UNITED STATES SECURITIES AND EXCHANGE
COMMISSION
WASHINGTON, D.C. 20549
FORM 10QSB
__X___QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended.............. June 30, 2002
______TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ..... to .....
COMMISSION FILE NUMBER 2-91-000FW
MIDSOUTH BANCORP, INC.
Louisiana 72 -1020809
102 Versailles Boulevard, Lafayette, Louisiana
70501
(337) 237-8343
Check whether the issuer (1) filed all reports required to be
filed by Section 13 or 15(d) of the Exchange Act during the past 12
months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. YES __X__ NO _____
State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practicable date.
Outstanding as of July 31, 2002
Common stock, $.10 par value 2,901,142
Transitional Small Business Disclosure Format:
Yes _______ No_____X______
Page 1
Page 2
PART 1 - FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited) Page
Financial Highlights 3
Statements of Condition - June 30, 2002 and
December 31, 2001 4
Statements of Income - Three and Six Months Ended
June 30, 2002 and 2001 5
Statement of Stockholders' Equity - Six Months
Ended June 30, 2002 6
Statements of Cash Flows - Six Months Ended
June 30, 2002 and 2001 7
Notes to Financial Statements 8
Item 2. Management's Discussion and Analysis or
Plan of Operation 9
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders 15
Item 6. Exhibits and Reports on Form 8-K 16
Signatures 17
MIDSOUTH BANCORP, INC. AND SUBSIDIARIES
FINANCIAL HIGHLIGHTS (UNAUDITED)
Three Months Ended Six Months Ended
June 30, June 30,
EARNINGS DATA 2002 2001 2002 2001
____________________________________________________________
Total interest income $6,071,740 $6,922,327 $11,881,675 $13,690,507
Total interest expense 1,697,011 2,842,668 3,502,459 5,727,665
Net interest income 4,374,729 4,079,659 8,379,216 7,962,842
Provision for loan losses 336,000 1,034,244 694,000 1,357,344
Non-interest income 1,659,230 1,366,477 3,161,839 2,549,693
Non-interest expense 4,197,565 3,821,855 8,275,565 7,525,723
Provision for income tax 413,149 120,200 666,114 364,454
Net income 1,087,245 469,837 1,905,376 1,265,014
Preferred dividend requirement - 22,458 - 52,751
Income available to common
shareholders $1,087,245 $447,379 $1,905,376 $1,212,263
==================================================================================================
PER COMMON SHARE DATA
Basic earnings per share $0.38 $0.18 $0.66 $0.48
Diluted earnings per share $0.37 $0.16 $0.65 $0.43
Book value at end of period $8.57 $7.64 $8.57 $7.64
Market price at end of period $13.10 $11.10 $13.10 $11.10
Weighted average shares outstanding
Basic 2,883,142 2,514,972 2,883,142 2,503,647
Diluted 2,946,844 2,920,454 2,940,992 2,916,902
==================================================================================================
AVERAGE BALANCE SHEET DATA
Total assets $359,946,669 $351,131,021 $357,858,495 $342,429,938
Earning assets 331,132,111 321,869,855 328,546,563 313,583,347
Loans and leases 220,395,576 206,236,001 216,785,462 204,910,390
Interest-bearing deposits 238,709,360 244,218,691 240,344,275 239,285,181
Total deposits 321,177,565 316,936,547 321,479,097 310,780,542
Common stockholders' equity 23,667,410 19,944,382 23,491,293 19,187,898
Total stockholders' equity 23,667,410 21,699,964 23,491,293 20,988,803
==================================================================================================
SELECTED RATIOS
Return on average assets
(annualized) 1.21% 0.54% 1.07% 0.74%
Return on average common equity
(annualized) 18.43% 9.00% 16.36% 12.74%
Return on average total equity
(annualized) 18.43% 8.68% 16.36% 12.15%
Leverage capital ratio 8.33% 7.80% 8.33% 7.80%
Tier 1 risk-based capital ratio 11.96% 11.68% 11.96% 11.68%
Total risk-based capital ratio 13.11% 12.72% 13.11% 12.72%
Allowance for loan losses as a %
of total loans 1.24% 1.14% 1.24% 1.14%
==================================================================================================
PERIOD ENDING BALANCE SHEET DATA 6/30/02 6/30/01 Net Change % Change
Total assets $379,991,713 $342,550,304 $37,441,409 10.93%
Earning assets 348,349,503 314,864,754 $33,484,749 10.63%
Loans and leases, net 227,212,579 210,532,711 $16,679,868 7.92%
Interest-bearing deposits 263,550,361 233,194,779 $30,355,582 13.02%
Total deposits 341,799,739 308,890,932 $32,908,807 10.65%
Common stockholders' equity 24,852,271 19,794,639 $5,057,632 25.55%
Total stockholders' equity 24,852,271 21,315,114 $3,537,157 16.59%
==================================================================================================
MIDSOUTH BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CONDITION
__________________________________________________________________________________
June 30, December 31,
2002 2001 *
ASSETS (unaudited)
___________ ___________
Cash and due from banks $16,509,305 $18,547,278
Federal funds sold 12,100,000 17,300,000
___________ ___________
Total cash and cash equivalents 28,609,305 35,847,278
Interest bearing deposits in banks 172,706 109,206
Securities available-for-sale, at fair value
(cost of $80,803,744 in June 2002 and
$75,052,952 in December 2001) 82,424,504 75,780,414
Securities held-to-maturity (estimated market
value of $25,350,735 in June 2002 and
$24,735,122 in December 2001) 23,583,870 23,584,850
Loans, net of allowance for loan losses of
$2,855,844 in June 2002 and $2,705,058 in
December 2001 227,212,579 211,685,063
Bank premises and equipment, net 12,431,839 11,950,701
Other real estate owned, net 108,752 359,336
Accrued interest receivable 2,394,503 2,197,794
Goodwill and other intangibles, net 927,513 431,987
Other assets 2,126,142 1,833,234
___________ ___________
Total assets $379,991,713 $363,779,863
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Non-interest bearing $78,249,378 $91,145,842
Interest bearing 263,550,361 239,431,616
___________ ___________
Total deposits 341,799,739 330,577,458
Securities sold under
repurchase agreements 3,698,013 663,079
Accrued interest payable 952,197 1,057,065
Notes payable 878,000 1,431,000
Junior subordinated debenture 7,000,000 7,000,000
Other liabilities 811,493 423,700
___________ ___________
Total liabilities 355,139,442 341,152,302
___________ ___________
Commitments and contingencies - -
Stockholders' Equity:
Common stock, $.10 par value- 5,000,000
shares authorized, 2,901,142 issued and
outstanding on June 30, 2002
and December 31, 2001, respectively 290,114 290,114
Surplus 12,972,762 12,972,762
Unearned ESOP shares (129,728) (149,638)
Unrealized gains on securities available-
for-sale, net of deferred taxes
of $561,260 in June 2002 and $257,500
in December 2001 1,059,500 469,962
Retained earnings 10,659,623 9,044,361
___________ ___________
Total stockholders' equity 24,852,271 22,627,561
___________ ___________
Total liabilities and stockholders' equity $379,991,713 $363,779,863
=========== ===========
* The consolidated statement of condition at December 31, 2001 is
taken from the audited balance sheet on that date.
See notes to unaudited consolidated financial statements.
MIDSOUTH BANCORP, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
___________________________________________________________________________________________________
Three Months Ended Six Months Ended
June 30, June 30,
2002 2001 2002 2001
______________________________ ____________________________
INTEREST INCOME:
Loans, including fees $4,777,307 $5,310,285 $9,357,437 $10,587,452
Securities
Taxable 847,314 1,060,091 1,602,909 1,928,931
Nontaxable 428,934 379,155 851,402 735,555
Federal funds sold 18,185 172,796 69,927 438,569
__________ __________ __________ ___________
TOTAL 6,071,740 6,922,327 11,881,675 13,690,507
__________ __________ __________ ___________
INTEREST EXPENSE:
Deposits 1,472,088 2,595,423 3,084,129 5,312,070
Securities sold under repurchase
agreements, federal funds
purchased and advances 27,428 21,750 30,688 32,518
Notes Payable 197,495 225,495 387,642 383,077
__________ __________ __________ ___________
TOTAL 1,697,011 2,842,668 3,502,459 5,727,665
__________ __________ __________ ___________
NET INTEREST INCOME 4,374,729 4,079,659 8,379,216 7,962,842
PROVISION FOR LOAN LOSSES 336,000 1,034,244 694,000 1,357,344
__________ __________ __________ ___________
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES 4,038,729 3,045,415 7,685,216 6,605,498
__________ __________ __________ ___________
OTHER OPERATING INCOME:
Service charges on deposits 1,158,404 846,841 2,233,717 1,639,803
Gains on securities, net - 46,491 - 46,491
Credit life insurance 91,995 68,237 145,820 134,855
Other charges and fees 408,831 404,908 782,302 728,544
__________ __________ __________ ___________
TOTAL OTHER INCOME 1,659,230 1,366,477 3,161,839 2,549,693
__________ __________ __________ ___________
OTHER EXPENSES:
Salaries and employee benefits 1,982,103 1,778,554 3,917,568 3,540,030
Occupancy expense 922,919 845,139 1,769,259 1,674,897
Other 1,292,543 1,198,162 2,588,738 2,310,796
__________ __________ __________ ___________
TOTAL OTHER EXPENSES 4,197,565 3,821,855 8,275,565 7,525,723
__________ __________ __________ ___________
INCOME BEFORE INCOME TAXES 1,500,394 590,037 2,571,490 1,629,468
PROVISION FOR INCOME TAXES 413,149 120,200 666,114 364,454
__________ __________ __________ ___________
NET INCOME 1,087,245 469,837 1,905,376 1,265,014
PREFERRED DIVIDEND REQUIREMENT - 22,458 - 52,751
__________ __________ __________ ___________
INCOME AVAILABLE TO COMMON
SHAREHOLDERS $1,087,245 $447,379 $1,905,376 $1,212,263
========== ========== ========== ===========
BASIC EARNINGS PER COMMON SHARE $0.38 $0.18 $0.66 $0.48
========== ========== ========== ===========
DILUTED EARNINGS PER COMMON SHARE $0.37 $0.16 $0.65 $0.43
========== ========== ========== ===========
See notes to unaudited consolidated financial statements.
MIDSOUTH BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
FOR SIX MONTHS ENDED JUNE 30, 2002 (UNAUDITED)
____________________________________________________________________________________________
UNREALIZED
GAINS (LOSSES)
COMMON STOCK ESOP ON SECURITIES RETAINED
SHARES AMOUNT SURPLUS OBLIGATION AFS, NET EARNINGS TOTAL
_____________________ ___________ _____________________________________________________
BALANCE,
JANUARY 1, 2002
2,901,142 $290,114 $12,972,762 ($149,638) $469,962 $9,044,361 $22,627,561
Dividends on
common stock (290,114) (290,114)
Net income 1,905,376 1,905,376
Increase in ESOP
obligation,
net of repayments 19,910 19,910
Net change in
unrealized gain/
loss on securities
available-for-sale,
net of income taxes 589,538 589,538
_________ ________ ___________ _________ __________ ___________ ___________
BALANCE,
JUNE 30, 2002
2,901,142 $290,114 $12,972,762 ($129,728) $1,059,500 $10,659,623 $24,852,271
========= ======== =========== ========= ========== =========== ===========
See notes to unaudited consolidated financial statements.
MIDSOUTH BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE SIX MONTHS ENDED JUNE 30, 2002 AND 2001
____________________________________________________________________________
June 30, 2002 June 30,2001
_____________ ____________
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $1,905,376 $1,265,014
Adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation and amortization 629,246 677,731
Provision for loan losses 694,000 1,357,344
Deferred income taxes (credit) (16,418) 10,778
Discount accretion, net 213,304 43,638
Net gain on sale of securities - (46,491)
(Gain)/loss on sale of premises and equipment 40,175 (2,700)
Loss on sale of other real estate owned 25,571 11,542
Write-down of other real estate owned - 22,787
Change in accrued interest receivable (196,709) (109,442)
Change in accrued interest payable (104,868) 179,225
Other, net 3,845 (521,465)
_____________ ____________
NET CASH PROVIDED BY OPERATING ACTIVITIES 3,193,522 2,887,961
_____________ ____________
CASH FLOWS FROM INVESTING ACTIVITIES:
Net increase in interest-bearing deposits
in banks (63,500) (184,705)
Proceeds from sales of securities available-for-sale - 1,647,500
Proceeds from maturities and calls of securities
available-for-sale 18,542,669 12,464,181
Purchases of securities available-for-sale (24,505,784) (35,295,098)
Loan originations, net of repayments (10,762,635) (9,631,486)
Purchases of premises and equipment (1,151,359) (370,405)
Proceeds from sales of premises and equipment 800 2,700
Proceeds from sales of other real estate owned 225,013 135,266
Net cash received in connection with acquisition 6,043,721 -
_____________ ____________
NET CASH USED IN INVESTING ACTIVITIES (11,671,075) (31,232,047)
_____________ ____________
CASH FLOWS FROM FINANCING ACTIVITIES:
Net decrease in deposits (952,240) (10,656,273)
Net increase in securities sold under repurchase
agreements and Federal Home Loan Bank advances 3,034,934 658,539
Issuance of notes payable - 20,000
Repayments of notes payable (553,000) (2,675,968)
Proceeds from issuance of common stock - 33,764
Payment of dividends (290,114) (308,316)
Issuance of junior subordinated debentures - 7,000,000
_____________ ____________
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 1,239,580 (5,928,254)
_____________ ____________
NET DECREASE IN CASH & CASH EQUIVALENTS (7,237,973) (34,272,340)
CASH & CASH EQUIVALENTS AT BEGINNING OF PERIOD 35,847,278 49,798,538
_____________ ____________
CASH & CASH EQUIVALENTS AT END OF PERIOD $28,609,305 $15,526,198
============= ============
See notes to unaudited consolidated financial statements.
MIDSOUTH BANCORP, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
1. STATEMENT BY MANAGEMENT CONCERNING THE REVIEW OF UNAUDITED
FINANCIAL INFORMATION
The accompanying unaudited consolidated financial statements
and notes thereto contain all adjustments, consisting only of
normal recurring adjustments, necessary to present fairly, in
accordance with accounting principles generally accepted in
the United States of America the financial position of
MidSouth Bancorp, Inc. ("MidSouth") and its subsidiaries as
of June 30, 2002 and the results of their operations and
their cash flows for the periods presented. The consolidated
financial statements should be read in conjunction with the
annual consolidated financial statements and the notes thereto
included in MidSouth's 2001 annual consolidated report and
Form 10-KSB.
The results of operations for the six month period ended
June 30, 2002 are not necessarily indicative of the results
to be expected for the entire year.
2. ALLOWANCE FOR LOAN AND LOSSES
An analysis of the activity in the allowance for loan losses
is as follows:
Six Months Ended
June 30,
2002 2001
__________ __________
Balance at beginning of period $2,705,058 $2,276,187
Provision for loan losses 694,000 1,357,344
Recoveries 61,488 42,414
Loans charged off (604,702) (1,237,642)
__________ __________
Balance at end of period $2,855,844 $2,438,303
========== ==========
3. COMPREHENSIVE INCOME
Comprehensive income includes net income and other comprehensive
income which, in the case of MidSouth, only includes
unrealized gains and losses on securities available-for-sale.
Following is a summary of MidSouth's comprehensive income for
the six months ended June 30, 2002 and 2001.
Six Months Ended
June 30,
2002 2001
__________ __________
Net income $1,905,376 $1,265,014
Other comprehensive income
Unrealized gains (losses)
on securities available-
for-sale, net:
Unrealized holding gains
arising during the period 589,538 475,319
Less reclassification
adjustment for
gains included in net
income - (30,219)
Total other comprehensive __________ _________
income 589,538 445,100
__________ _________
Total comprehensive income $2,494,914 $1,710,114
========== ==========
4. On June 21, 2002 MidSouth acquired the Morgan City, Louisiana
branch of IberiaBank for an amount which was approximately
$500,00 in excess of book value of those assets on IberiaBank's
books. The purchase included, among other things, approximately
$6.0 million of cash, $5.4 million of loans, and the assumption of
$12.2 million of deposits. MidSouth is presently evaluating
the assets purcahsed and liabilities assumed, and expects to
complete that evaluation by December 31, 2002. It is presently
extimated that any intangible associated with this acquisition
will relate to core deposit intangibles and will be amortized
over approximately 8 - 10 years on an accelerated basis.
Item 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
This review should be read in conjunction with MidSouth
Bancorp Inc.'s ("MidSouth") consolidated financial
statements and accompanying notes contained herein, as
well as with MidSouth's 2001 annual consolidated
financial statements, the notes thereto and the related
Management's Discussion and Analysis.
MidSouth Bancorp, Inc. recorded net income of $1,087,245
for the second quarter of 2002, a 131% increase from net
income of $469,837 for the second quarter of 2001.
Second quarter 2001 earnings reflected a net after tax
charge of $500,000 for the default and charge-off of one
commercial loan. Basic earnings per share were $.38 and
$.18 for the quarters ended June 30, 2002 and 2001,
respectively. Diluted earnings per share were $.37 for the
second quarter of 2002 compared to $.16 for the second
quarter of 2001.
Net income for the six months ended June 30, 2002 totaled
$1,905,376 compared to $1,265,014 for the six months
ended June 30, 2001. Loan loss provisions decreased
$663,344 over the six months ended June 30, 2002. Basic
earnings per share were $.66 and $.48 for the two six month
periods, respectively. Diluted earnings per share were $.65
for the six months ended June 30, 2002 compared to $.43
for the six months ended June 30, 2001.
MidSouth's net interest income continued to improve in
quarterly and year-to-date comparison due to improvement
in the net interest margin combined with a higher volume
of earning assets. Net interest income increased 7%, or
$295,070 in quarterly comparison and 5% or $416,374 in
year-to-date comparison. Non-interest income, excluding
net gains on sales of securities recorded in 2001, increased
26% or $339,244 in quarterly comparison and 26% or
$658,637 in year-to-date comparison, primarily due to
increased transaction volume on deposit accounts resulting
in increased service charge and insufficient funds fee
income. Non-interest expense, primarily salaries, benefits
and occupancy expenses, increased 10% or $375,710 in
quarterly comparison and 10% or $749,842 in year-to-date
comparison.
Consolidated assets totaled $380.0 million at June 30,
2002, up 4% from $363.8 million at December 31, 2001
and 11% from $342.5 million at June 30, 2001. Total
deposits increased $32.9 million over the past twelve
months, from $308.9 million at June 30, 2001 to $330.6
million at December 31, 2001 and to $341.8 million at June
30, 2002. The increase included $12.2 million in deposits
from the purchase of IberiaBank's Morgan City branch.
The purchase was completed on June 21, 2002 and also
added $5.4 million to MidSouth's loan portfolio.
Loans, net of Allowance for Loan Losses ("ALL"),
increased $16.7 million or 8%, from $210.5 million in the
second quarter of 2001 to $227.2 million in the second
quarter of 2002. Provisions for loan and lease losses
totaled $336,000 in the second quarter of 2002 compared to
$1,034,244 in the second quarter of 2001, and $694,000 in
the first six months of 2002 compared to $1,357,344 in the
first six months of 2001. Provisions for the three and
six month period ended June 30, 2001 were substantially
higher due to an additional $700,000 allocated for the
default and charge-off of one commercial loan.
Nonperforming loans as a percentage of total loans
increased from .20% at June 30, 2001 to .36% at June 30,
2002. Loans past due ninety days and over and still
accruing decreased from $854,216 at June 30, 2001 to
$716,639 at June 30, 2002. Other real estate owned
decreased $234,977 for the same period to $108,752. The
ALL represented 303.5% of nonperforming assets as of
June 30, 2002 compared to 314.5% as of June 30, 2001.
MidSouth's leverage ratio was 8.33% at June 30, 2002, up
from 7.80% at June 30, 2001. Return on average common
equity for the quarter was 18.43% compared to 9.00% for
the second quarter of 2001. Return on average assets was
1.21% for the second quarter of 2002 compared to .54% for
the second quarter of 2001.
EARNINGS ANALYSIS
Net Interest Income
Average earning assets increased $9.2 million, from $321.9
million for the three months ended June 30, 2001 to $331.1
million for the three months ended June 30, 2002. The mix
of earning assets shifted from 64% of average earning
assets in loans for the second quarter of 2001 up to 67% in
the second quarter of 2002. The average yield on loans
decreased 164 basis points, from 10.33% to 8.69% for the
three months ended June 30, 2002.
Decreases in the prime lending rate and market competition
for quality credits lowered commercial and real estate loan
yields by 148 basis points in quarterly comparison. The
average volume of the commercial and real estate portfolio
grew 8% or $13.3 million in quarterly comparison, from
$164.2 million for the quarter ending June 30, 2001 to
$177.5 million for the quarter ending June 30, 2002.
Consumer loan yields decreased 201 basis points primarily
due to falling interest rates and the average volume
increased slightly, from $42.0 million for the quarter
ending June 30, 2001 to $ 42.8 million for the quarter
ending June 30, 2002.
Investment volume increased by $5.8 million, from $100.5
million at June 30, 2001 to $106.3 million at June 30, 2002.
The volume of federal funds sold decreased $10.7 million
in quarterly comparison. The average taxable-equivalent
yield on investments decreased 89 basis points, from 6.41%
at June 30, 2001 to 5.52% at June 30, 2002.
Lower yields in both loans and investments decreased the
taxable-equivalent yield on quarterly average earning assets
125 basis points, from 8.83% for the second quarter of
2001 to 7.58% for the second quarter of 2002.
Average interest-bearing deposits decreased $5.5 million in
quarterly comparison, from $244.2 million for the quarter
ending June 30, 2001 to $238.7 million for the quarter
ending June 30, 2002. The decrease in average volume
resulted from a decline in certificates of deposits partially
offset by an increase in interest-bearing transaction and
money market deposits. The rate paid on interest-bearing
deposits decreased 179 basis points for the same period,
from 4.26% to 2.47%. Included in interest-bearing
liabilities is $7,000,000 in trust preferred securities
issued in February 2001. The interest rate on the trust
preferred securities is 10.20% with interest payable semi-
annually. The average rate paid on total interest-bearing
liabilities decreased 177 basis points, from 4.47% for the
quarter ended June 30, 2001 to 2.70% for the quarter ended
June 30, 2002.
The net effect of changes in the volume and mix of average
earning assets and interest-bearing liabilities resulted in a
23 basis point improvement in the net taxable-equivalent
yield on average earning assets, from 5.29% for the quarter
ended June 30, 2001 to 5.52% for the quarter ended June
30, 2002. A review of the changes in the volume and
yields of average earning assets and interest-bearing
liabilities between the two six month periods ended June
30, 2001 and 2002 reflected results similar to the quarterly
comparison. The net taxable-equivalent yield on average
earning assets for the six months ended June 30, 2002
increased 4 basis points from 5.33% at June 30, 2001 to
5.37% at June 30, 2002. Volume increases in earning
assets resulted in an increase to net interest income of
$416,374 between the two six month periods.
Non-interest Income
MidSouth's primary source of non-interest income, service
charges on deposit accounts, increased $311,563 for the
three months and $593,914 for the six months ended June
30, 2002 as compared to the same periods for 2001. The
increases were due primarily to a higher volume of
transactions on deposit accounts, which resulted in
increased insufficient funds fees. Other non-interest
income, net of gains on sales of investment securities,
increased $27,671 in quarterly comparison and $64,723 in
year-to-date comparison.
Non-interest Expense
Non-interest expense increased $375,710 for the three
months and $749,842 for the six months ended June 30,
2002 compared to the three and six months ended June 30,
2001. Increases were recorded primarily in the categories
of salaries and employee benefits, occupancy expense,
printing and office supplies expenses, and professional fees.
Salaries and employee benefits increased primarily due to
additional staff and an increase in the cost of group health
insurance. The number of full-time equivalent ("FTE")
employees increased by 12, from 197 in June 2001 to 209
in June 2002. Staff additions over the past twelve months
included a compliance officer, two internal auditors and a
collateral documentation officer to enhance the risk
management and loan administration functions.
Occupancy expense increased in the three and six month
periods ended June 30, 2002 compared to the same period
of 2001 due to increases in lease expense, depreciation and
maintenance expenses on computer hardware and software
and property taxes.
Printing expenses increased primarily due to Bank-paid
check orders associated with MidSouth's Business Value
Checking and Select 50 programs. Office supplies
increased due primarily to the completion of a new
facility in Jennings and new offices at MidSouth's main
office in Lafayette. The increase in professional fees
resulted primarily from consulting fees associated with
a process and workflow review of MidSouth's retail,
lending and technology areas.
BALANCE SHEET ANALYSIS
MidSouth ended the second quarter of 2002 with
consolidated assets of $379,991,713, an increase of $16.2
million from the $363,779,863 reported for December 31,
2001. Deposits increased over the six months ended June
30, 2002 by $11.2 million, from $330,577,458 at December
31, 2001 to $341,799,739 due to the $12.2 million in
deposits acquired through the IberiaBank Morgan City
branch purchase on June 21, 2002.
Loans experienced growth of $15.7 million in the first six
months of 2002, $5.4 million of which was acquired
through the branch purchase. Securities available-for-sale
increased by $6.6 milllion, from $99.4 million at December
31, 2001 to $106.0 million at June 30, 2002. The increase
reflects purchases of $24.5 million offset by sales,
maturities and principal paydowns of $18.5 million. Net
unrealized gains in the securities available-for-sale
portfolio, net of tax effect, were $1,059,500 at June 30,
2002, compared to a net unrealized gain of $469,962 at
December 31, 2001. These amounts result from interest
rate fluctuations and do not represent permanent adjustment
of value. Moreover, classification of securities as
available-for-sale does not necessarily indicate that the
securities will be sold prior to maturity.
Capital
As of June 30, 2002, MidSouth's leverage ratio was 8.33%
as compared to 7.80% at December 31, 2001. Tier 1 capital
to risk-weighted assets was 11.96% and total capital to risk-
weighted assets was 13.11% at the end of the second
quarter of 2002. At year-end 2001, Tier 1 capital to risk-
weighted assets was 11.68% and total capital to risk-
weighted assets was 12.72%. Included in the capital ratio
calculations is $7 million in Trust Preferred Securities
issued in February of 2001. For regulatory purposes, these
funds qualify as Tier 1 capital. For financial reporting
purposes, these funds are included as a liability under
generally accepted accounting principles.
Nonperforming Assets and Past Due Loans
Table 1 summarizes MidSouth's nonaccrual, past due and
restructured loans and nonperforming assets.
Nonperforming Assets and
Loans Past Due 90 Days
================================================================
June December June
30, 31, 30,
2002 2001 2001
Nonperforming loans $832,209 $768,753 $431,570
Other real estate owned, net 108,752 359,336 343,729
Total nonperforming assets $940,961 $1,128,089 $775,299
Loans past due 90 days
or more and still accruing $716,639 $999,538 $854,216
Nonperforming loans as a
% of total loans 0.36% 0.38% 0.20%
Nonperforming assets as a
% of total loans, other real
estate owned and other assets
Repossessed 0.41% 0.55% 0.36%
ALL as a % of nonperforming
assets 303.50% 201.77% 314.50%
Nonperforming assets were $940,961 as of June 30, 2002 a
decrease of $187,128 from the $1,128,089 reported for
December 31, 2001 and an increase of $165,662 from the
$775,299 reported for June 30, 2001. Loans past due 90
days or more decreased in June 2002 to $716,639 from
$999,538 in December 2001 and decreased from $854,216
as of June 30, 2001.
Specific reserves have been established in the ALL to cover
probable losses on nonperforming assets. The ALL is
analyzed quarterly and additional reserves, if needed, are
allocated at that time. Management believes that the
$2,855,844 in the allowance as of June 30, 2002 is
sufficient to cover probable losses in nonperforming assets
and in the loan portfolio. Loans classified for regulatory
purposes but not included in Table 1 do not represent
material credits about which management has serious
doubts as to the ability of the borrower to comply with loan
repayment terms.
Page 15
Item 4. Submission of Matters to a Vote of Security Holders
At the annual meeting of shareholders of MidSouth Bancorp, Inc. held
May 21, 2002 at 4:00 p.m., the Class III Directors and an additional
Class II Director were elected.
The following provides information as to the votes:
Election of Class III Directors For Withheld
James R. Davis, Jr. 2,390,693 8,706
Karen L. Hail 2,388,654 10,745
Milton B. Kidd, III, O.D. 2,388,574 10,825
Election of an additional Class II Director
Stephen C. May 2,390,693 8,706
Item 6. Exhibits and Reports on Form 8-K Page 16
(a) Exhibits
Exihibit Number Document Description
3.1 Amended and Restated Articles of Incorporation of
MidSouth Bancorp, Inc. is included as Exhibit 3.1
to the MidSouth's Report on Form 10-K for the year
ended December 31, 1993, and is incorporated herein
by reference.
3.2 Articles of Amendment to Amended and Restated
Articles of Incorporation dated July 19, 1995 are
included as Exhibit 4.2 to MidSouth's Registration
Statement on Form S-8 filed September 20, 1995
and is incorporated herein by reference.
3.3 Amended and Restated By-laws adopted by the Board
of Directors on April 12, 1995 are included as
Exhibit 3.2 to Amendment No. 1 to MidSouth's
Registration Statement on Form S-4 (Reg. No.
33-58499) filed on June 1, 1995.
10.1 MidSouth National Bank Lease Agreement with
Southwest Bank Building Limited Partnership is
included as Exhibit 10.7 to the Company's annual
report on Form 10-K for the Year Ended
December 31, 1992, and is incorporated herein by
reference.
10.2 First Amendment to Lease between MBL Life Assurance
Corporation, successor in interest to Southwest
Bank Building Limited Partnership in Commendam, and
MidSouth National Bank is included as Exhibit 10.1
to Report on the Company's annual report on
Form 10-KSB for the year ended December 31, 1994,
and is incorporated herein by reference.
10.3 Amended and Restated Deferred Compensation Plan and
Trust is included as Exhibit 10.3 to the Company's
annual report on Form 10-K for the year ended
December 31, 1992 and is incorporated herein by
reference.
10.4 Employment Agreements with C. R. Cloutier and
Karen L. Hail are included as Exhibit 5(c) to
MidSouth's Form 1-A and are incorporated
herein by reference.
10.6 MidSouth Bancorp, Inc.'s 1997 Stock Incentive Plan
is included as Exhibit 4.5 to MidSouth's definitive
Proxy Statement filed April 11, 1997, and is
incorporated herein by reference.
Page 17
10.7 The MidSouth Bancorp, Inc. Dividend Reinvestment
and Stock Purchase Plan is included as Exhibit 4.6
to MidSouth Bancorp, Inc.'s Form S-3D filed on
July 25, 1997 and is incorporated herein by
reference.
10.8 Loan Agreements and Master Notes for lines of credit
established for MidSouth Bancorp, Inc. and Financial
Services of the South, Inc. are included as
Exhibit 10.7 of MidSouth's Form 10-QSB filed on
August 14, 1997 and is incorporated herein by
reference.
10.9 Modification Agreement to the Loan Agreement and
Master Note for the Line of Credit established for
MidSouth Bancorp, Inc. is included as Exhibit 10.9
of MidSouth's Form 10-QSB filed on August 13, 1999
and is incorporated herein by reference.
10.10 Junior Subordinated Debentures Interest Debenture
issued on February 22, 2001 by Midsouth Bancorp, Inc.
is included as Exhibit 99 to MidSouth Bancorp, Inc.'s
Form 10-QSB filed on May 15, 2001, and is
incorporated hereing by reference.
11 Computation of earnings per share
99.1 Certification pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
(b) Reports Filed on Form 8-K
(none)
Signatures
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
MidSouth Bancorp, Inc.
(Registrant)
Date: August 14, 2002
________________________________
C. R. Cloutier, President & CEO
________________________________
Karen L. Hail, Executive Vice
President & CFO
________________________________
Teri S. Stelly, Senior Vice
President & Controller