, combined with
decreased loan fee income caused commercial and real
estate loan yields to decline. Consumer loan yields
increased primarily due to loans funded by Financial
Services of the South, Inc. (the "Finance Company"), credit
2
<PAGE>
card loans and insurance premium financing loans acquired
with the purchase of TMC Financial Services, Inc.
("TMC"). TMC's portfolio averaged $3.0 million with an
average yield of approximately 24%, net of agent
commissions. The Finance Company's portfolio averaged
$1.5 million in consumer finance loans yielding an average
of 22%. Credit card loans at the Bank averaged $1.25
million and yielded an average of 18%.
Investment volume increased significantly by $20.2
million, from $62.3 million at September 30, 1998 to $82.5
million at September 30, 1999. Growth in MidSouth's
deposits resulting from the deposit promotion in the
second quarter of 1999 exceeded the moderate loan demand
for the same period. Subsequently, excess dollars were
invested in investment securities. The average taxable-
equivalent yield on investments remained the same at
6.29% at September 30, 1998 and 1999. The change in the
mix of earning assets combined with lower loan yields
decreased the taxable-equivalent yield on quarterly average
earning assets 24 basis points, from 9.07% for the third
quarter of 1998 to 8.83% for the third quarter of 1999.
An average volume increase of $17.8 million in interest-
bearing liabilities resulted in increased interest expense for
the quarter ended September 30, 1999 compared to the
quarter ended September 30, 1998. The percentage of
average interest-bearing deposits to average total deposits
remained stable at 25% for both quarters ended September
30, 1998 and 1999. The average rate paid on interest-
bearing deposits decreased 24 basis points, from 4.12% at
September 30, 1998 to 3.88% at September 30, 1999. The
decrease resulted primarily from the withdrawal of
approximately $18.2 million in deposits held under a public
fund contract. These deposits were withdrawn the first
week of July and earned an average rate of 4.50%.
The net effect of changes in rate, volume and mix of
average earning assets and interest-bearing liabilities
increased net interest income $353,578 in quarterly
comparison. The net taxable-equivalent yield on average
earning assets declined 14 basis points, from 5.82% for the
quarter ended September 30, 1998 to 5.68% for the quarter
ended September 30, 1999. Review of the changes in the
volume and yields of average earning assets and interest-
bearing liabilities between the two nine month periods
ended September 30, 1999 and 1998 reflected results
similar to the quarterly comparison. The net taxable-
equivalent yield on average earning assets for the nine
months ended September 30, 1999 decreased 26 basis
points from 5.75% at September 30, 1998 to 5.49% at
September 30, 1999. However, the volume increase in
earning assets resulted in increased net interest income of
$1,039,147 between the two nine month periods reviewed.
Non-interest Income
MidSouth's primary source of non-interest income, service
charges on deposit accounts, increased $86,179 for the
three months and $302,271 for the nine months ended
September 30, 1999 as compared to the same periods for
1998. The increases resulted primarily from additional
insufficient funds fees and an increase in service charge
income due to a higher volume of accounts serviced.
3
<PAGE>
Other non-interest income, net of gains on sales of
investment securities, increased $19,263 in quarterly
comparison and $67,223 in year-to-date comparison. A
new mortgage origination program with a third party
processor contributed $14,252 to the increase for the
quarter and $40,000 for the nine months ended September
30, 1999. VISA merchant and debit card income increased
significantly in 1999, however, expenses associated with
these programs have also increased, offsetting the income.
Income from the sale of credit life insurance increased
$35,854 for the quarter and $9,123 for the nine months
period ended September 30, 1999 as compared to the same
periods ended September 30, 1998. A retail loan promotion
during the third quarter of 1999 increased sales of credit life
insurance.
Non-interest Expense
Non-interest expense increased $472,228 for the three
months and $1,364,132 for the nine months ended
September 30, 1999 compared to the three and nine months
ended September 30, 1998. Increases were recorded
primarily in the categories of salaries and employee
benefits, occupancy expenses, marketing expenses, and
VISA program expenses. These increases reflect
MidSouth's long term investment in staff development,
system upgrades and market penetration.
Salaries and employee benefits increased primarily due to
additional staff and an increase in the cost of group health
insurance. The number of full-time equivalent ("FTE")
employees increased by 10, from 167 in September 1998 to
177 in September 1999. Positions added over the past
twelve months include trainer, retail sales manager and
several customer contact positions.
Occupancy expense increased in the three and nine month
periods ended September 30, 1999 compared to the same
period of 1998 due to increases in depreciation of building,
furniture, and equipment and maintenance expenses
incurred on fixed assets.
Balance Sheet Analysis
MidSouth ended the third quarter of 1999 with consolidated
assets of $275,777,727, an increase of $25.9 million or
10% from the $249,818,268 reported for December 31,
1998. Deposits increased over the nine months ended
September 30, 1999 by $10.3 million to $240,213,936.
Deposits had increased $31.4 million from year-end
December 1998 to June 30, 1999 primarily due to a deposit
promotion held during the months of March, April and May
1999. However, in the first week of July 1999, a two-year
public fund contract expired and deposits totaling
approximately $18.2 million were withdrawn. MidSouth
borrowed funds from the Federal Home Loan Bank to fund
the withdrawal. Cash flows from the deposit promotion
had been used to fund loans and securities purchases.
Loans experienced growth of $14.7 million in the nine
months ended September 30, 1999, with the majority of the
increase in commercial and real estate loans. Of the $14.7
million in growth, $7.4 million occurred in the third quarter
of 1999 as business activity increased in MidSouth's
markets. Securities available-for-sale increased $15.3
million, from $43.9 million at December 31, 1998 to $59.2
million at September 30, 1999. The increase reflects
purchases of $ 27.0 million and maturities and principal
paydowns of $10.7 million. Purchases of securities held-
4
to-maturity totaled $2.1 million for the same period.
Unrealized losses in the securities available-for-sale
portfolio, net of unrealized gains and tax effect, were
$398,650 at September 30, 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 adjustment 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 September 30, 1999, MidSouth's leverage ratio was
6.10% as compared to 6.06% at December 31, 1998. Tier 1
capital to risk-weighted assets was 9.18% and total capital
to risk-weighted assets was 10.25% at the end of the third
quarter of 1999. At year-end 1998, Tier 1 capital to risk-
weighted assets was 9.24% and total capital to risk-
weighted assets was 10.36%.
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. 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. During the
first half of 1999, MidSouth completed testing and
updating on 100% of its 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.
To further reduce the risks associated with the Year 2000,
MidSouth worked with commercial customers and
community businesses in preparation for the Year 2000. In
May 1998, MidSouth provided Year 2000 seminar
participants with software designed to help them identify
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 $93,500 have been identified 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.
5
<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
=================================================================
September December September
30, 31, 30,
1999 1998 1998
=================================================================
<S> <C> <C> <C>
Nonperforming loans
Nonaccrual loans $247,777 $ 533,107 $610,725
Restructured loans - - -
___________________________________________
Total nonperforming loans 247,777 533,107 610,725
Other real estate
owned, net 369,049 48,100 39,100
Other assets repossessed 45,695 26,533 9,854
___________________________________________
Total nonperforming assets $662,521 $607,740 $659,670
==========================================
Loans past due 90 days
Or more and still
accruing $605,510 $329,116 $518,879
Nonperforming loans as a
% of total loans .15% 0.34% 0.39%
Nonperforming assets as a
% of total loans,
other real Estate
owned and other assets
Repossessed 0.39% 0.39% 0.42%
ALL as a % of nonperforming
loans and other real
estate owned 315.71% 320.11% 275.02%
6
</TABLE>
<PAGE>
Nonperforming assets were $662,521 as of September 30,
1999, an increase of $54,781 from the $607,740 reported
for December 31, 1998 and an increase of $2,851 from the
$659,670 reported for September 30, 1998. Two related
commercial credits totaling $357,575 were moved from
nonaccrual loans into other real estate owned in June 1999.
Loans past due 90 days or more decreased from $518,879
in September 1998 to $329,116 in December 1998 and
increased to $605,510 as of September 30, 1999. Of the
$605,510 in loans past due 90 days or more, $79,364 were
funded by the Finance Company and $25,389 represent past
due insurance premium financing loans at TMC.
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
$1,947,385 in the reserve as of September 30, 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.
7
<PAGE>
<TABLE>
<CAPTION>
Item 6. Exhibits and Reports on Form 8-K Page 16
(a) Exhibits
Exihibit Number Document Description
<S> <C>
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
idSouth's definitive Proxy
Statement filed April 11, 1997, and
is incorporated herein
by reference.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Page 17
<S> <C>
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.
10.9 Modification Agreement to the Loan
Agreement and Master Note for the
Line of Credit established for
MidSouth Bancorp, Inc. is included as
Exhibit 10.9 of MidSouth's Form
10-QSB filed on August 13, 1999
and is incorporated herein by
reference.
11 Computation of earnings per share
27 Financial Data Schedule
(b) Reports Filed on Form 8-K
(none)
</TABLE>
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 12, 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 AND NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
Third Quarter Third Quarter Year-to-Date Year-to-Date
September 30, September 30, September 30, September 30,
BASIC 1999 1998 1999 1998
_____________ _____________ _____________ _____________
<S> <C> <C> <C> <C>
Earnings:
Income applicable to common
stock $680,328 $587,102 $1,878,749 $1,743,298
============ =========== ============ ============
Shares:
Weighted average number of
common shares outstanding, 2,448,731 2,417,457 2,435,075 2,404,799
============ =========== ============ ============
Earnings per common share:
Income applicable to common
stock $0.28 $0.24 $0.77 $0.72
============ =========== ============ ============
DILUTED
Earnings:
Net income $712,976 $624,105 $1,977,683 $1,855,265
============ =========== ============ ============
Weighted average number of
common shares outstanding 2,448,731 2,417,457 2,435,075 2,404,799
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 49,500 72,891 54,183 75,485
Assuming conversion of
preferred stock at a
conversion rate of 1 to
2.998 shares 459,668 473,270 464,504 476,304
____________ ___________ ____________ ____________
Weighted average number of
common shares outstanding,
as adjusted 2,957,899 2,963,618 2,953,762 2,956,588
============ =========== ============ ============
Fully diluted earnings per common
share $0.24 $0.21 $0.67 $0.63
============ =========== ============ ============
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> SEP-30-1999
<CASH> 11,568,998
<INT-BEARING-DEPOSITS> 13,338
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 59,214,729
<INVESTMENTS-CARRYING> 21,312,220
<INVESTMENTS-MARKET> 21,191,494
<LOANS> 170,133,663
<ALLOWANCE> 1,947,385
<TOTAL-ASSETS> 275,777,727
<DEPOSITS> 240,213,936
<SHORT-TERM> 14,302,514
<LIABILITIES-OTHER> 1,066,589
<LONG-TERM> 3,355,597
0
2,176,488
<COMMON> 247,037
<OTHER-SE> 14,415,566
<TOTAL-LIABILITIES-AND-EQUITY> 275,777,727
<INTEREST-LOAN> 11,957,997
<INTEREST-INVEST> 3,237,934
<INTEREST-OTHER> 382,932
<INTEREST-TOTAL> 15,578,863
<INTEREST-DEPOSIT> 5,535,132
<INTEREST-EXPENSE> 5,798,703
<INTEREST-INCOME-NET> 9,780,160
<LOAN-LOSSES> 678,050
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 9,388,608
<INCOME-PRETAX> 2,650,295
<INCOME-PRE-EXTRAORDINARY> 1,977,683
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,977,683
<EPS-BASIC> .77
<EPS-DILUTED> .67
<YIELD-ACTUAL> 5.20
<LOANS-NON> 247,777
<LOANS-PAST> 605,510
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 1,860,490
<CHARGE-OFFS> 678,050
<RECOVERIES> 109,387
<ALLOWANCE-CLOSE> 1,947,385
<ALLOWANCE-DOMESTIC> 90,000
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 1,857,385
</TABLE>
