MIDSOUTH BANCORP, INC. LAFAYETTE, La., Oct. 24, 2017 /PRNewswire/ -- MidSouth Bancorp, Inc. ("MidSouth") (NYSE:MSL) today reported quarterly net earnings available to common shareholders of $856,000 for the third quarter of 2017, compared to net earnings available to common shareholders of $1.6 million reported for the third quarter of 2016 and a net loss available to common shareholders of $6.2 million reported for the second quarter of 2017. The third quarter of 2017 included an after-tax gain on sales of securities of $220,000 and a non-recurring after-tax expense of $587,000 related to the branch closures during the quarter. The second quarter 2017 net loss included an after-tax charge of $872,000 for severance and retention accruals, an after-tax charge of $371,000 resulting from the write-down of assets held for sale, and a one-time after-tax charge of $302,000 related to discontinued branch projects. Excluding these non-operating income and expenses, diluted earnings for the third quarter of 2017 were $0.07 per common share, compared to a loss of $0.38 per diluted share for the second quarter of 2017 and earnings of $0.14 per diluted share for the third quarter of 2016.
Jim McLemore, President and CEO, remarked, "We are pleased to report operating earnings for the quarter of $0.07 per share. We remain very focused on our priorities of reducing credit risk, improving our risk culture, pre-tax pre-provision earnings and overall efficiency, and positioning ourselves to repay SBLF. While quantifiable measures of progress like earnings, classified assets, non-performing assets, energy exposure, net charge-offs and loan loss provision all reflected improvement this quarter, we are also working very diligently to improve the underlying processes and organizational capabilities, including investing in talent, that are essential to the long-term success of the Bank. We continue to rationalize our distribution system as we closed 7 branches at the end of September and have 2 more branches under contract to sell in December.
"We are extremely focused on strengthening our risk management capabilities that target root causes including credit risk management staffing, policies, procedures, systems and practices. While the buildout of these core capabilities will require substantial time and resources, this commitment to improve our credit culture is vital to reduce risk and improve the quality of our earnings over the longer term. Our employees have embraced the need for these changes, and we appreciate their dedication, hard work and support."
Energy Lending Update
MidSouth Bank defines an energy loan as any loan where the borrower's ability to repay is disproportionately impacted by a prolonged downturn in energy prices. Under this definition, the Bank includes direct Commercial and Industrial (C&I) loans to energy borrowers, as well as Commercial Real Estate (CRE) loans, Residential Real Estate loans and loans to energy-related borrowers where the loan's primary collateral is cash and marketable securities.
Other comments on the Bank's energy lending:
-- Total energy loans, as defined above, decreased $11.0 million during
3Q17 to $197.8 million, or 16.0% of total loans, from 16.8% at June 30,
2017 primarily due to $8.9 million of payoffs during the quarter as well
as $862,000 of charge-offs of energy loans.
-- Direct C&I energy loans were $161.3 million or 13.0% of total loans and
had a weighted average maturity of 3.1 years at September 30, 2017.
-- Energy-related CRE and residential real estate loans were $36.3 million
or 2.9% of total loans at September 30, 2017.
-- Total criticized energy-related loans decreased $5.1 million, or 5.5%,
during 3Q17 to $88.4 million and represented 44.7% of energy loans at
September 30, 2017, unchanged from 44.7% at June 30, 2017.
-- Seven energy loan relationships had rating changes during the quarter.
-- Two loan relationships totaling $3.6 million were downgraded to
Special Mention
-- Five loan relationships totaling $1.8 million were downgraded to
Substandard
-- Three energy-related charge-offs totaled $862,000.
-- Cycle to date net charge-offs totaled $10.8 million, or 4.08% of
December 31, 2014 energy loans, which was when the effects of declining
oil prices began to surface.
-- One new energy-related impairment totaling $103,000 was identified
during 3Q17 and two additional impairment charges of $104,000 were
recorded related to existing impaired loans identified prior to 3Q17.
-- The energy reserve as a percentage of total energy loans, as defined,
was 5.5% at September 30, 2017. The reserve attributable to C&I energy
loans was approximately 5.7%. The reserve on all other energy loans was
4.5%.
-- The Bank has two Shared National Credits (SNCs) totaling $12.7 million
in the energy portfolio at September 30, 2017 and both are rated as
Substandard.
-- To date, during the month of October 2017, the Bank has had one rating
related change to its energy portfolio:
-- One credit in the amount of $2.6 million was upgraded to Special
Mention from Classified.
More information on our energy loan portfolio and other information on quarterly results can be found on our website at MidSouthBank.com under Investor Relations/Presentations.
Balance Sheet
Consolidated assets totaled $1.9 billion at September 30, 2017 and June 30, 2017, compared to $2.0 billion at September 30, 2016. Our stable core deposit base, which excludes time deposits, totaled $1.4 billion at September 30, 2017 and June 30, 2017 and accounted for 87.5% and 90.3% of deposits at September 30, 2017 and June 30, 2017, respectively. Net loans totaled $1.211 billion at September 30, 2017, compared to $1.216 billion at June 30, 2017 and $1.250 billion at September 30, 2016.
MidSouth's Tier 1 leverage capital ratio was 12.84% at September 30, 2017, compared to 12.66% at June 30, 2017. Tier 1 risk-based capital and total risk-based capital ratios were 17.01% and 18.27% at September 30, 2017, compared to 16.48% and 17.73% at June 30, 2017, respectively. Tier 1 common equity to total risk-weighted assets at September 30, 2017 was 12.68%, compared to 12.15% at June 30, 2017. Tangible common equity totaled $180.7 million at September 30, 2017, compared to $174.2 million at June 30, 2017. Tangible book value per share at September 30, 2017 was $10.92 versus $10.87 at June 30, 2017. During the third quarter, MidSouth completed the sale of 516,700 shares of common stock pursuant to the partial exercise of the option to purchase additional shares granted from the capital raise in the second quarter, resulting in additional common equity of approximately $5.8 million.
Asset Quality
Nonperforming assets totaled $53.9 million at September 30, 2017, a decrease of $2.5 million compared to $56.4 million reported at June 30, 2017. The decrease is primarily attributable to the payoffs/paydowns of $8.8 million of non-accrual loans and the charge-off of $1.8 million of non-accrual loans. These decreases were partially offset by $7.1 million of loans placed on non-accrual during the quarter. Allowance coverage for nonperforming loans increased to 48.47% at September 30, 2017, compared to 44.88% at June 30, 2017. The ALLL/total loans ratio was 2.03% at September 30, 2017 and 1.99% at June 30, 2017. Including valuation accounting adjustments on acquired loans, the total valuation accounting adjustment plus ALLL was 2.13% of loans at September 30, 2017. The ratio of annualized net charge-offs to total loans decreased to 1.26% for the three months ended September 30, 2017 compared to 4.01% for the three months ended June 30, 2017.
Total nonperforming assets to total loans plus ORE and other assets repossessed was 4.35% at September 30, 2017 compared to 4.54% at June 30, 2017. Loans classified as troubled debt restructurings, accruing ("TDRs, accruing") totaled $1.6 million at September 30, 2017 compared to $1.7 million at June 30, 2017. Classified assets, including ORE, were $139.7 million at September 30, 2017 compared to $148.8 million at June 30, 2017. Payoffs/paydowns of $15.8 million and charge-offs of $2.5 million of loans rated as classified at June 30, 2017 were partially offset by downgrades to classified loans of $8.7 million during the quarter. The classified to capital ratio at MidSouth Bank was 66.8% at September 30, 2017 versus 72.0% at June 30, 2017.
Mr. McLemore noted "We are pleased to see progress across all of our credit quality metrics this quarter. We continue to work to aggressively identify problem loans through improvement in our internal processes and to identify and appropriately recognize loan loss content in a timely manner. We are also working with our borrowers to improve the Bank's position on problem loans. With our recent capital raise of $61 million, we are in a position of strength to deal with our problem loans. At the same time, we are committed to be as judicious as possible in preserving capital as we resolve problem loans.
"Although pleased with our progress in the third quarter and to date in the fourth quarter, with our elevated level of classified assets, the ongoing weaknesses in the energy services sector and our efforts to more aggressively identify and resolve problem loans, we believe it is appropriate to measure progress over multiple quarters."
Third Quarter 2017 vs. Second Quarter 2017 Earnings Comparison
Net earnings available to common shareholders totaled $856,000 for the three months ended September 30, 2017, compared to a net loss available to common shareholders of $6.2 million for the three months ended June 30, 2017. The third and second quarters of 2017 included $338,000 and $3,000, respectively, in gain on sales of securities. Excluding these non-operating revenues, revenues from consolidated operations increased $495,000 in sequential-quarter comparison. Net interest income increased $567,000 and noninterest income decreased $72,000 in sequential-quarter comparison.
The third quarter of 2017 included a non-recurring charge of $903,000 related to branch closures. The second quarter of 2017 included non-operating expenses totaling $2.4 million which consisted of $1.3 million of severance and retention accruals, a $570,000 write-down on assets held for sale and a $465,000 non-recurring charge related to discontinued branch projects. Excluding these non-operating expenses, noninterest expense decreased $372,000 in sequential-quarter comparison. Decreases of $261,000 in salaries and benefits costs, $148,000 in provision for unfunded lines/letters of credit, $88,000 in directors fees and $77,000 in expenses on ORE were primarily offset by an increase of $468,000 in legal and professional fees. The increase in legal and professional fees is primarily due to increased outsourcing expenses to enhance risk management as well as to address the provisions of our written agreement with the OCC. The provision for loan losses decreased $8.2 million in sequential-quarter comparison. Income tax expense of $574,000 was reported for the third quarter of 2017, compared to a $3.2 million income tax benefit for the second quarter of 2017.
Dividends on the Series B Preferred Stock issued to the U.S. Treasury as a result of our participation in the Small Business Lending Fund ("SBLF") totaled $720,000 for the third quarter of 2017 based on a dividend rate of 9%, unchanged from $720,000 for the second quarter of 2017. Dividends on the Series C Preferred Stock issued with the December 28, 2012 acquisition of PSB Financial Corporation ("PSB") totaled $90,000 for the three months ended September 30, 2017 and $91,000 for the three months ended June 30, 2017.
Fully taxable-equivalent ("FTE") net interest income increased $561,000 in sequential-quarter comparison, primarily due to an increase in interest income on loans of $598,000 as well as a $155,000 increase in interest income on time and interest-bearing deposits in other banks. These increases were partially offset by a $157,000 decrease in FTE interest income on investment securities. Interest income on loans increased in sequential-quarter comparison due to an increase in the average yield on loans of 13 basis points, from 5.35% to 5.48%. Excluding purchase accounting adjustments, the loan yield increased 14 basis points, from 5.25% to 5.39% during the same period. The average yield on investment securities decreased 4 basis points, from 2.69% to 2.65%, and the average balance of investment securities decreased $16.3 million. The average yield on total earning assets increased 3 basis points for the same period, from 4.52% to 4.55%, respectively. The FTE net interest margin increased 2 basis points in sequential-quarter comparison, from 4.18% for the second quarter of 2017 to 4.20% for the third quarter of 2017. Excluding purchase accounting adjustments, the FTE net interest margin increased 3 basis points, from 4.09% for the second quarter of 2017 to 4.12% for the third quarter of 2017.
Third Quarter 2017 vs. Third Quarter 2016 Earnings Comparison
Third quarter 2017 net earnings available to common shareholders totaled $856,000 compared to $1.6 million for the third quarter of 2016. The third quarter of 2017 included $338,000 of gain on sales of securities. Excluding these non-operating revenues, revenues from consolidated operations increased $556,000 in quarterly comparison, from $23.4 million for the three months ended September 30, 2016 to $24.0 million for the three months ended September 30, 2017. Net interest income increased $560,000 in quarterly comparison, resulting from a $712,000 increase in interest income, which was partially offset by a $152,000 increase in interest expense. Operating noninterest income decreased $4,000 in quarterly comparison.
Excluding non-operating expenses of $903,000 for the third quarter of 2017, noninterest expenses decreased $258,000 in quarterly comparison and consisted primarily of a $192,000 decrease in occupancy expense, a $206,000 decrease in corporate development, a $185,000 decrease in salaries and benefits costs, a $140,000 decrease in marketing costs, a $110,000 decrease in printing and supplies, a $67,000 decrease in recruiting expense, a $77,000 decrease in losses on check/wire processing and a $69,000 decrease in shares taxes, which were partially offset by an $888,000 increase in legal and professional fees and a $113,000 increase in data processing costs. Several other smaller decreases in other non-interest expense categories contributed to the overall decrease from the third quarter of 2016. A reclass of certain hosted services subscriptions from corporate development into data processing at the beginning of 2017 caused the fluctuations in those two expense categories. The provision for loan losses increased $1.4 million in quarterly comparison, from $2.9 million for the three months ended September 30, 2016 to $4.3 million for the three months ended September 30, 2017. Income tax expense decreased $419,000 in quarterly comparison.
Dividends on preferred stock totaled $810,000 for the three months ended September 30, 2017 and $811,000 for the three months ended September 30, 2016. Dividends on the Series B Preferred Stock were $720,000 for the third quarter of 2017, unchanged from $720,000 for the third quarter of 2016. Dividends on the Series C Preferred Stock totaled $90,000 for the three months ended September 30, 2017 and $91,000 for the three months ended September 30, 2016.
FTE net interest income increased $531,000 in prior year quarterly comparison. Interest income on loans increased $242,000 due to an increase in the average yield on loans of 12 basis points. The average balance of loans decreased $13.4 million in prior year quarterly comparison. Purchase accounting adjustments added 9 basis points to the average yield on loans for the third quarter of 2017 and 14 basis points to the average yield on loans for the third quarter of 2016. Excluding the impact of the purchase accounting adjustments, average loan yields increased 17 basis points in prior year quarterly comparison, from 5.22% to 5.39%.
Investment securities totaled $410.0 million, or 21.0% of total assets at September 30, 2017, versus $440.1 million, or 22.6% of total assets at December 31, 2016. The investment portfolio had an effective duration of 3.1 years and a net unrealized gain of $1.2 million at September 30, 2017. FTE interest income on investments increased $211,000 in prior year quarterly comparison. The average volume of investment securities increased $12.5 million in prior year quarterly comparison, and the average tax equivalent yield on investment securities increased 13 basis points, from 2.52% to 2.65%.
The average yield on all earning assets increased 6 basis points in prior year quarterly comparison, from 4.49% for the third quarter of 2016 to 4.55% for the third quarter of 2017. Excluding the impact of purchase accounting adjustments, the average yield on total earning assets increased 10 basis points, from 4.39% to 4.49% for the three-month periods ended September 30, 2016 and 2017, respectively.
Interest expense increased $152,000 in prior year quarterly comparison. Increases in interest expense included a $179,000 increase in interest expense on deposits and a $42,000 increase in interest expense on variable rate junior subordinated debentures. These increases were partially offset by an $87,000 decrease in interest expense on repurchase agreements. Excluding purchase accounting adjustments on acquired certificates of deposit and FHLB borrowings, the average rate paid on interest-bearing liabilities was 0.53% for the three months ended September 30, 2017 and 0.46% for the three months ended September 30, 2016.
As a result of these changes in volume and yield on earning assets and interest-bearing liabilities, the FTE net interest margin increased 3 basis points, from 4.17% for the third quarter of 2016 to 4.20% for the third quarter of 2017. Excluding purchase accounting adjustments on loans, deposits and FHLB borrowings, the FTE margin increased 7 basis points, from 4.05% for the third quarter of 2016 to 4.12% for the third quarter of 2017.
Year-To-Date Earnings Comparison
MidSouth reported a net loss available to common shareholders of $3.7 million for the nine months ended September 30, 2017, compared to net earnings available to common shareholders of $5.2 million for the nine months ended September 30, 2016. The first nine months of 2017 included $347,000 of gain on sales of securities. The first nine months of 2016 included $20,000 of gain on sales of securities. Excluding these non-operating revenues, revenues from consolidated operations increased $1.4 million in year-over-year comparison, from $69.1 million for the nine months ended September 30, 2016 to $70.5 million for the nine months ended September 30, 2017. Net interest income increased $1.0 million in year-over-year comparison, resulting from a $1.3 million increase in interest income, which was partially offset by a $312,000 increase in interest expense. Operating noninterest income increased $391,000 in year-over-year comparison and consisted primarily of a $259,000 increase in ATM/debit card income.
Excluding non-operating expenses of $3.3 million for the first nine months of 2017, noninterest expenses increased $400,000 in year-over-year comparison and consisted primarily of a $442,000 increase in salaries and benefits costs, a $1.4 million increase in legal and professional fees and a $465,000 increase in data processing costs, which were partially offset by decreases of $405,000 in occupancy expense, $330,000 in marketing costs, $391,000 in corporate development, $322,000 in ATM/debit card expense, $203,000 in printing and supplies and $144,000 in expenses on ORE. The increase in legal and professional fees in year-to-date comparison is primarily due to legal costs related to management transition issues and increased outsourcing expenses to enhance risk management. A reclass of certain hosted services subscriptions from corporate development into data processing at the beginning of 2017 caused the fluctuations in those two expense categories. The provision for loan losses increased $11.6 million in year-over-year comparison, from $8.0 million for the nine months ended September 30, 2016 to $19.6 million for the nine months ended September 30, 2017, primarily due to the high level of charge-offs and additional impairment charges on nonperforming loans in 2017. A $2.1 million income tax benefit was reported for the first nine months of 2017, compared to income tax expense of $3.0 million for the first nine months of 2016.
In year-to-date comparison, FTE net interest income increased $939,000 primarily due to an $829,000 increase in FTE interest income from investment securities. The average volume of investment securities increased $21.7 million in year-over-year comparison, and the average yield on investment securities increased 13 basis points for the same period. Interest income on loans increased $157,000 in year-over-year comparison. The average volume of loans increased $2.0 million in year-over-year comparison, and the average yield on loans increased 1 basis point, from 5.36% to 5.37%. The average yield on earning assets increased 6 basis points in year-over-year comparison, from 4.47% at September 30, 2016 to 4.53% at September 30, 2017. The purchase accounting adjustments added 8 basis points to the average yield on loans for the nine months ended September 30, 2017 and 13 basis points for the nine months ended September 30, 2016. Net of purchase accounting adjustments, the average yield on earning assets increased 9 basis points, from 4.38% at September 30, 2016 to 4.47% at September 30, 2017.
Interest expense increased $312,000 in year-over-year comparison. Increases in interest expense included a $277,000 increase in interest expense on deposits and a $125,000 increase in interest expense on junior subordinated debentures. These increases were partially offset by an $83,000 decrease in interest expense on repurchase agreements. The average rate paid on interest-bearing liabilities was 0.48% for the nine months ended September 30, 2017, compared to 0.43% for the nine months ended September 30, 2016. Net of purchase accounting adjustments, the average rate paid on interest-bearing liabilities increased 5 basis points, from 0.46% for the nine months ended September 30, 2016 to 0.51% for the nine months ended September 30, 2017. The FTE net interest margin increased 4 basis points, from 4.15% for the nine months ended September 30, 2016 to 4.19% for the nine months ended September 30, 2017. Net of purchase accounting adjustments, the FTE net interest margin increased 7 basis points, from 4.04% to 4.11% for the nine months ended September 30, 2016 and 2017.
Dividends
MidSouth's Board of Directors announced a cash dividend was declared in the amount of $0.01 per share to be paid on its common stock on January 2, 2018 to shareholders of record as of the close of business on December 15, 2017. Additionally, a quarterly cash dividend of 1.00% per preferred share on its 4.00% Non-Cumulative Perpetual Convertible Preferred Stock, Series C was declared payable on January 15, 2018 to shareholders of record as of the close of business on January 2, 2018.
About MidSouth Bancorp, Inc.
MidSouth Bancorp, Inc. is a financial holding company headquartered in Lafayette, Louisiana, with assets of $1.9 billion as of September 30, 2017. MidSouth Bancorp, Inc. trades on the NYSE under the symbol "MSL." Through its wholly owned subsidiary, MidSouth Bank, N.A., MidSouth offers a full range of banking services to commercial and retail customers in Louisiana and Texas. MidSouth Bank currently has 50 locations in Louisiana and Texas and is connected to a worldwide ATM network that provides customers with access to more than 55,000 surcharge-free ATMs. Additional corporate information is available at MidSouthBank.com.
Forward-Looking Statements
Certain statements contained herein are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 and subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, which involve risks and uncertainties. These statements include, among others, statements regarding the strength of the Company's balance sheet and its positioning to address problem assets and achieve operating efficiencies and the implementation of the provisions of the formal agreement with the OCC.
Actual results may differ materially from the results anticipated in these forward-looking statements. Factors that might cause such a difference include, among other matters, changes in interest rates and market prices that could affect the net interest margin, asset valuation, and expense levels; changes in local economic and business conditions in the markets we serve, including, without limitation, changes related to the oil and gas industries that could adversely affect customers and their ability to repay borrowings under agreed upon terms, adversely affect the value of the underlying collateral related to their borrowings, and reduce demand for loans; increases in competitive pressure in the banking and financial services industries; increased competition for deposits and loans which could affect compositions, rates and terms; changes in the levels of prepayments received on loans and investment securities that adversely affect the yield and value of the earning assets; our ability to successfully implement and manage our recently announced strategic initiatives; costs and expenses associated with our strategic initiatives and possible changes in the size and components of the expected costs and charges associated with our strategic initiatives; our ability to realize the anticipated benefits and cost savings from our strategic initiatives within the anticipated time frame, if at all; the ability of our strategic initiatives to adequately address the anticipated concerns of the Office of the Comptroller of the Currency (the "OCC") in its current examination of us and the ability of the Company to comply with the terms of the formal agreement with the OCC; credit losses due to loan concentration, particularly our energy lending and legacy commercial real estate portfolios; a deviation in actual experience from the underlying assumptions used to determine and establish our allowance for loan losses ("ALLL"), which could result in greater than expected loan losses; the adequacy of the level of our ALLL and the amount of loan loss provisions required in future periods including the impact of implementation of the new CECL (current expected credit loss) methodology; future examinations by our regulatory authorities, including the possibility that the regulatory authorities may, among other things, impose conditions on our operations or require us to increase our allowance for loan losses or write-down assets; changes in the availability of funds resulting from reduced liquidity or increased costs; the timing and impact of future acquisitions or divestitures, the success or failure of integrating acquired operations, and the ability to capitalize on growth opportunities upon entering new markets; the ability to acquire, operate, and maintain effective and efficient operating systems; increased asset levels and changes in the composition of assets that would impact capital levels and regulatory capital ratios; loss of critical personnel and the challenge of hiring qualified personnel at reasonable compensation levels; legislative and regulatory changes, including the impact of regulations under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 and other changes in banking, securities and tax laws and regulations and their application by our regulators, changes in the scope and cost of FDIC insurance and other coverage; regulations and restrictions resulting from our participation in government-sponsored programs such as the U.S. Treasury's Small Business Lending Fund, including potential retroactive changes in such programs; changes in accounting principles, policies, and guidelines applicable to financial holding companies and banking; increases in cybersecurity risk, including potential business disruptions or financial losses; acts of war, terrorism, cyber intrusion, weather, or other catastrophic events beyond our control; and other factors discussed under the heading "Risk Factors" in MidSouth's Annual Report on Form 10-K for the year ended December 31, 2016 filed with the SEC on March 16, 2017 and in its other filings with the SEC.
MidSouth does not undertake any obligation to publicly update or revise any of these forward-looking statements, whether to reflect new information, future events or otherwise, except as required by law.
MIDSOUTH BANCORP, INC. and SUBSIDIARIES
Condensed Consolidated Financial Information (unaudited)
(in thousands except per share data)
-----------------------------------
Quarter Quarter Quarter Quarter Quarter
Ended Ended Ended Ended Ended
EARNINGS DATA 9/30/2017 6/30/2017 3/31/2017 12/31/2016 9/30/2016
--------- --------- --------- ---------- ---------
Total interest income $20,379 $19,758 $19,531 $19,694 $19,667
Total interest expense 1,566 1,512 1,465 1,459 1,414
----- ----- ----- ----- -----
Net interest income 18,813 18,246 18,066 18,235 18,253
------ ------ ------ ------ ------
FTE net interest income 19,003 18,442 18,279 18,478 18,472
------ ------ ------ ------ ------
Provision for loan losses 4,300 12,500 2,800 2,600 2,900
----- ------ ----- ----- -----
Non-interest income 5,486 5,223 5,044 5,071 5,152
Non-interest expense 17,759 19,604 17,230 17,636 17,114
------ ------ ------ ------ ------
Earnings (loss) before income taxes 2,240 (8,635) 3,080 3,070 3,391
Income tax expense (benefit) 574 (3,221) 589 871 993
--- ------ --- --- ---
Net earnings (loss) 1,666 (5,414) 2,491 2,199 2,398
Dividends on preferred stock 810 811 811 812 811
Net earnings (loss) available to common
shareholders $856 $(6,225) $1,680 $1,387 $1,587
==== ======= ====== ====== ======
PER COMMON SHARE DATA
Basic earnings (loss) per share $0.05 $(0.51) $0.15 $0.12 $0.14
Diluted earnings (loss) per share 0.05 (0.51) 0.15 0.12 0.14
Diluted earnings (loss) per share,
operating (Non-GAAP)(*) 0.07 (0.38) 0.15 0.12 0.14
Quarterly dividends per share 0.01 0.09 0.09 0.09 0.09
Book value at end of period 13.70 13.76 15.37 15.25 15.58
Tangible book value at period end (Non-
GAAP)(*) 10.92 10.87 11.28 11.13 11.44
Market price at end of period 12.05 11.75 15.30 13.60 10.40
Shares outstanding at period end 16,548,829 16,026,355 11,383,914 11,362,716 11,362,716
Weighted average shares outstanding
Basic 16,395,317 12,227,456 11,264,394 11,271,948 11,262,282
Diluted 16,395,740 12,237,299 11,282,491 11,273,302 11,262,710
AVERAGE BALANCE SHEET DATA
Total assets $1,954,343 $1,926,408 $1,932,818 $1,960,436 $1,927,351
Loans and leases 1,254,885 1,254,402 1,274,213 1,277,555 1,268,270
Total deposits 1,546,837 1,551,498 1,569,188 1,591,814 1,562,193
Total common equity 227,948 187,762 174,785 176,747 177,866
Total tangible common equity (Non-
GAAP)(*) 181,851 141,389 128,124 129,821 130,662
Total equity 269,035 228,871 215,895 217,857 218,976
SELECTED RATIOS
Annualized return on average assets,
operating (Non-GAAP)(*) 0.25% -0.97% 0.35% 0.28% 0.33%
Annualized return on average common
equity, operating (Non-GAAP)(*) 2.13% -10.00% 3.89% 3.12% 3.55%
Annualized return on average tangible
common equity, operating (Non-
GAAP)(*) 2.67% -13.28% 5.31% 4.25% 4.83%
Pre-tax, pre-provision annualized
return on average assets, operating
(Non-GAAP)(*) 1.44% 1.30% 1.23% 1.15% 1.30%
Efficiency ratio, operating (Non-
GAAP)(*) 70.43% 73.11% 74.51% 75.67% 73.04%
Average loans to average deposits 81.13% 80.85% 81.20% 80.26% 81.19%
Taxable-equivalent net interest margin 4.20% 4.18% 4.18% 4.09% 4.17%
Tier 1 leverage capital ratio 12.84% 12.66% 10.27% 10.11% 10.27%
CREDIT QUALITY
Allowance for loan and lease losses
(ALLL) as a % of total loans 2.03% 1.99% 1.93% 1.90% 1.83%
Nonperforming assets to tangible equity
+ ALLL 21.83% 23.50% 30.34% 33.88% 32.98%
Nonperforming assets to total loans,
other real estate owned and other
repossessed assets 4.35% 4.54% 4.62% 5.06% 5.03%
Annualized QTD net charge-offs to
total loans 1.26% 4.01% 0.83% 0.46% 0.32%
(*)See reconciliation of Non-
GAAP financial measures on pages
8-10.
MIDSOUTH BANCORP, INC. and SUBSIDIARIES
Condensed Consolidated Balance Sheets (unaudited)
(in thousands)
-------------
BALANCE SHEET September 30, June 30, March 31, December 31, September 30,
2017 2017 2017 2016 2016
---- ---- ---- ---- ----
Assets
Cash and cash equivalents $163,123 $131,437 $78,471 $82,228 $126,667
-------- -------- ------- ------- --------
Securities available-for-sale 326,222 348,580 357,803 341,873 316,145
Securities held-to-maturity 83,739 87,462 91,242 98,211 103,412
------ ------ ------ ------ -------
Total investment securities 409,961 436,042 449,045 440,084 419,557
------- ------- ------- ------- -------
Other investments 12,200 11,666 11,362 11,355 11,339
Total loans 1,235,969 1,240,253 1,272,000 1,284,082 1,272,800
Allowance for loan losses (25,053) (24,674) (24,578) (24,372) (23,268)
------- ------- ------- ------- -------
Loans, net 1,210,916 1,215,579 1,247,422 1,259,710 1,249,532
--------- --------- --------- --------- ---------
Premises and equipment 64,969 65,739 68,216 68,954 69,778
Goodwill and other intangibles 45,963 46,239 46,516 46,792 47,069
Other assets 39,934 38,867 33,907 34,217 29,978
------ ------ ------ ------ ------
Total assets $1,947,066 $1,945,569 $1,934,939 $1,943,340 $1,953,920
========== ========== ========== ========== ==========
Liabilities and Shareholders'
Equity
Non-interest bearing deposits $428,183 $428,419 $426,998 $414,921 $403,301
Interest-bearing deposits 1,127,752 1,107,801 1,145,946 1,164,509 1,181,906
--------- --------- --------- --------- ---------
Total deposits 1,555,935 1,536,220 1,572,944 1,579,430 1,585,207
Securities sold under
agreements to repurchase 54,875 90,799 89,807 94,461 95,210
Short-term FHLB advances 12,500 - - - -
Long-term FHLB advances 25,110 25,211 25,318 25,424 25,531
Junior subordinated debentures 22,167 22,167 22,167 22,167 22,167
Other liabilities 8,836 9,602 8,641 7,482 7,679
----- ----- ----- ----- -----
Total liabilities 1,679,423 1,683,999 1,718,877 1,728,964 1,735,794
--------- --------- --------- --------- ---------
Total shareholders' equity 267,643 261,570 216,062 214,376 218,126
------- ------- ------- ------- -------
Total liabilities and
shareholders' equity $1,947,066 $1,945,569 $1,934,939 $1,943,340 $1,953,920
========== ========== ========== ========== ==========
MIDSOUTH BANCORP, INC. and SUBSIDIARIES
Condensed Consolidated Income Statements (unaudited)
(in thousands except per share data)
-----------------------------------
Percent Change
--------------
EARNINGS STATEMENT Three Months Ended 3Q17 vs. 3Q17 vs. Nine Months Ended Percent
2Q17 3Q16
---- ----
9/30/2017 6/30/2017 9/30/2016 9/30/2017 9/30/2016 Change
--------- --------- --------- --------- --------- ------
Interest income:
Loans, including fees $17,064 $16,440 $16,688 3.8% 2.3% $49,941 $49,424 1.0%
Investment securities 2,639 2,790 2,399 -5.4% 10.0% 8,163 7,253 12.5%
Accretion of purchase accounting
adjustments 265 291 399 -8.9% -33.6% 741 1,101 -32.7%
Other interest income 411 237 181 73.4% 127.1% 823 558 47.5%
--- --- --- --- ---
Total interest income 20,379 19,758 19,667 3.1% 3.6% 59,668 58,336 2.3%
------ ------ ------ ------ ------
Interest expense:
Deposits 1,094 973 919 12.4% 19.0% 3,002 2,753 9.0%
Borrowings 350 416 419 -15.9% -16.5% 1,177 1,269 -7.2%
Junior subordinated debentures 212 212 170 0.0% 24.7% 632 507 24.7%
Accretion of purchase accounting
adjustments (90) (89) (94) 1.1% -4.3% (268) (298) -10.1%
--- --- --- ---- ----
Total interest expense 1,566 1,512 1,414 3.6% 10.7% 4,543 4,231 7.4%
----- ----- ----- ----- -----
Net interest income 18,813 18,246 18,253 3.1% 3.1% 55,125 54,105 1.9%
Provision for loan losses 4,300 12,500 2,900 -65.6% 48.3% 19,600 8,000 145.0%
----- ------ ----- ------ -----
Net interest income after provision for
loan losses 14,513 5,746 15,353 152.6% -5.5% 35,525 46,105 -22.9%
------ ----- ------ ------ ------
Noninterest income:
Service charges on deposit accounts 2,463 2,396 2,584 2.8% -4.7% 7,339 7,404 -0.9%
ATM and debit card income 1,687 1,766 1,620 -4.5% 4.1% 5,156 4,897 5.3%
Gain on securities, net (non-
operating)(*) 338 3 - 11166.7% - 347 20 1635.0%
Mortgage lending 155 167 190 -7.2% -18.4% 465 422 10.2%
Other charges and fees 843 891 758 -5.4% 11.2% 2,446 2,292 6.7%
--- --- --- ----- -----
Total non-interest income 5,486 5,223 5,152 5.0% 6.5% 15,753 15,035 4.8%
----- ----- ----- ------ ------
Noninterest expense:
Salaries and employee benefits 7,849 8,110 8,034 -3.2% -2.3% 24,648 24,206 1.8%
Occupancy expense 3,443 3,428 3,635 0.4% -5.3% 10,494 10,899 -3.7%
ATM and debit card 654 713 833 -8.3% -21.5% 2,088 2,410 -13.4%
Legal and professional fees 1,404 936 516 50.0% 172.1% 2,726 1,335 104.2%
FDIC premiums 448 430 365 4.2% 22.7% 1,275 1,214 5.0%
Marketing 302 262 442 15.3% -31.7% 844 1,174 -28.1%
Corporate development 189 253 395 -25.3% -52.2% 758 1,149 -34.0%
Data processing 640 667 527 -4.0% 21.4% 1,928 1,463 31.8%
Printing and supplies 81 135 191 -40.0% -57.6% 399 602 -33.7%
Expenses on ORE, net 15 92 100 -83.7% -85.0% 186 330 -43.6%
Amortization of core deposit intangibles 277 276 277 0.4% 0.0% 830 830 0.0%
Severance and retention accruals (non-
operating)(*) - 1,341 - -100.0% - 1,341 - -
One-time charge related to discontinued
branch projects (non-operating)(*) - 465 - -100.0% - 465 - -
One-time charge related to closure of
branches (non-operating)(*) 903 - - 903 - -
Write-down of assets held for sale
(non-operating)(*) - 570 - -100.0% - 570 - -
Other non-interest expense 1,554 1,926 1,799 -19.3% -13.6% 5,138 5,302 -3.1%
----- ----- ----- ----- -----
Total non-interest expense 17,759 19,604 17,114 -9.4% 3.8% 54,593 50,914 7.2%
------ ------ ------ ------ ------
Earnings (loss) before income taxes 2,240 (8,635) 3,391 -125.9% -33.9% (3,315) 10,226 -132.4%
Income tax expense 574 (3,221) 993 -117.8% -42.2% (2,058) 2,986 -168.9%
--- ------ --- ------ -----
Net earnings (loss) 1,666 (5,414) 2,398 -130.8% -30.5% (1,257) 7,240 -117.4%
Dividends on preferred stock 810 811 811 -0.1% -0.1% 2,432 2,049 18.7%
--- --- --- ----- -----
Net earnings (loss) available to common
shareholders $856 $(6,225) $1,587 -113.8% -46.1% $(3,689) $5,191 -171.1%
==== ======= ====== ======= ======
Earnings (loss) per common share,
diluted $0.05 $(0.51) $0.14 -109.8% -64.3% $(0.28) $0.46 -160.9%
===== ====== ===== ====== =====
Operating earnings (loss) per common
share, diluted (Non-GAAP)(*) $0.07 $(0.38) $0.14 -118.4% -50.0% $(0.13) $0.46 -128.3%
===== ====== ===== ====== =====
(*)See reconciliation of Non-GAAP financial measures on page 8-10.
Note: Prior period information presented above has been adjusted to reflect a reclass of certain credit
card income from interest income to other non-interest income as well as certain wire fee income from
other non-interest income into service charges on deposit accounts.
MIDSOUTH BANCORP, INC. and SUBSIDIARIES
Composition of Loans and Deposits and Asset Quality Data (unaudited)
(in thousands)
-------------
COMPOSITION OF LOANS September 30, June 30, Sep 17 vs Jun 17 % March 31, December 31, September 30, Sep 17 vs Sep 16 %
Change Change
------ ------
2017 2017 2017 2016 2016
---- ---- ---- ---- ----
Commercial, financial, and agricultural $447,482 $451,767 -0.9% $469,815 $459,574 $463,031 -3.4%
Lease financing receivable 760 866 -12.2% 969 1,095 1,449 -47.6%
Real estate - construction 90,088 98,695 -8.7% 100,248 100,959 96,365 -6.5%
Real estate - commercial 473,046 461,064 2.6% 464,859 481,155 464,853 1.8%
Real estate - residential 155,676 156,394 -0.5% 159,426 157,872 155,653 0.0%
Installment loans to individuals 63,148 70,031 -9.8% 75,258 82,660 88,537 -28.7%
Other 5,769 1,436 301.7% 1,425 767 2,912 98.1%
----- ----- ----- --- -----
Total loans $1,235,969 $1,240,253 -0.3% $1,272,000 $1,284,082 $1,272,800 -2.9%
========== ========== ========== ========== ==========
COMPOSITION OF DEPOSITS
September 30, June 30, Sep 17 vs Jun 17 % March 31, December 31, September 30, Sep 17 vs Sep 16 %
Change Change
------ ------
2017 2017 2017 2016 2016
---- ---- ---- ---- ----
Noninterest bearing $428,183 $428,419 -0.1% $426,998 $414,921 $403,301 6.2%
NOW & other 461,740 465,505 -0.8% 489,789 472,484 465,850 -0.9%
Money market/savings 473,023 493,232 -4.1% 505,669 539,815 557,068 -15.1%
Time deposits of less than $100,000 120,685 75,196 60.5% 75,579 75,940 78,785 53.2%
Time deposits of $100,000 or more 72,304 73,868 -2.1% 74,909 76,270 80,203 -9.8%
------ ------ ------ ------ ------
Total deposits $1,555,935 $1,536,220 1.3% $1,572,944 $1,579,430 $1,585,207 -1.8%
========== ========== ========== ========== ==========
ASSET QUALITY DATA
September 30, June 30, March 31, December 31, September 30,
2017 2017 2017 2016 2016
---- ---- ---- ---- ----
Nonaccrual loans $51,289 $54,810 $56,443 $62,580 $60,522
Loans past due 90 days and over 402 165 775 268 968
--- --- --- --- ---
Total nonperforming loans 51,691 54,975 57,218 62,848 61,490
Other real estate 1,931 1,387 1,643 2,175 2,317
Other repossessed assets 234 36 30 16 283
--- --- --- --- ---
Total nonperforming assets $53,856 $56,398 $58,891 $65,039 $64,090
======= ======= ======= ======= =======
Troubled debt restructurings, accruing $1,557 $1,653 $1,995 $152 $153
====== ====== ====== ==== ====
Nonperforming assets to total assets 2.77% 2.90% 3.04% 3.35% 3.28%
Nonperforming assets to total loans +
ORE + other repossessed assets 4.35% 4.54% 4.62% 5.06% 5.03%
ALLL to nonperforming loans 48.47% 44.88% 42.96% 38.78% 37.84%
ALLL to total loans 2.03% 1.99% 1.93% 1.90% 1.83%
Quarter-to-date charge-offs $4,381 $12,659 $2,906 $1,835 $1,161
Quarter-to-date recoveries 460 255 312 339 151
--- --- --- --- ---
Quarter-to-date net charge-offs $3,921 $12,404 $2,594 $1,496 $1,010
====== ======= ====== ====== ======
Annualized QTD net charge-offs to total
loans 1.26% 4.01% 0.83% 0.46% 0.32%
MIDSOUTH BANCORP, INC. and SUBSIDIARIES
Loan Portfolio - Quarterly Roll Forward (unaudited)
(in thousands)
-------------
Three Months Ended
------------------
September 30, June 30, September 30,
2017 2017 2016
---- ---- ----
LOAN ACTIVITY
Loans originated $87,377 $72,316 $87,991
Repayments (91,856) (116,885) (65,871)
Increases on renewals 5,773 2,531 4,749
Change in lines of credit (6,931) 9,151 (20,079)
Change in allowance for
loan losses (379) (96) (1,890)
Other 1,353 1,140 3,621
Net change in loans $(4,663) $(31,843) $8,521
======= ======== ======
MIDSOUTH BANCORP, INC. and SUBSIDIARIES
Tangible Common Equity to Tangible Assets and Regulatory Ratios (unaudited)
(in thousands)
-------------
COMPUTATION OF TANGIBLE COMMON EQUITY
TO TANGIBLE ASSETS
September 30, September 30,
2017 2016
---- ----
Total equity $267,643 $218,126
Less preferred equity 40,987 41,110
------ ------
Total common equity 226,656 177,016
Less goodwill 42,171 42,171
Less intangibles 3,792 4,898
----- -----
Tangible common equity $180,693 $129,947
======== ========
Total assets $1,947,066 $1,953,920
Less goodwill 42,171 42,171
Less intangibles 3,792 4,898
----- -----
Tangible assets $1,901,103 $1,906,851
========== ==========
Tangible common equity to tangible
assets 9.50% 6.81%
REGULATORY CAPITAL
Common equity tier 1 capital $182,768 $130,349
Tier 1 capital 245,254 192,958
Total capital 263,365 211,468
Regulatory capital ratios:
Common equity tier 1 capital ratio 12.68% 8.83%
Tier 1 risk-based capital ratio 17.01% 13.07%
Total risk-based capital ratio 18.27% 14.33%
Tier 1 leverage ratio 12.84% 10.27%
MIDSOUTH BANCORP, INC. and SUBSIDIARIES
Quarterly Yield Analysis (unaudited)
(in thousands)
-------------
YIELD ANALYSIS Three Months Ended Three Months Ended Three Months Ended Three Months Ended Three Months Ended
September 30, 2017 June 30, 2017 March 31, 2017 December 31, 2016 September 30, 2016
------------------ ------------- -------------- ----------------- ------------------
Tax Tax Tax Tax Tax
Average Equivalent Yield/ Average Equivalent Yield/ Average Equivalent Yield/ Average Equivalent Yield/ Average Equivalent Yield/
Balance Interest Rate Balance Interest Rate Balance Interest Rate Balance Interest Rate Balance Interest Rate
------- -------- ---- ------- -------- ---- ------- -------- ---- ------- -------- ---- ------- -------- ----
Taxable securities $372,648 $2,276 2.44% $387,441 $2,416 2.49% $382,105 $2,327 2.44% $348,673 $1,965 2.25% $354,770 $1,983 2.24%
Tax-exempt securities 55,129 553 4.01% 56,622 570 4.03% 60,618 620 4.09% 66,549 705 4.24% 60,544 635 4.20%
------ --- ------ --- ------ --- ------ --- ------ ---
Total investment securities 427,777 2,829 2.65% 444,063 2,986 2.69% 442,723 2,947 2.66% 415,222 2,670 2.57% 415,314 2,618 2.52%
----- ----- ----- ----- -----
Federal funds sold 4,319 13 1.18% 3,573 9 1.00% 3,571 6 0.67% 3,261 5 0.60% 2,703 3 0.43%
Time and interest bearing deposits in
other banks 94,675 305 1.26% 55,331 150 1.07% 41,785 85 0.81% 90,527 125 0.54% 64,444 83 0.50%
Other investments 12,098 93 3.07% 11,493 78 2.71% 11,355 84 2.96% 11,342 78 2.75% 11,253 95 3.38%
Loans 1,254,885 17,329 5.48% 1,254,402 16,731 5.35% 1,274,213 16,622 5.29% 1,277,555 17,059 5.31% 1,268,270 17,087 5.36%
--------- ------ --------- ------ --------- ------ --------- ------ --------- ------
Total interest earning assets 1,793,754 20,569 4.55% 1,768,862 19,954 4.52% 1,773,647 19,744 4.51% 1,797,907 19,937 4.41% 1,761,984 19,886 4.49%
------ ------ ------ ------ ------
Non-interest earning assets 160,589 157,546 159,171 162,529 165,367
------- ------- ------- ------- -------
Total assets $1,954,343 $1,926,408 $1,932,818 $1,960,436 $1,927,351
========== ========== ========== ========== ==========
Interest-bearing liabilities:
Deposits $1,118,593 $1,094 0.39% $1,125,482 $973 0.35% $1,155,407 $935 0.33% $1,179,174 $929 0.31% $1,170,660 $915 0.31%
Repurchase agreements 75,654 149 0.78% 90,807 236 1.04% 92,571 234 1.03% 94,609 241 1.01% 88,560 236 1.06%
Short-term FHLB advances 6,522 19 1.14% - - 0.00% - - 0.00% - - 0.00% 0 - 0.00%
Long-term FHLB advances 25,155 92 1.43% 25,260 91 1.43% 25,370 88 1.39% 25,474 92 1.41% 25,581 93 1.42%
Junior subordinated debentures 22,167 212 3.74% 22,167 212 3.78% 22,167 208 3.75% 22,167 197 3.48% 22,167 170 3.00%
------ --- ------ --- ------ --- ------ --- ------ ---
Total interest bearing liabilities 1,248,091 1,566 0.50% 1,263,716 1,512 0.48% 1,295,515 1,465 0.46% 1,321,424 1,459 0.44% 1,306,968 1,414 0.43%
----- ----- ----- ----- -----
Non-interest bearing liabilities 437,217 433,821 421,408 421,155 401,407
Shareholders' equity 269,035 228,871 215,895 217,857 218,976
------- ------- ------- ------- -------
Total liabilities and shareholders'
equity $1,954,343 $1,926,408 $1,932,818 $1,960,436 $1,927,351
========== ========== ========== ========== ==========
Net interest income (TE) and spread $19,003 4.05% $18,442 4.04% $18,279 4.05% $18,478 3.97% $18,472 4.06%
======= ======= ======= ======= =======
Net interest margin 4.20% 4.18% 4.18% 4.09% 4.17%
Core net interest margin (Non-GAAP)(*) 4.12% 4.09% 4.11% 3.98% 4.05%
(*) See reconciliation of Non-
GAAP financial measures on page
8-10.
Note: Prior period information
presented above has been
adjusted to reflect a reclass of
certain credit card income from
interest income to non-interest
income.
MIDSOUTH BANCORP, INC. and SUBSIDIARIES
Reconciliation of Non-GAAP Financial Measures (unaudited)
(in thousands except per share data)
-----------------------------------
Certain financial information included in the earnings release and the associated Condensed Consolidated Financial Information (unaudited) is determined by methods other than in accordance with GAAP. We are providing disclosure of the reconciliation of these non-GAAP financial
measures to the most comparable GAAP financial measures. "Tangible common equity" is defined as total common equity reduced by intangible assets. "Core net interest margin" is defined as reported net interest margin less purchase accounting adjustments. "Annualized return on
average assets, operating" is defined as net earnings available to common shareholders adjusted for specified one-time items divided by average assets. "Annualized return on average common equity, operating" is defined as net earnings available to common shareholders adjusted
for specified one-time items divided by average common equity. "Annualized return on average tangible common equity, operating" is defined as net earnings available to common shareholders adjusted for specified one-time items divided by average tangible common equity. "Pre-
tax, pre-provision annualized return on average assets, operating" is defined as pre-tax, pre-provision earnings adjusted for specified one-time items divided by average assets. "Tangible book value per common share" is defined as tangible common equity divided by total
common shares outstanding. "Diluted earnings per share, operating" is defined as net earnings available to common shareholders adjusted for specified one-time items divided by diluted weighted-average shares. The GAAP-based efficiency ratio is measured as noninterest
expense as a percentage of net interest income plus noninterest income. The non-GAAP efficiency ratio excludes specified one-time items in addition to securities gains and losses and gains and losses on the sale/valuation of other real estate owned and other assets
repossessed.
We use non-GAAP measures because we believe they are useful for evaluating our financial condition and performance over periods of time, as well as in managing and evaluating our business and in discussions about our performance. We also believe these non-GAAP financial
measures provide users of our financial information with a meaningful measure for assessing our financial condition as well as comparison to financial results for prior periods. These results should not be viewed as a substitute for results determined in accordance with GAAP,
and are not necessarily comparable to non-GAAP performance measures that other companies may use.
Three Months Ended
------------------
September 30, June 30, March 31, December 31, September 30,
2017 2017 2017 2016 2016
---- ---- ---- ---- ----
AVERAGE BALANCE SHEET DATA
Total average assets A $1,954,343 $1,926,408 $1,932,818 $1,960,436 $1,927,351
Total equity $269,035 $228,871 $215,895 $217,857 $218,976
Less preferred equity 41,087 41,109 41,110 41,110 41,110
------ ------ ------ ------ ------
Total common equity B $227,948 $187,762 $174,785 $176,747 $177,866
Less intangible assets 46,097 46,373 46,661 46,926 47,204
------ ------ ------ ------ ------
Tangible common equity C $181,851 $141,389 $128,124 $129,821 $130,662
===
MIDSOUTH BANCORP, INC. and SUBSIDIARIES
Reconciliation of Non-GAAP Financial Measures (unaudited) (continued)
(in thousands except per share data)
-----------------------------------
Three Months Ended
------------------
September 30, June 30, March 31, December 31, September 30,
CORE NET INTEREST MARGIN 2017 2017 2017 2016 2016
---- ---- ---- ---- ----
Net interest income (FTE) $19,003 $18,442 $18,279 $18,478 $18,472
Less purchase accounting adjustments (355) (380) (274) (458) (493)
Core net interest income, net of purchase
accounting adjustments D $18,648 $18,062 $18,005 $18,020 $17,979
===
Total average earnings assets $1,793,754 $1,768,862 $1,773,647 $1,797,907 $1,761,984
Add average balance of loan valuation discount 1,504 1,720 1,964 2,316 2,634
Average earnings assets, excluding loan
valuation discount E $1,795,258 $1,770,582 $1,775,611 $1,800,223 $1,764,618
===
Core net interest margin D/E 4.12% 4.09% 4.11% 3.98% 4.05%
=====
Three Months Ended
------------------
September 30, June 30, March 31, December 31, September 30,
RETURN RATIOS 2017 2017 2017 2016 2016
---- ---- ---- ---- ----
Net earnings (loss) available to common shareholders $856 $(6,225) $1,680 $1,387 $1,587
Severance and retention accruals, after-tax - 872 - - -
One-time charge related to discontinued branch projects,
after-tax - 302 - - -
One-time charge related to closure of branches, after-tax 587 - - - -
Write-down of assets held for sale, after-tax - 371 - - -
Net gain on sale of securities, after-tax (220) (2) (4) - -
Net earnings (loss) available to common
shareholders, operating F $1,223 $(4,682) $1,676 $1,387 $1,587
===
Earnings (loss) before income taxes $2,240 $(8,635) $3,080 $3,070 $3,391
Severance and retention accruals - 1,341 - - -
One-time charge related to discontinued branch projects - 465 - - -
One-time charge related to closure of branches 903 - - - -
Write-down of assets held for sale - 570 - - -
Net gain on sale of securities (338) (3) (6) - -
Provision for loan losses 4,300 12,500 2,800 2,600 2,900
Pre-tax, pre-provision earnings, operating G $7,105 $6,238 $5,874 $5,670 $6,291
===
Annualized return on average assets,
operating F/A 0.25% -0.97% 0.35% 0.28% 0.33%
Annualized return on average common equity,
operating F/B 2.13% -10.00% 3.89% 3.12% 3.55%
Annualized return on average tangible common
equity, operating F/C 2.67% -13.28% 5.31% 4.25% 4.83%
Pre-tax, pre-provision annualized return
on average assets, operating G/A 1.44% 1.30% 1.23% 1.15% 1.30%
MIDSOUTH BANCORP, INC. and SUBSIDIARIES
Reconciliation of Non-GAAP Financial Measures (unaudited) (continued)
(in thousands except per share data)
-----------------------------------
Three Months Ended Nine Months Ended
------------------ -----------------
September 30, June 30, March 31, December 31, September 30, September 30, September 30,
PER COMMON SHARE DATA 2017 2017 2017 2016 2016 2017 2016
---- ---- ---- ---- ---- ---- ----
Diluted earnings (loss) per share $0.05 $(0.51) $0.15 $0.12 $0.14 $(0.28) $0.46
Effect of severance and retention
accruals - 0.08 - - - 0.07 -
Effect of one-time charge
related to discontinued branch
projects - 0.02 - - - 0.02 -
Effect of one-time charge
related to closure of branches 0.03 - - - - 0.04
Effect of write-down of assets
held for sale - 0.03 - - - 0.03 -
Effect of gain on sales of
securities (0.01) - - - - (0.01) -
Diluted earnings (loss) per
share, operating $0.07 $(0.38) $0.15 $0.12 $0.14 $(0.13) $0.46
===== ====== ===== ===== ===== ====== =====
Book value per common share $13.70 $13.76 $15.37 $15.25 $15.58
Effect of intangible assets per
share 2.78 2.89 4.09 4.12 4.14
---- ---- ---- ---- ----
Tangible book value per common
share $10.92 $10.87 $11.28 $11.13 $11.44
====== ====== ====== ====== ======
Three Months Ended
------------------
September 30, June 30, March 31, December 31, September 30,
EFFICIENCY RATIO 2017 2017 2017 2016 2016
---- ---- ---- ---- ----
Net interest income $18,813 $18,246 $18,066 $18,235 $18,253
Noninterest income 5,486 5,223 5,044 5,071 5,152
Net gain on sale of securities (338) (3) (6) - -
---- --- --- --- ---
Noninterest income (non-GAAP) $5,148 $5,220 $5,038 $5,071 $5,152
====== ====== ====== ====== ======
Total revenue H $24,299 $23,469 $23,110 $23,306 $23,405
Total revenue (non-
GAAP) I $23,961 $23,466 $23,104 $23,306 $23,405
Noninterest expense J $17,759 $19,604 $17,230 $17,636 $17,114
Severance and retention accruals - (1,341) - - -
One-time charge related to
discontinued branch projects - (465) - - -
One-time charge related to
closure of branches (903) - - - -
Write-down of assets held for
sale - (570) - - -
Net gain (loss) on sale/
valuation of other real estate
owned 19 (72) (15) - (19)
--- --- --- --- ---
Noninterest expense
(non-GAAP) K $16,875 $17,156 $17,215 $17,636 $17,095
===
Efficiency ratio
(GAAP) J/H 73.09% 83.53% 74.56% 75.67% 73.12%
Efficiency ratio
(non-GAAP) K/I 70.43% 73.11% 74.51% 75.67% 73.04%
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SOURCE MidSouth Bancorp, Inc.
