LAFAYETTE, La., April 24 /PRNewswire-FirstCall/ -- MidSouth Bancorp, Inc. (AMEX:MSL) today reported net income of $1,199,000 for the first quarter ended March 31, 2008, a decrease of 38.4% from net income of $1,946,000 reported for the first quarter of 2007 and 36.7% below net income of $1,894,000 reported for the fourth quarter of 2007. Diluted earnings per share for the first quarter of 2008 were $0.18 per share, a decrease of 37.9% from the $0.29 per share for the first quarter of 2007 and 35.7% below the $0.28 per share for the fourth quarter of 2007.
First quarter 2008 earnings were impacted by a $1,200,000 provision for loan losses prompted by credit downgrades related to borrower liquidity concerns and softness in the real estate market as a result of the ongoing housing crisis throughout the country. General market conditions and concern for borrower deterioration was reflected in an increase of $1.8 million in loans past due 90 days and over and an increase of $325,000 in nonaccrual loans for the first quarter of 2008 compared to the first quarter of 2007. Additionally, $189,000 of the provision expense was necessary to cover probable losses resulting from the indirect auto loan fraud reported in the fourth quarter 2007 earnings release. In the fourth quarter of 2007, provisions totaling $525,000 were expensed, $300,000 of which was related to the indirect loan fraud and $225,000 to residential real estate development credits. No loan loss provisions were expensed in the first quarter of 2007.
C. R. "Rusty" Cloutier, President and Chief Executive Officer, commenting on the results noted, "Our first quarter 2008 results were negatively impacted by the increased provision for loan losses, primarily related to current economic conditions. Additionally, the 200 basis point rate drop by the Federal Reserve Open Market Committee in the first quarter lowered our net interest margin in linked-quarter comparison." Mr. Cloutier added, "On the positive side, we are staying on course with strategic initiatives that are focused on adding long-term, lasting value to our franchise. We remain encouraged by demographics that reflect continued job growth, low unemployment, and increased wages in our existing markets and remain cautiously optimistic that our conservative approach in credit underwriting and investing activities will allow us to weather the storm caused by the housing crisis." First quarter 2008 results were positively impacted by a lower effective tax rate of approximately 12.35% that reduced income tax expense by $407,000 compared to the first quarter of 2007. The effective tax rate for first quarter 2007 was 22.84%. The lower effective tax rate resulted from decreased earnings due to the $1,200,000 expensed in provisions for loan losses combined with sustained nontaxable interest income from municipal securities within the investment portfolio.
Quarterly revenues for the Company, defined as net interest income and non-interest income, increased $1,260,000, or 10.9%, for the first quarter of 2008 compared to the first quarter of 2007. The improvement in revenues resulted primarily from an increase of $936,000 in net interest income, which was driven by a 13.8% increase in average loan volume in quarterly comparison. Non-interest income increased $324,000, primarily due to an increase in debit card and ATM transaction fee income earned on a higher volume of transactions processed. Additionally, a one-time payment totaling $131,000 was received from VISA during the first quarter 2008. The one-time payment was related to VISA's redemption of a portion of its Class B shares outstanding in connection with its initial public offering. The improvement in quarterly revenues was offset by a $1,214,000 increase in non-interest expenses. The increase in non-interest expenses was primarily attributable to higher salary and employee benefits costs and occupancy expenses associated with the addition of eight new facilities over the past fifteen months, three of which replaced existing facilities.
The Company's total assets for the first quarter ended March 31, 2008 were $937.0 million, a 15.0% increase over the $814.7 million in total assets recorded at March 31, 2007. Deposits were $818.0 million as of March 31, 2008, an increase of $89.2 million, or 12.2%, over the $728.8 million as of March 31, 2007. Total loans were $569.7 million, an increase of $59.1 million, or 11.6%, from $510.6 million as of March 31, 2007. Nonperforming assets to total assets were 0.49% as of March 31, 2008, compared to 0.28 % for the first quarter of 2007 and 0.35% in linked-quarter comparison.
Earnings Analysis Net Interest Income. Net interest income totaled $9,274,000 for the first quarter of 2008, an increase of 11.2 %, or $936,000, from the $8,338,000 reported for the first quarter of 2007. The improvement in net interest income resulted primarily from an increase of $68.4 million in average earning assets. Total taxable-equivalent interest income from earning assets increased $884,000 for the first quarter of 2008 compared to 2007. The increase in taxable-equivalent interest income was primarily due to a $68.9 million increase in average loan volume, partially offset by a 43 basis point decrease in the average yield on loans, from 8.91% to 8.48%. The taxable-equivalent yield on investment securities increased 21 basis points, from 4.93% to 5.14% in quarterly comparison, while the average volume decreased $5.9 million from the first quarter of 2008 to the same period in 2007. A 235 basis point decrease in the yield on federal funds sold reduced interest income by $156,000 in quarterly comparison, despite a $5.4 million average volume increase in federal funds sold for the same period. The yields on loans and overnight federal funds sold declined during the first quarter of 2008 as New York Prime ("Prime") fell 200 basis points, from 7.25% at year-end 2007 to 5.25% at March 31, 2008, and the Federal Reserve Bank Target rate was lowered to 2.25%.
Interest expense for the first quarter of 2008 decreased $66,000 in comparison to the first quarter of 2007. A 49 basis point decrease in the average rate paid on interest-bearing liabilities lessened the impact of a $71.8 million increase in the average volume of interest-bearing liabilities in quarterly comparison. The increase in interest-bearing liabilities was primarily in commercial Platinum money market deposits and in certificates of deposit. The taxable-equivalent net interest margin improved 3 basis points, from 4.85% for the first quarter of 2007 to 4.88% for the first quarter of 2008.
In linked-quarter comparison, average earning assets increased $28.5 million. The average volume of investment securities fell $5.7 million due to maturities and calls in linked-quarter comparison, and loan volume was held to a $5.5 million increase due to a decline in loan demand and a higher volume of loans paid out in the first quarter of 2008. Excess cash flows from the $39.8 million increase in interest-bearing liabilities were invested in overnight federal funds sold earning an average rate of 2.78%. The impact of the $5.5 million increase in loan volume on net interest income was partially offset by a 34 basis point decrease in the average yield on loans, from 8.82% for the fourth quarter of 2007 to 8.48% for the first quarter of 2008. The taxable equivalent net yield on earning assets decreased 39 basis points, from 7.80% for the fourth quarter of 2007 to 7.41% for the first quarter of 2008 and resulted in a $428,000 decrease in taxable-equivalent interest income. A 23 basis point decrease in the average rate paid on interest-bearing liabilities, from 3.42% to 3.19% offset the impact of a $39.8 million increase in average volume and resulted in a $93,000 decrease in interest expense. The taxable-equivalent net interest margin decreased 28 basis points in linked-quarter comparison, from 5.16% to 4.88%, and taxable-equivalent net interest income decreased $335,000.
Non-interest income. Non-interest income for the first quarter of 2008 totaled $3.6 million, or 9.9% above the $3.3 million earned in the first quarter of 2007 and 3.9% below the $3.7 million earned in the fourth quarter of 2007. The increase in prior-year quarterly comparison resulted primarily from an $115,000 increase in debit card and ATM transaction fee income due to a higher volume of transactions processed. Additionally, a one-time payment totaling $131,000 was received from VISA during the first quarter 2008. The one-time payment was related to VISA's redemption of a portion of its Class B shares outstanding in connection with an initial public offering. In linked-quarter comparison, non-interest income decreased $145,000 primarily due to a decrease of $275,000 in insufficient funds fees on deposit accounts. The decline in insufficient funds fees was partially offset by the $131,000 VISA payment.
Operating Expenses. Non-interest expense increased $1.2 million in prior-year quarterly comparison, primarily due to increased salaries and benefits costs and occupancy expenses. Salaries and benefits costs increased $391,000 as the number of full-time equivalent employees increased from 387 at March 31, 2007, to 423 at March 31, 2008, due to franchise expansion and recruitment of talented leaders to support growth. Occupancy expenses increased $378,000, primarily in lease expense and depreciation expenses on fixed assets. Additional increases were recorded in marketing expenses, data processing expenses, education and travel costs and other growth-related expenses. In linked-quarter comparison, non-interest expenses decreased $276,000 primarily attributable to lower group health insurance costs in the first quarter of 2008 due to a decrease in the total dollars of claims processed and decreases in other non-interest expense items including costs of printing and supplies, professional fees, losses on debit card/ATM processing, and recruiting expenses.
Asset Quality. At March 31, 2008, nonperforming assets, including loans past due 90 days and over, totaled $4.6 million, or 0.49% of total assets, as compared to the $2.3 million, or 0.28% of total assets, recorded at March 31, 2007. The increase in non-performing assets in prior year comparison resulted primarily from an increase of $1.8 million in loans past due 90 days and over and an increase in nonaccrual loans of $325,000.
Of the $2.3 million in loans past due 90 days and over at March 31, 2008, one loan totaling $674,000 has been renewed and one loan totaling $87,000 has been paid off. Of the remaining $1.5 million in loans past due 90 days or more, approximately $1.0 million represents two commercial credits. Of the $1.9 million in nonaccrual loans, approximately $800,000 is expected to be returned to accrual status or to be paid off in the second quarter of 2008.
Allowance coverage for nonperforming assets was 132.34% at March 31, 2008, compared to 215.76% at March 31, 2007. Net year-to-date charge-offs were 0.12% of total loans for the first quarter 2008 compared to 0.02% the first quarter of 2007. The increase resulted primarily from $353,000 in indirect auto loans due to fraudulent activity and a $232,000 commercial loan charged-off in the first quarter of 2008. Management's most recent analysis of the Allowance for Loan and Lease Losses ("ALLL") indicated that the ALLL/total loans ratio of 1.08% was appropriate at March 31, 2008.
About MidSouth Bancorp, Inc.
MidSouth Bancorp, Inc. is a bank holding company headquartered in Lafayette, Louisiana and has 34 locations in Louisiana and Texas and more than 120 ATMs. Through its wholly owned subsidiary, MidSouth Bank, N.A., the Company offers complete banking services to commercial and retail customers in south Louisiana and southeast Texas. The group is community oriented and focuses primarily on offering commercial and consumer loan and deposit services to individuals, small, and middle market businesses.
The south Louisiana region has 26 offices extending along the Interstate 10 corridor in south Louisiana located in Lafayette (9), Baton Rouge (2), New Iberia (3), Lake Charles (2), Sulphur, Jeanerette, Jennings, Thibodaux, Cutoff, Opelousas, Breaux Bridge, Cecilia, Morgan City, and Houma. In addition, a new banking facility in the Baton Rouge market is scheduled to open in late April 2008.
The southeast region of Texas currently has 1 loan production office and 7 full-service offices, which are located in Beaumont (3), Conroe (2), Houston, Vidor, and College Station. A commercial loan production office in the greater Houston market was replaced by a full-service banking facility in February 2008 and a new loan production office was established in Conroe during the first quarter.
The Company merged MidSouth Bank Texas, N.A. into MidSouth Bank, and N.A. in the first quarter of 2008. MidSouth Bancorp's common stock is traded on the American Stock Exchange under the symbol MSL.
Forward Looking Statements The Private Securities Litigation Act of 1995 provides a safe harbor for disclosure of information about a company's anticipated future financial performance. This act protects a company from unwarranted litigation if actual results differ from management expectations. This press release reflects management's current views and estimates of future economic circumstances, industry conditions, MidSouth's performance and financial results. A number of factors and uncertainties could cause actual results to differ from anticipated results and expectations. These factors include, but are not limited to, factors identified in Management's Discussion and Analysis under the caption "Forward Looking Statements" contained in the Company's Annual Report on Form 10-K filed with the Securities and Exchange Commission.
MIDSOUTH BANCORP, INC. and SUBSIDIARIES
Condensed Consolidated Financial Information (unaudited)
(in thousands except per share data) For the For the
Quarter Ended Quarter Ended
March 31, % December 31, %
EARNINGS DATA 2008 2007 Change 2007 Change Total interest income $14,312 $13,442 6.5% $14,744 -2.9%
Total interest expense 5,038 5,104 -1.3% 5,131 -1.8%
Net interest income 9,274 8,338 11.2% 9,613 -3.5%
Provision for loan losses 1,200 - - 525 128.6%
Non-interest income 3,587 3,263 9.9% 3,732 -3.9%
Non-interest expense 10,293 9,079 13.4% 10,569 -2.6%
Provision for income tax 169 576 -70.7% 357 -52.7%
Net income $1,199 $1,946 -38.4% $1,894 -36.7% PER COMMON SHARE DATA
Basic earnings per
share (2) $0.18 $0.30 -40.0% $0.29 -37.9%
Diluted earnings per
share (2) $0.18 $0.29 -37.9% $0.28 -35.7% Book value at end of
period (2) $10.65 $9.36 13.8% $10.41 2.3%
Market price at end of
period (2) $18.70 $25.39 -26.3% $23.22 -19.5%
Weighted avg shares
outstanding
Basic (2) 6,585,747 6,552,272 0.5% 6,570,644 0.2%
Diluted (2) 6,621,917 6,646,304 -0.4% 6,638,199 -0.2% AVERAGE BALANCE SHEET DATA
Total assets $884,158 $803,458 10.0% $850,172 4.0%
Earning assets 799,961 731,564 9.3% 771,466 3.7%
Loans and leases 569,154 500,271 13.8% 563,612 1.0%
Interest-bearing deposits 591,775 541,808 9.2% 543,436 8.9%
Total deposits 765,884 717,808 6.7% 726,221 5.5%
Total stockholders'
equity 69,901 60,372 15.8% 67,219 4.0% SELECTED RATIOS 3/31/2008 3/31/2007 12/31/2007
Return on average
assets 0.55% 0.98% -44.5% 0.88% -38.3%
Return on average
total equity 6.90% 13.07% -47.2% 11.18% -38.3%
Return on average
realized equity (1) 7.06% 12.82% -44.9% 11.01% -35.9%
Average equity to
average assets 7.91% 7.51% 5.2% 7.91% 0.0%
Leverage capital
ratio 8.44% 8.50% -0.7% 8.68% -2.8%
Taxable-equivalent
net interest margin 4.88% 4.85% 0.6% 5.16% -5.4% CREDIT QUALITY
Allowance for loan
loses as a % of total
loans 1.08% 0.96% 12.1% 0.99% 9.2%
Nonperforming assets
to total assets 0.49% 0.28% 76.5% 0.35% 40.5%
Net YTD charge-offs
to total loans 0.12% 0.02% 498.5% 0.09% 26.2% (1) Excluding net unrealized gain (loss) on securities available for
sale. (2) On July 18, 2007, the Company announced a 5% stock dividend on its
common stock to holders on record as of September 21, 2007 paid on
October 23, 2007. Per common share data has been adjusted
accordingly.
MIDSOUTH BANCORP, INC. and SUBSIDIARIES
Condensed Consolidated Financial Information (unaudited)
(in thousands) BALANCE SHEET March 31, March 31, % December 31, September 30,
2008 2007 Change 2007 2007
Assets
Cash and cash
equivalents $115,651 $55,027 110.2% $30,873 $30,974
Securities
available-for-sale 181,618 182,285 -0.4% 181,452 181,719
Securities
held-to-maturity 9,747 13,404 -27.3% 10,746 11,515
Total investment
securities 191,365 195,689 -2.2% 192,198 193,234
Total loans 569,745 510,561 11.6% 569,506 553,048
Allowance for loan
losses (6,130) (4,900) 25.1% (5,612) (5,297)
Loans, net 563,615 505,661 11.5% 563,894 547,751
Premises and
equipment 39,967 31,488 26.9% 39,229 36,450
Goodwill and other
intangibles 9,718 9,905 -1.9% 9,759 9,800
Other assets 16,714 16,890 -1.0% 18,103 18,678
Total assets $937,030 $814,660 15.0% $854,056 $836,887 Liabilities and Stockholders' Equity
Non-interest
bearing deposits $184,109 $180,435 2.0% $182,588 $179,860
Interest bearing
deposits 633,895 548,404 15.6% 550,929 534,494
Total deposits 818,004 728,839 12.2% 733,517 714,354
Securities sold
under agreements
to repurchase and
FHLB borrowings 27,662 4,791 477.4% 30,717 36,346
Junior subordinated
debentures 15,465 15,465 0.0% 15,465 15,465
Other liabilities 5,568 3,889 43.2% 5,888 4,435
Total liabilities 866,699 752,984 15.1% 785,587 770,600
Total shareholders'
equity 70,331 61,676 14.0% 68,469 66,287
Total liabilities
and shareholders'
equity $937,030 $814,660 15.0% $854,056 $836,887 MIDSOUTH BANCORP, INC. and SUBSIDIARIES
Condensed Consolidated Financial Information (unaudited)
(in thousands except per share data) Three Months Ended
INCOME STATEMENT March 31, %
2008 2007 Change Interest income $14,312 $13,442 6.5%
Interest expense 5,038 5,104 -1.3%
Net interest income 9,274 8,338 11.2%
Provision for loan losses 1,200 0 -
Service charges on deposit
accounts 2,370 2,306 2.8%
Other charges and fees 1,217 957 27.2%
Total non-interest income 3,587 3,263 9.9%
Salaries and employee benefits 5,178 4,787 8.2%
Occupancy expense 1,950 1,572 24.0%
Intangible amortization 41 52 -21.2%
Other non-interest expense 3,124 2,668 17.1%
Total non-interest expense 10,293 9,079 13.4%
Income before income taxes 1,368 2,522 -45.8%
Provision for income taxes 169 576 -70.7%
Net income $1,199 $1,946 -38.4% Earnings per share, diluted (1) $0.18 $0.29 -37.9% (1) On July 18, 2007, the Company announced a 5% stock dividend on its
common stock to holders on record as of September 21, 2007 paid on
October 23, 2007. Per common share data has been adjusted
accordingly.
MIDSOUTH BANCORP, INC. and SUBSIDIARIES
Condensed Consolidated Financial Information (unaudited)
(in thousands except per share data) INCOME STATEMENT First Fourth Third Second First
Quarterly Trends Quarter Quarter Quarter Quarter Quarter
2008 2007 2007 2007 2007 Interest income $14,312 $14,744 $14,651 $14,302 $13,442
Interest expense 5,038 5,131 5,234 5,065 5,104
Net interest income 9,274 9,613 9,417 9,237 8,338
Provision for loan
losses 1,200 525 300 350 -
Net interest income
after provision for
loan loss 8,074 9,088 9,117 8,887 8,338
Total non-interest
income 3,587 3,732 3,574 3,690 3,263
Total non-interest
expense 10,293 10,569 9,742 9,245 9,079
Income before income
taxes 1,368 2,251 2,949 3,332 2,522
Income taxes 169 357 508 837 576
Net income $1,199 $1,894 $2,441 $2,495 $1,946 Earnings per share,
basic (1) $0.18 $0.29 $0.37 $0.38 $0.30
Earnings per share,
diluted (1) $0.18 $0.28 $0.37 $0.38 $0.29
Book value per share (1) $10.65 $10.41 $10.07 $9.53 $9.36
Return on average equity 6.90% 11.18% 15.19% 16.03% 13.07% (1) On July 18, 2007, the Company announced a 5% stock dividend on its
common stock to holders on record as of September 21, 2007 paid on
October 23, 2007. Per common share data has been adjusted
accordingly.
MIDSOUTH BANCORP, INC. and SUBSIDIARIES
Condensed Consolidated Financial Information (unaudited)
(in thousands) March 31, March 31, % December 31, September 30,
2008 2007 Change 2007 2007 Composition of Loans
Commercial, financial,
and agricultural $181,540 $155,094 17.1% $187,545 $175,150
Lease financing
receivable 7,115 8,694 -18.2% 8,089 10,017
Real estate --
mortgage 205,875 191,381 7.6% 204,291 205,200
Real estate --
construction 86,998 74,379 17.0% 80,864 73,787
Installment loans
to individuals 87,347 80,371 8.7% 87,775 88,166
Other 870 642 35.5% 942 728 Total loans $569,745 $510,561 11.6% $569,506 $553,048 MIDSOUTH BANCORP, INC. and SUBSIDIARIES
Condensed Consolidated Financial Information (unaudited)
(in thousands) March 31, March 31, % December 31, September 30,
2008 2007 Change 2007 2007 Asset Quality Data
Nonaccrual loans $1,899 $1,574 20.6% $1,602 $1,084
Loans past due 90
days and over 2,275 481 373.0% 980 510
Total nonperforming
loans 4,174 2,055 103.1% 2,582 1,594
Other real estate
owned 143 158 -9.5% 143 143
Other foreclosed
assets 315 58 443.1% 280 134
Total nonperforming
assets $4,632 $2,271 104.0% $3,005 $1,871 Nonperforming assets
to total assets 0.49% 0.28% 76.5% 0.35% 0.22%
Nonperforming assets
to total loans
+ OREO + other
foreclosed assets 0.81% 0.44% 84.6% 0.53% 0.34%
ALL to nonperforming
assets 132.34% 215.76% -38.7% 186.76% 283.11%
ALL to nonperforming
loans 146.86% 238.44% -38.4% 217.35% 332.31%
ALL to total loans 1.08% 0.96% 12.1% 0.99% 0.96% Year-to-date
charge-offs $691 $95 627.4% $626 $408
Year-to-date
recoveries 9 18 -50.0% 86 78
Year-to-date net
charge-offs $682 $77 785.7% $540 $330
Net YTD charge-offs
to total loans 0.12% 0.02% 498.5% 0.09% 0.06% MIDSOUTH BANCORP, INC. AND SUBSIDIARIES
Yield Analysis (unaudited)
(in thousands) Three Months Ended Three Months Ended
March 31, 2008 March 31, 2007 Tax Tax
Average Equivalent Yield/ Average Equivalent Yield/
Balance Interest Rate Balance Interest Rate Taxable
securities $79,211 $960 4.85% $85,373 $981 4.60%
Tax-exempt
securities 108,933 1,474 5.41% 109,859 1,435 5.22%
Equity
securities 3,693 31 3.36% 2,511 22 3.50%
Federal funds
sold 38,970 274 2.78% 33,550 430 5.13%
Loans 569,154 12,006 8.48% 500,271 10,993 8.91%
Total interest
earning
assets 799,961 14,745 7.41% 731,564 13,861 7.68%
Noninterest
earning assets 84,197 71,894
Total assets $884,158 $803,458 Interest bearing
liabilities:
Deposits $591,775 $4,478 3.04% $541,808 $4,682 3.50%
Repurchase
agreements
and federal
funds purchased 26,150 212 3.21% 4,346 49 4.51%
Short term
borrowings 1,663 16 3.81% 1,593 27 6.78%
Junior
subordinated
debentures 15,465 332 8.49% 15,465 346 8.95%
Total
interest
bearing
liabilities 635,053 5,038 3.19% 563,212 5,104 3.68%
Noninterest
bearing
liabilities 179,204 179,874
Shareholders'
equity 69,901 60,372
Total
liabilities
and
shareholders'
equity $884,158 $803,458 Net interest
income (TE)
and margin $9,707 4.88% $8,757 4.85% Net interest
spread 4.22% 4.01%
DATASOURCE: MidSouth Bancorp, Inc.
CONTACT: C.R. Cloutier, or J.E. Corrigan, Jr., both of MidSouth Bancorp, Inc., +1-337-237-8343
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