MIDSOUTH BANCORP, INC. LAFAYETTE, La., Jan. 31, 2017 /PRNewswire/ -- MidSouth Bancorp, Inc. ("MidSouth") (NYSE:MSL) today reported quarterly net earnings available to common shareholders of $1.4 million for the fourth quarter of 2016, compared to net earnings available to common shareholders of $1.7 million reported for the fourth quarter of 2015 and $1.6 million in net earnings available to common shareholders for the third quarter of 2016. Diluted earnings for the fourth quarter of 2016 were $0.12 per common share, compared to $0.15 per common share reported for the fourth quarter of 2015 and $0.14 per common share reported for the third quarter of 2016.
Troy Cloutier, MidSouth Bank President and CEO, commenting on fourth quarter earnings remarked, "We continue to work diligently to support our energy-related customers through this cycle and at the same time look to minimize risk to our balance sheet. Our loss content during the past two years has been modest with cycle-to-date charge-offs of 1.23% of energy loans. More importantly, we are focused on improving performance in non-energy related lending and are very excited with new hires we have made in the latter part of 2016, especially in our Texas markets."
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. Although this definition has resulted in a lack of comparability with some other energy-related banks, management believes it to be the prudent approach to monitoring and managing the Bank's energy exposure.
Other comments on the Bank's energy lending:
-- Total energy loans, as defined above, decreased $5.9 million during 4Q16
to $237.4 million, or 18.5% of total loans, from 19.1% at September 30,
2016.
-- Direct C&I energy loans were $192.1 million or 15.0% of total loans and
had a weighted average maturity of 3.2 years at December 31, 2016.
-- Energy-related CRE and residential real estate loans were $44.9 million
or 3.5% of total loans at December 31, 2016.
-- Total criticized energy-related loans increased $4.5 million, or 3.6%,
during 4Q16 to $119.2 million and represented 50.2% of energy loans at
December 31, 2016, versus 47.1% at September 30, 2016.
-- Eleven energy loan relationships were downgraded during the quarter.
-- One loan relationship totaling $4.2 million was downgraded to
Special Mention
-- Ten loan relationships totaling $21.1 million were downgraded to
Substandard
-- Four energy-related charge-offs totaled $549,000 and one energy-related
recovery totaled $175,000 during 4Q16. YTD energy-related net
charge-offs totaled $1.6 million, or approximately 64 basis points of
average energy loans.
-- Cycle to date net charge-offs totaled $3.3 million, or 1.23% of December
31, 2014 energy loans, which was when the effects of declining oil
prices began to surface.
-- One energy-related impairment totaling $2.9 million was identified
during 4Q16. We utilized $2.0 million of the energy reserve in the
allowance to offset the impairment.
-- The energy reserve as a percentage of total energy loans, as defined,
was 4.9% at December 31, 2016. The reserve attributable to C&I energy
loans was approximately 5.6%. The reserve on all other energy loans was
2.3%.
-- The Bank has two Shared National Credits (SNCs) totaling $14.6 million
in the energy portfolio at December 31, 2016 and both were downgraded to
Substandard during the third quarter of 2016.
-- To date, during the month of January 2017, the Bank has had two rating
related changes to its energy portfolio:
-- One credit in the amount of $670,000 was downgraded from Pass to
Classified
-- One credit in the amount of $640,000 was downgraded from Special
Mention to Classified
C. R. Cloutier, MidSouth Bancorp President and CEO stated, "We are encouraged with the higher pricing levels for oil and natural gas in addition to the recent Executive directives to expedite both the reopening of the Keystone pipeline and ordering permits for the Dakota access pipeline. Furthermore, signs of regulatory relief appear to be forthcoming, all of which should be beneficial to our energy-related customers."
More information on our energy loan portfolio can be found on our website at MidSouthBank.com under Investor Relations/Presentations.
Balance Sheet
Consolidated assets totaled $1.9 billion at December 31, 2016 and 2015, compared to $2.0 billion at September 30, 2016. Our stable core deposit base, which excludes time deposits, totaled $1.4 billion at December 31, 2016 and September 30, 2016 and accounted for 90.0% of deposits at December 31, 2016 and September 30, 2016. Net loans totaled $1.3 billion at December 31, 2016, compared to $1.2 billion at September 30, 2016 and December 31, 2015.
MidSouth's Tier 1 leverage capital ratio was 10.11% at December 31, 2016, compared to 10.27% at September 30, 2016. Tier 1 risk-based capital and total risk-based capital ratios were 13.02% and 14.28% at December 31, 2016, compared to 13.07% and 14.33% at September 30, 2016, respectively. Tier 1 common equity to total risk-weighted assets at December 31, 2016 was 8.81%, compared to 8.83% at September 30, 2016. Tangible common equity totaled $126.5 million at December 31, 2016, compared to $129.9 million at September 30, 2016. Tangible book value per share at December 31, 2016 was $11.13 versus $11.44 at September 30, 2016 primarily due to a $4.3 million decline in other comprehensive income during the quarter.
Asset Quality
Nonperforming assets totaled $65.0 million at December 31, 2016, an increase of $949,000 compared to $64.1 million reported at September 30, 2016. The increase is primarily attributable to a $2.1 increase in loans on nonaccrual, which was partially offset by a $700,000 decrease in loans past due ninety days and over and accruing. Allowance coverage for nonperforming loans increased to 38.78% at December 31, 2016, compared to 37.84% at September 30, 2016. The ALLL/total loans ratio was 1.90% at December 31, 2016 and 1.83% at September 30, 2016. Including valuation accounting adjustments on acquired loans, the total valuation accounting adjustment plus ALLL was 2.06% of loans at December 31, 2016. The ratio of annualized net charge-offs to total loans increased to 0.46% for the three months ended December 31, 2016 compared to 0.32% for the three months ended September 30, 2016.
Total nonperforming assets to total loans plus ORE and other assets repossessed was 5.06% at December 31, 2016 compared to 5.03% at September 30, 2016. Loans classified as troubled debt restructurings, accruing ("TDRs, accruing") totaled $152,000 at December 31, 2016 and $153,000 at September 30, 2016. Classified assets, including ORE, increased $15.6 million, or 13.2%, to $134.2 million at December 31, 2016 compared to $118.6 million at September 30, 2016. The increase in classified assets during the quarter ended December 31, 2016 is primarily due to the downgrade of six energy-related credits totaling $19.8 million and the downgrade of one credit not related to energy totaling $4.3 million. These increases to classified assets were partially offset by the payoff of $8.1 million classified relationship during the fourth quarter.
Fourth Quarter 2016 vs. Third Quarter 2016 Earnings Comparison
In sequential-quarter comparison, net earnings available to common shareholders decreased $200,000, from $1.6 million for the three months ended September 30, 2016 to $1.4 million for the three months ended December 31, 2016. Net interest income decreased $15,000 in sequential-quarter comparison. Noninterest income decreased $84,000 in sequential-quarter comparison. The decrease in noninterest income consisted primarily of a $110,000 decrease in service charges on deposit accounts and a $26,000 decrease in mortgage program fee income, which were partially offset by a $62,000 increase in ATM/debit card income.
Noninterest expense increased $522,000 in sequential-quarter comparison, which was primarily due to increased costs of $362,000, or $0.02 per share, related to recruiting new talent to the organization, including new producers in Texas and a new Chief Information Officer. The increase in noninterest expense consisted primarily of increases of $692,000 in salaries and benefits costs, a $96,000 in occupancy expense and an $89,000 increase in loss on sale of other assets repossessed, which were partially offset by a $93,000 decrease in marketing expense and a $274,000 decrease in shares tax expense. The provision for loan losses decreased $300,000 in sequential-quarter comparison.
Dividends on the Series B Preferred Stock issued to the Treasury as a result of our participation in the Small Business Lending Fund ("SBLF") totaled $720,000 for the fourth quarter of 2016 based on a dividend rate of 9%. Dividends on the Series C Preferred Stock issued with the December 28, 2012 acquisition of PSB Financial Corporation ("PSB") totaled $92,000 for the three months ended December 31, 2016.
Fully taxable-equivalent ("FTE") net interest income increased $9,000 in sequential-quarter comparison. Interest income on loans decreased $25,000 due to a decrease in the average yield on loans of 5 basis points, from 5.45% to 5.40%. The average balance of loans increased $9.3 million in sequential-quarter comparison. Excluding purchase accounting adjustments, the loan yield decreased 3 basis points, from 5.31% to 5.28% during the same period. The average yield on total earning assets decreased 7 basis points for the same period, from 4.55% to 4.48%, respectively. As a result of these changes in volume and yield on earning assets, the FTE net interest margin decreased 9 basis points, from 4.24% to 4.15%. Excluding purchase accounting adjustments, the FTE net interest margin decreased 7 basis points, from 4.12% for the third quarter of 2016 to 4.05% for the fourth quarter of 2016.
Fourth Quarter 2016 vs. Fourth Quarter 2015 Earnings Comparison
Fourth quarter 2016 net earnings available to common shareholders totaled $1.4 million compared to $1.7 million for the fourth quarter of 2015. Revenues from consolidated operations increased $194,000 in quarterly comparison, from $23.1 million for the three months ended December 31, 2015 to $23.3 million for the three months ended December 31, 2016. Net interest income decreased $13,000 in quarterly comparison. A $110,000 increase in interest expense was partially offset by a $97,000 increase in interest income. Noninterest income increased $207,000 in quarterly comparison and consisted primarily of a $66,000 increase in ATM/debit card income, a $46,000 increase in service charges on deposits accounts and a $41,000 increase in mortgage program fee income.
Noninterest expenses increased $128,000 in quarterly comparison and consisted primarily of a $482,000 increase in salaries and employee benefits costs, a $54,000 increase in recruiting expense and a $102,000 increase in loss on sale of other assets repossessed, which was partially offset by a $123,000 decrease in FDIC premiums, a $240,000 decrease in shares tax expense, a $103,000 decrease in marketing expense and a $57,000 decrease in printing and supplies costs. The increases in salaries and benefits expense and recruiting expense were attributable primarily to the cost of locating and hiring several new key employees. The increase in salaries and benefits costs included $124,000 of sign-on bonuses for these employees, and we also recorded $100,000 of recruiting expenses during the three months ended December 31, 2016 related to these employees. Also included in the increase in salaries and benefits expense is $223,000 of severance benefits. The provision for loan losses decreased $400,000 in quarterly comparison, from $3.0 million for the three months ended December 31, 2015 to $2.6 million for the three months ended December 31, 2016. Income tax expense increased $105,000 in quarterly comparison.
Dividends on preferred stock totaled $812,000 for the three months ended December 31, 2016 and $170,000 for the three months ended December 31, 2015.
FTE net interest income totaled $18.8 million for the quarters ended December 31, 2016 and 2015. The FTE net interest income decreased $39,000 in prior year quarterly comparison. Interest income on loans increased $29,000 due to a $6.4 million increase in the average balance of loans. The average yield on loans decreased 1 basis point, from 5.41% to 5.40%. Purchase accounting adjustments added 12 basis points to the average yield on loans for the fourth quarter of 2016 and 15 basis points to the average yield on loans for the fourth quarter of 2015. Excluding the impact of the purchase accounting adjustments, average loan yields increased 2 basis points in prior year quarterly comparison, from 5.26% to 5.28%.
Investment securities totaled $440.1 million, or 22.6% of total assets at December 31, 2016, versus $435.0 million, or 22.6% of total assets at December 31, 2015. The investment portfolio had an effective duration of 3.2 years and a net unrealized loss of $2.5 million at December 31, 2016. The average volume of investment securities increased $5.6 million in prior year quarterly comparison. The average tax equivalent yield on investment securities decreased 6 basis points, from 2.65% to 2.57%.
The average yield on all earning assets decreased 4 basis points in prior year quarterly comparison, from 4.52% for the fourth quarter of 2015 to 4.48% for the fourth quarter of 2016. Excluding the impact of purchase accounting adjustments, the average yield on total earning assets decreased 3 basis points, from 4.42% to 4.39% for the three month periods ended December 31, 2015 and 2016, respectively.
Interest expense increased $110,000 in prior year quarterly comparison. Increases in interest expense included a $93,000 increase in interest expense on deposits and a $35,000 increase in interest expense on junior subordinated debentures. These increases were partially offset by a $19,000 decrease in interest expense on short-term FHLB advances. Excluding purchase accounting adjustments on acquired certificates of deposit and FHLB borrowings, the average rate paid on interest-bearing liabilities was 0.47% for the three months ended December 31, 2016 and 0.44% for the three months ended December 31, 2015.
As a result of these changes in volume and yield on earning assets and interest-bearing liabilities, the FTE net interest margin decreased 7 basis points, from 4.22% for the fourth quarter of 2015 to 4.15% for the fourth quarter of 2016. Excluding purchase accounting adjustments on loans, deposits and FHLB borrowings, the FTE margin decreased 4 basis points, from 4.09% for the fourth quarter of 2015 to 4.05% for the fourth quarter of 2016.
Year-To-Date Earnings Comparison
In year-to-date comparison, net earnings available to common shareholders decreased $3.7 million, from $10.3 million at December 31, 2015 to $6.6 million at December 31, 2016. 2016 net earnings included $13,000 in gain on sales of securities, net of tax. 2015 net earnings included $808,000 in gain on sales of securities, net of tax, and $160,000 of income from a death benefit on bank owned life insurance. Excluding these non-operating revenues, net earnings available to common shareholders decreased $2.8 million in year-to-date comparison. The $2.8 million decrease in operating earnings in year-to-date comparison resulted primarily from a $2.9 million decrease in net interest income, an increase of $1.4 million of noninterest expense and an increase of $2.2 million in dividends on preferred stock, which were partially offset by a $3.3 million decrease in the provision for loan losses and an $726,000 decrease in income tax expense.
Excluding non-operating income, noninterest income increased $70,000 and consisted primarily of $89,000 in service charges on deposit accounts and $116,000 in ATM/debit card income, which were partially offset by a $54,000 decrease in letter of credit income and a $41,000 decrease in credit card income. Increases in noninterest expense primarily included $896,000 in salaries and benefits costs, $288,000 in ATM and debit card processing fees, $295,000 in legal and professional fees and $191,000 in recruiting expense, which were partially offset by a $422,000 decrease in occupancy expense.
In year-to-date comparison, FTE net interest income decreased $3.1 million primarily due to a $3.0 million decrease in interest income on loans. The average volume of loans decreased $28.1 million in year-over-year comparison, and the average yield on loans decreased 11 basis points, from 5.54% to 5.43%. The average volume of investment securities increased $861,000 in year-over-year comparison, and the average yield on investment securities decreased 8 basis points for the same period. The average yield on earning assets decreased in year-over-year comparison, from 4.66% at December 31, 2015 to 4.52% at December 31, 2016. The purchase accounting adjustments added 16 basis points to the average yield on loans for the year ended December 31, 2015 and 12 basis points for the year ended December 31, 2016. Net of purchase accounting adjustments, the average yield on earning assets decreased 11 basis points, from 4.54% at December 31, 2015 to 4.43% at December 31, 2016.
Interest expense increased $109,000 in year-over-year comparison. Increases in interest expense included a $67,000 increase in interest expense on deposits and a $91,000 increase in interest expense on junior subordinated debentures. These increases were partially offset by a $33,000 decrease in interest expense on short-term FHLB advances and a $18,000 decrease in interest expense on securities sold under agreements to repurchase. The average rate paid on interest-bearing liabilities was 0.43% for the year ended December 31, 2016, compared to 0.42% for the year ended December 31, 2015. Net of purchase accounting adjustments, the average rate paid on interest-bearing liabilities increased one basis point, from 0.45% for the year ended December 31, 2015 to 0.46% for the year ended December 31, 2016. The FTE net interest margin decreased 14 basis points, from 4.34% for the year ended December 31, 2015 to 4.20% for the year ended December 31, 2016. Net of purchase accounting adjustments, the FTE net interest margin decreased 11 basis points, from 4.20% to 4.09% for the years ended December 31, 2015 and 2016, respectively, primarily due to a decline in the average rate earned on loans and the decreased average volume of loans.
Dividends
MidSouth's Board of Directors announced a cash dividend was declared in the amount of $0.09 per share to be paid on its common stock on April 3, 2017 to shareholders of record as of the close of business on March 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 April 17, 2017 to shareholders of record as of the close of business on April 3, 2017.
About MidSouth Bancorp, Inc.
MidSouth Bancorp, Inc. is a financial holding company headquartered in Lafayette, Louisiana, with assets of $1.9 billion as of December 31, 2016. 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 57 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, the expected loan loss provision and future operating results. 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, 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; the timing and ability to reach any agreement to restructure nonaccrual loans; increased competition for deposits and loans which could affect compositions, rates and terms; the timing and impact of future acquisitions, the success or failure of integrating operations, and the ability to capitalize on growth opportunities upon entering new markets; loss of critical personnel and the challenge of hiring qualified personnel at reasonable compensation levels; legislative and regulatory changes, including 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; and other factors discussed under the heading "Risk Factors" in MidSouth's Annual Report on Form 10-K for the year ended December 31, 2015 filed with the SEC on March 15, 2016 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 12/31/2016 9/30/2016 6/30/2016 3/31/2016 12/31/2015
---------- --------- --------- --------- ----------
Total interest income $19,983 $19,953 $19,388 $19,804 $19,886
Total interest expense 1,459 1,414 1,397 1,420 1,349
----- ----- ----- ----- -----
Net interest income 18,524 18,539 17,991 18,384 18,537
------ ------ ------ ------ ------
FTE net interest income 18,767 18,758 18,212 18,625 18,806
------ ------ ------ ------ ------
Provision for loan losses 2,600 2,900 2,300 2,800 3,000
----- ----- ----- ----- -----
Non-interest income 4,782 4,866 4,873 4,487 4,575
Non-interest expense 17,636 17,114 17,041 16,759 17,508
------ ------ ------ ------ ------
Earnings before income taxes 3,070 3,391 3,523 3,312 2,604
Income tax expense 871 993 1,030 963 766
--- --- ----- --- ---
Net earnings 2,199 2,398 2,493 2,349 1,838
Dividends on preferred stock 812 811 811 427 171
Net earnings available to common
shareholders $1,387 $1,587 $1,682 $1,922 $1,667
====== ====== ====== ====== ======
PER COMMON SHARE DATA
Basic earnings per share $0.12 $0.14 $0.15 $0.17 $0.15
Diluted earnings per share 0.12 0.14 0.15 0.17 0.15
Diluted earnings per share,
operating (Non-GAAP)(*) 0.12 0.14 0.15 0.17 0.15
Quarterly dividends per share 0.09 0.09 0.09 0.09 0.09
Book value at end of period 15.25 15.58 15.56 15.38 15.14
Tangible book value at period
end (Non-GAAP)(*) 11.13 11.44 11.40 11.19 10.92
Market price at end of period 13.60 10.40 10.04 7.63 9.08
Shares outstanding at period end 11,362,716 11,362,716 11,362,705 11,362,150 11,362,150
Weighted average shares
outstanding
Basic 11,271,948 11,262,282 11,255,042 11,261,644 11,281,286
Diluted 11,273,302 11,262,710 11,255,178 11,261,644 11,281,286
AVERAGE BALANCE SHEET DATA
Total assets $1,960,436 $1,927,351 $1,921,004 $1,931,904 $1,938,235
Loans and leases 1,277,555 1,268,270 1,256,133 1,252,742 1,271,106
Total deposits 1,591,814 1,562,193 1,562,680 1,552,217 1,557,272
Total common equity 176,747 177,866 175,994 175,479 173,950
Total tangible common equity
(Non-GAAP)(*) 129,821 130,662 128,516 127,722 125,919
Total equity 217,857 218,976 217,112 216,599 215,072
SELECTED RATIOS
Annualized return on average
assets, operating (Non-
GAAP)(*) 0.28% 0.33% 0.35% 0.40% 0.34%
Annualized return on average
common equity, operating (Non-
GAAP)(*) 3.12% 3.55% 3.81% 4.41% 3.80%
Annualized return on average
tangible common equity,
operating (Non-GAAP)(*) 4.25% 4.83% 5.22% 6.05% 5.25%
Pre-tax, pre-provision
annualized return on average
assets, operating (Non-
GAAP)(*) 1.15% 1.30% 1.21% 1.27% 1.15%
Efficiency ratio, operating
(Non-GAAP)(*) 75.67% 73.04% 74.49% 73.28% 75.69%
Average loans to average
deposits 80.26% 81.19% 80.38% 80.71% 81.62%
Taxable-equivalent net interest
margin 4.15% 4.24% 4.17% 4.24% 4.22%
Tier 1 leverage capital ratio 10.11% 10.27% 10.25% 10.17% 10.10%
CREDIT QUALITY
Allowance for loan and lease
losses (ALLL) as a % of total
loans 1.90% 1.83% 1.69% 1.63% 1.50%
Nonperforming assets to tangible
equity + ALLL 33.88% 32.98% 32.77% 30.83% 29.54%
Nonperforming assets to total
loans, other real estate owned
and other repossessed assets 4.29%
5.06% 5.03% 4.97% 4.64%
Annualized QTD net charge-offs
to total loans 0.46% 0.32% 0.40% 0.47% 0.92%
(*)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 December 31, September 30, June 30, March 31, December 31,
2016 2016 2016 2016 2015
---- ---- ---- ---- ----
Assets
Cash and cash equivalents $82,228 $126,667 $98,535 $112,410 $89,201
------- -------- ------- -------- -------
Securities available-for-sale 341,873 316,145 318,239 302,151 318,159
Securities held-to-maturity 98,211 103,412 109,420 113,623 116,792
------ ------- ------- ------- -------
Total investment securities 440,084 419,557 427,659 415,774 434,951
------- ------- ------- ------- -------
Other investments 11,355 11,339 11,036 11,195 11,188
Total loans 1,284,082 1,272,800 1,262,389 1,250,049 1,263,645
Allowance for loan losses (24,372) (23,268) (21,378) (20,347) (19,011)
------- ------- ------- ------- -------
Loans, net 1,259,710 1,249,532 1,241,011 1,229,702 1,244,634
--------- --------- --------- --------- ---------
Premises and equipment 68,954 69,778 68,468 68,482 69,105
Goodwill and other intangibles 46,792 47,069 47,346 47,622 47,899
Other assets 34,217 29,978 28,469 31,366 30,755
------ ------ ------ ------ ------
Total assets $1,943,340 $1,953,920 $1,922,524 $1,916,551 $1,927,733
========== ========== ========== ========== ==========
Liabilities and Shareholders'
Equity
Non-interest bearing deposits $414,921 $403,301 $383,797 $383,684 $374,261
Interest-bearing deposits 1,164,509 1,181,906 1,176,269 1,174,519 1,176,589
--------- --------- --------- --------- ---------
Total deposits 1,579,430 1,585,207 1,560,066 1,558,203 1,550,850
Securities sold under agreements
to repurchase 94,461 95,210 85,786 87,879 85,957
Short-term FHLB advances - - - - 25,000
Long-term FHLB advances 25,424 25,531 25,638 25,744 25,851
Junior subordinated debentures 22,167 22,167 22,167 22,167 22,167
Other liabilities 7,482 7,679 10,926 6,704 4,771
----- ----- ------ ----- -----
Total liabilities 1,728,964 1,735,794 1,704,583 1,700,697 1,714,596
--------- --------- --------- --------- ---------
Total shareholders' equity 214,376 218,126 217,941 215,854 213,137
------- ------- ------- ------- -------
Total liabilities and
shareholders' equity $1,943,340 $1,953,920 $1,922,524 $1,916,551 $1,927,733
========== ========== ========== ========== ==========
MIDSOUTH BANCORP, INC. and SUBSIDIARIES
Condensed Consolidated Income Statements (unaudited)
(in thousands except per share data)
-----------------------------------
Percent Change
--------------
EARNINGS STATEMENT Three Months Ended 4Q16 vs. 4Q16 vs. Twelve Months Ended Percent
3Q16 4Q15
---- ----
12/31/2016 9/30/2016 12/31/2015 12/31/2016 12/31/2015 Change
---------- --------- ---------- ---------- ---------- ------
Interest income:
Loans, including fees $16,986 $16,974 $16,914 0.1% 0.4% $67,219 $69,753 -3.6%
Investment securities 2,427 2,399 2,440 1.2% -0.5% 9,680 9,747 -0.7%
Accretion of purchase accounting
adjustments 362 399 405 -9.3% -10.6% 1,463 1,880 -22.2%
Other interest income 208 181 127 14.9% 63.8% 766 517 48.2%
--- --- --- --- ---
Total interest income 19,983 19,953 19,886 0.2% 0.5% 79,128 81,897 -3.4%
------ ------ ------ ------ ------
Interest expense:
Deposits 936 919 850 1.8% 10.1% 3,689 3,686 0.1%
Borrowings 422 419 442 0.7% -4.5% 1,691 1,744 -3.0%
Junior subordinated debentures 197 170 162 15.9% 21.6% 704 613 14.8%
Accretion of purchase accounting
adjustments (96) (94) (105) 2.1% -8.6% (394) (462) -14.7%
--- --- ---- ---- ----
Total interest expense 1,459 1,414 1,349 3.2% 8.2% 5,690 5,581 2.0%
----- ----- ----- ----- -----
Net interest income 18,524 18,539 18,537 -0.1% -0.1% 73,438 76,316 -3.8%
Provision for loan losses 2,600 2,900 3,000 -10.3% -13.3% 10,600 13,900 -23.7%
----- ----- ----- ------ ------
Net interest income after provision for
loan losses 15,924 15,639 15,537 1.8% 2.5% 62,838 62,416 0.7%
------ ------ ------ ------ ------
Noninterest income:
Service charges on deposit accounts 2,399 2,509 2,353 -4.4% 2.0% 9,612 9,523 0.9%
ATM and debit card income 1,682 1,620 1,616 3.8% 4.1% 6,579 6,463 1.8%
Gain on securities, net (non-
operating)(*) - - - - - 20 1,243 -98.4%
Mortgage lending 164 190 123 -13.7% 33.3% 586 618 -5.2%
Income from death benefit on BOLI (non-
operating)(*) - - - - - - 160 -100.0%
Other charges and fees 537 547 483 -1.8% 11.2% 2,211 2,314 -4.5%
--- --- --- ----- -----
Total non-interest income 4,782 4,866 4,575 -1.7% 4.5% 19,008 20,321 -6.5%
----- ----- ----- ------ ------
Noninterest expense:
Salaries and employee benefits 8,726 8,034 8,244 8.6% 5.8% 32,932 32,036 2.8%
Occupancy expense 3,731 3,635 3,687 2.6% 1.2% 14,630 15,052 -2.8%
ATM and debit card 829 833 825 -0.5% 0.5% 3,239 2,951 9.8%
Legal and professional fees 520 516 448 0.8% 16.1% 1,855 1,560 18.9%
FDIC premiums 387 365 510 6.0% -24.1% 1,601 1,513 5.8%
Marketing 349 442 452 -21.0% -22.8% 1,523 1,564 -2.6%
Corporate development 423 395 453 7.1% -6.6% 1,572 1,531 2.7%
Data processing 500 527 488 -5.1% 2.5% 1,963 1,888 4.0%
Printing and supplies 158 191 215 -17.3% -26.5% 760 923 -17.7%
Expenses on ORE, net 59 100 23 -41.0% 156.5% 389 267 45.7%
Amortization of core deposit
intangibles 277 277 276 0.0% 0.4% 1,107 1,106 0.1%
Other non-interest expense 1,677 1,799 1,887 -6.8% -11.1% 6,979 6,746 3.5%
----- ----- ----- ----- -----
Total non-interest expense 17,636 17,114 17,508 3.1% 0.7% 68,550 67,137 2.1%
------ ------ ------ ------ ------
Earnings before income taxes 3,070 3,391 2,604 -9.5% 17.9% 13,296 15,600 -14.8%
Income tax expense 871 993 766 -12.3% 13.7% 3,857 4,583 -15.8%
--- --- --- ----- -----
Net earnings 2,199 2,398 1,838 -8.3% 19.6% 9,439 11,017 -14.3%
Dividends on preferred stock 812 811 170 0.1% 377.6% 2,861 687 316.4%
--- --- --- ----- ---
Net earnings available to common
shareholders $1,387 $1,587 $1,668 -12.6% -16.8% $6,578 $10,330 -36.3%
====== ====== ====== ====== =======
Earnings per common share, diluted $0.12 $0.14 $0.15 -14.3% -20.0% $0.58 $0.90 -35.6%
===== ===== ===== ===== =====
Operating earnings per common share,
diluted (Non-GAAP)(*) $0.12 $0.14 $0.15 -14.3% -20.0% $0.58 $0.82 -29.3%
===== ===== ===== ===== =====
(*)See reconciliation of Non-GAAP financial measures on page 8-10.
MIDSOUTH BANCORP, INC. and SUBSIDIARIES
Composition of Loans and Deposits and Asset Quality Data (unaudited)
(in thousands)
-------------
COMPOSITION OF LOANS December 31, September 30, Dec 16 vs Sept 16 June 30, March 31, December 31, Dec 16 vs Dec 15
% Change % Change
-------- --------
2016 2016 2016 2016 2015
---- ---- ---- ---- ----
Commercial, financial, and agricultural $459,574 $463,031 -0.7% $456,264 $441,160 $454,028 1.2%
Lease financing receivable 1,095 1,449 -24.4% 1,641 1,590 1,968 -44.4%
Real estate - construction 100,959 96,365 4.8% 96,331 84,790 74,952 34.7%
Real estate - commercial 481,155 464,853 3.5% 463,142 467,648 471,141 2.1%
Real estate - residential 157,872 155,653 1.4% 148,379 149,961 149,064 5.9%
Installment loans to individuals 82,660 88,537 -6.6% 94,522 103,181 111,009 -25.5%
Other 767 2,912 -73.7% 2,110 1,719 1,483 -48.3%
--- ----- ----- ----- -----
Total loans $1,284,082 $1,272,800 0.9% $1,262,389 $1,250,049 $1,263,645 1.6%
========== ========== ========== ========== ==========
COMPOSITION OF DEPOSITS
December 31, September 30, Dec 16 vs Sept 16 June 30, March 31, December 31, Dec 16 vs Dec 15
% Change % Change
-------- --------
2016 2016 2016 2016 2015
---- ---- ---- ---- ----
Noninterest bearing $414,921 $403,301 2.9% $383,798 $383,684 $374,261 10.9%
NOW & other 472,484 465,850 1.4% 467,987 472,309 475,346 -0.6%
Money market/savings 539,815 557,068 -3.1% 544,256 534,854 531,449 1.6%
Time deposits of less than $100,000 75,940 78,785 -3.6% 80,158 80,802 81,638 -7.0%
Time deposits of $100,000 or more 76,270 80,203 -4.9% 83,867 86,554 88,156 -13.5%
------ ------ ------ ------ ------
Total deposits $1,579,430 $1,585,207 -0.4% $1,560,066 $1,558,203 $1,550,850 1.8%
========== ========== ========== ========== ==========
ASSET QUALITY DATA
December 31, September 30, June 30, March 31, December 31,
2016 2016 2016 2016 2015
---- ---- ---- ---- ----
Nonaccrual loans $62,580 $60,522 $59,865 $53,714 $50,051
Loans past due 90 days and over 268 968 56 258 147
--- --- --- --- ---
Total nonperforming loans 62,848 61,490 59,921 53,972 50,198
Other real estate 2,175 2,317 2,735 3,908 4,187
Other repossessed assets 16 283 263 265 38
--- --- --- --- ---
Total nonperforming assets $65,039 $64,090 $62,919 $58,145 $54,423
======= ======= ======= ======= =======
Troubled debt restructurings, accruing $152 $153 $154 $5,675 $164
==== ==== ==== ====== ====
Nonperforming assets to total assets 3.35% 3.28% 3.27% 3.03% 2.82%
Nonperforming assets to total loans +
ORE + other repossessed assets 5.06% 5.03% 4.97% 4.64% 4.29%
ALLL to nonperforming loans 38.78% 37.84% 35.68% 37.70% 37.87%
ALLL to total loans 1.90% 1.83% 1.69% 1.63% 1.50%
Quarter-to-date charge-offs $1,835 $1,161 $1,425 $1,594 $3,091
Quarter-to-date recoveries 339 151 156 130 163
--- --- --- --- ---
Quarter-to-date net charge-offs $1,496 $1,010 $1,269 $1,464 $2,928
====== ====== ====== ====== ======
Annualized QTD net charge-offs to total
loans 0.46% 0.32% 0.40% 0.47% 0.92%
MIDSOUTH BANCORP, INC. and SUBSIDIARIES
Loan Portfolio - Quarterly Roll Forward (unaudited)
(in thousands)
-------------
Three Months Ended
------------------
December 31, September 30, December 31,
2016 2016 2015
---- ---- ----
LOAN ACTIVITY
Loans originated $91,332 $87,991 $58,882
Repayments (64,528) (65,871) (108,561)
Increases on renewals 5,259 4,749 4,421
Change in lines of
credit (19,990) (20,079) 10,282
Change in allowance for
loan losses (1,104) (1,890) (72)
Other (791) 3,621 (2,831)
Net change in loans $10,178 $8,521 $(37,879)
======= ====== ========
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
December 31, December 31,
2016 2015
---- ----
Total equity $214,376 $213,137
Less preferred equity 41,110 41,120
------ ------
Total common equity 173,266 172,017
Less goodwill 42,171 42,171
Less intangibles 4,621 5,728
----- -----
Tangible common equity $126,474 $124,118
======== ========
Total assets $1,943,340 $1,927,733
Less goodwill 42,171 42,171
Less intangibles 4,621 5,728
----- -----
Tangible assets $1,896,548 $1,879,834
========== ==========
Tangible common equity to tangible
assets 6.67% 6.60%
REGULATORY CAPITAL
Common equity tier 1 capital $131,091 $128,470
Tier 1 capital 193,700 191,089
Total capital 212,366 209,132
Regulatory capital ratios:
Common equity tier 1 capital ratio 8.81% 8.91%
Tier 1 risk-based capital ratio 13.02% 13.25%
Total risk-based capital ratio 14.28% 14.50%
Tier 1 leverage ratio 10.11% 10.10%
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
December 31, 2016 September 30, 2016 June 30, 2016 March 31, 2016 December 31, 2015
----------------- ------------------ ------------- -------------- -----------------
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 $348,673 $1,965 2.25% $354,770 $1,983 2.24% $349,433 $1,940 2.22% $358,623 $2,036 2.27% $339,033 $1,917 2.26%
Tax-exempt securities 66,549 705 4.24% 60,544 635 4.20% 60,972 641 4.21% 64,971 699 4.30% 70,548 778 4.41%
------ --- ------ --- ------ --- ------ --- ------ ---
Total investment securities 415,222 2,670 2.57% 415,314 2,618 2.52% 410,405 2,581 2.52% 423,594 2,735 2.58% 409,581 2,695 2.65%
----- ----- ----- ----- -----
Federal funds sold 3,261 5 0.60% 2,703 3 0.43% 3,655 3 0.32% 3,843 5 0.51% 3,922 3 0.30%
Time and interest bearing deposits in
other banks
90,527 125 0.54% 64,444 83 0.50% 76,042 97 0.50% 74,271 94 0.50% 73,069 52 0.28%
Other investments 11,342 78 2.75% 11,253 95 3.38% 11,232 90 3.21% 11,189 88 3.15% 11,544 86 2.99%
Loans 1,277,555 17,348 5.40% 1,268,270 17,373 5.45% 1,256,133 16,838 5.39% 1,252,742 17,123 5.50% 1,271,106 17,319 5.41%
--------- ------ --------- ------ --------- ------ --------- ------ --------- ------
Total interest earning assets 1,797,907 20,226 4.48% 1,761,984 20,172 4.55% 1,757,467 19,609 4.49% 1,765,639 20,045 4.57% 1,769,222 20,155 4.52%
------ ------ ------ ------ ------
Non-interest earning assets 162,529 165,367 163,537 166,265 169,013
------- ------- ------- ------- -------
Total assets $1,960,436 $1,927,351 $1,921,004 $1,931,904 $1,938,235
========== ========== ========== ========== ==========
Interest-bearing liabilities:
Deposits $1,179,174 $929 0.31% $1,170,660 $915 0.31% $1,176,387 $903 0.31% $1,180,581 $907 0.31% $1,156,166 $836 0.29%
Repurchase agreements 94,609 241 1.01% 88,560 236 1.06% 85,479 233 1.10% 85,756 233 1.09% 85,178 240 1.12%
Federal funds purchased - - 0.00% - - 0.00% 2 - 0.00% - - 0.00% 4 - 0.00%
Short-term FHLB advances - - 0.00% - - 0.00% - - 0.00% 22,802 23 0.40% 25,000 19 0.30%
Long-term FHLB advances 25,474 92 1.41% 25,581 93 1.42% 25,687 91 1.40% 25,794 90 1.38% 25,900 92 1.39%
Junior subordinated debentures 22,167 197 3.48% 22,167 170 3.00% 22,167 170 3.03% 22,167 167 2.98% 22,167 162 2.86%
------ --- ------ --- ------ --- ------ --- ------ ---
Total interest bearing liabilities 1,321,424 1,459 0.44% 1,306,968 1,414 0.43% 1,309,722 1,397 0.43% 1,337,100 1,420 0.43% 1,314,415 1,349 0.41%
----- ----- ----- ----- -----
Non-interest bearing liabilities 421,155 401,407 394,170 378,205 408,748
Shareholders' equity 217,857 218,976 217,112 216,599 215,072
------- ------- ------- ------- -------
Total liabilities and shareholders'
equity $1,960,436 $1,927,351 $1,921,004 $1,931,904 $1,938,235
========== ========== ========== ========== ==========
Net interest income (TE) and spread $18,767 4.04% $18,758 4.12% $18,212 4.06% $18,625 4.14% $18,806 4.11%
======= ======= ======= ======= =======
Net interest margin 4.15% 4.24% 4.17% 4.24% 4.22%
Core net interest margin (Non-GAAP)(*) 4.05% 4.12% 4.08% 4.11% 4.09%
(*) See reconciliation of Non-GAAP financial measures on page 8-10.
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
------------------
December 31, September 30, June 30, March 31, December 31,
2016 2016 2016 2016 2015
---- ---- ---- ---- ----
AVERAGE
BALANCE
SHEET DATA
Total
average
assets A $1,960,436 $1,927,351 $1,921,004 $1,931,904 $1,938,235
Total equity $217,857 $218,976 $217,112 $216,599 $215,072
Less
preferred
equity 41,110 41,110 41,118 41,120 41,122
------ ------ ------ ------ ------
Total common
equity B $176,747 $177,866 $175,994 $175,479 $173,950
Less
intangible
assets 46,926 47,204 47,478 47,757 48,031
------ ------ ------ ------ ------
Tangible
common
equity C $129,821 $130,662 $128,516 $127,722 $125,919
======== ======== ======== ======== ========
MIDSOUTH BANCORP, INC. and SUBSIDIARIES
Reconciliation of Non-GAAP Financial Measures (unaudited) (continued)
(in thousands except per share data)
-----------------------------------
Three Months Ended
------------------
December 31, September 30, June 30, March 31, December 31,
CORE NET INTEREST MARGIN 2016 2016 2016 2016 2015
---- ---- ---- ---- ----
Net interest income (FTE) $18,767 $18,758 $18,212 $18,625 $18,806
Less purchase accounting
adjustments (458) (493) (341) (565) (510)
Core net interest
income, net of
purchase
accounting
adjustments D $18,309 $18,264 $17,871 $18,060 $18,296
===
Total average earnings assets $1,797,907 $1,761,984 $1,757,467 $1,765,639 $1,769,222
Add average balance of loan
valuation discount 2,316 2,634 2,931 3,323 3,712
Average earnings
assets, excluding
loan valuation
discount E $1,800,223 $1,764,618 $1,760,398 $1,768,962 $1,772,934
===
Core net interest
margin D/E 4.05% 4.12% 4.08% 4.11% 4.09%
=====
Three Months Ended
------------------
December 31, September 30, June 30, March 31, December 31,
RETURN RATIOS 2016 2016 2016 2016 2015
---- ---- ---- ---- ----
Net earnings available to common
shareholders $1,387 $1,587 $1,682 $1,922 $1,667
Net gain on sale of securities,
after-tax - - (13) - -
Net earnings
available to
common
shareholders,
operating F $1,387 $1,587 $1,669 $1,922 $1,667
===
Earnings before income taxes $3,070 $3,391 $3,523 $3,312 $2,604
Net gain on sale of securities - - (20) - -
Provision for loan losses 2,600 2,900 2,300 2,800 3,000
Pre-tax, pre-
provision
earnings,
operating G $5,670 $6,291 $5,803 $6,112 $5,604
===
Annualized return
on average assets,
operating F/A 0.28% 0.33% 0.35% 0.40% 0.34%
Annualized return
on average common
equity, operating F/B 3.12% 3.55% 3.81% 4.41% 3.80%
Annualized return
on average
tangible common
equity, operating F/C 4.25% 4.83% 5.22% 6.05% 5.25%
Pre-tax, pre-
provision
annualized return
on average assets,
operating G/A 1.15% 1.30% 1.21% 1.27% 1.15%
MIDSOUTH BANCORP, INC. and SUBSIDIARIES
Reconciliation of Non-GAAP Financial Measures (unaudited) (continued)
(in thousands except per share data)
-----------------------------------
Three Months Ended Twelve Months Ended
------------------ -------------------
December 31, September 30, June 30, March 31, December 31, December 31, December 31,
PER COMMON SHARE DATA 2016 2016 2016 2016 2015 2016 2015
---- ---- ---- ---- ---- ---- ----
Diluted earnings per share $0.12 $0.14 $0.15 $0.17 $0.15 $0.58 $0.90
Effect of net gain on sale of
securities, after-tax - - - - - - (0.07)
Effect of income from death
benefit on bank owned life
insurance - - - - - - (0.01)
Diluted earnings per share,
operating $0.12 $0.14 $0.15 $0.17 $0.15 $0.58 $0.82
===== ===== ===== ===== ===== ===== =====
Book value per common share $15.25 $15.58 $15.56 $15.38 $15.14
Effect of intangible assets per
share 4.12 4.14 4.16 4.19 4.22
---- ---- ---- ---- ----
Tangible book value per common
share $11.13 $11.44 $11.40 $11.19 $10.92
====== ====== ====== ====== ======
Three Months Ended
------------------
December 31, September 30, June 30, March 31, December 31,
EFFICIENCY RATIO 2016 2016 2016 2016 2015
---- ---- ---- ---- ----
Net interest income $18,524 $18,539 $17,991 $18,384 $18,537
Noninterest income 4,782 4,866 4,873 4,487 4,575
Net gain on sale of securities - - (20) - -
--- --- --- --- ---
Noninterest income (non-GAAP) $4,782 $4,866 $4,853 $4,487 $4,575
====== ====== ====== ====== ======
Total revenue H $23,306 $23,405 $22,864 $22,871 $23,112
Total revenue (non-
GAAP) I $23,306 $23,405 $22,844 $22,871 $23,112
Noninterest expense J $17,636 $17,114 $17,041 $16,759 $17,508
Net (loss) gain on sale/
valuation of other real estate
owned - (19) (24) (144) (14)
--- --- --- ---- ---
Noninterest expense
(non-GAAP) K $17,636 $17,095 $17,017 $16,615 $17,494
===
Efficiency ratio
(GAAP) J/H 75.67% 73.12% 74.53% 73.28% 75.75%
Efficiency ratio
(non-GAAP) K/I 75.67% 73.04% 74.49% 72.65% 75.69%
To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/midsouth-bancorp-inc-reports-fourth-quarter-2016-results-and-declares-quarterly-dividends-300399091.html
SOURCE MidSouth Bancorp, Inc.
