LAFAYETTE, La., Jan. 25 /PRNewswire-FirstCall/ -- MidSouth Bancorp, Inc. today reported net income of $1,894,000 for the fourth quarter ended December 31, 2007, an increase of 8.3% over net income of $1,749,000 reported for the fourth quarter of 2006 and a decrease of 22.4% over net income of $2,441,000 reported for the third quarter of 2007. Diluted earnings per share for the fourth quarter of 2007 were $0.28 per share, an increase of 3.7% over the $0.27 per share for the fourth quarter of 2006 and a decrease of 24.3% below the $0.37 per share for the third quarter of 2007. These amounts reflect a five percent (5%) stock dividend to holders of record as of September 21, 2007 paid on October 23, 2007.
For the year ended December 31, 2007, net income totaled $8,776,000, a 6.8% increase compared to $8,220,000 for the year ended December 31, 2006. Diluted earnings per share were $1.32 per share for in 2007, compared to $1.24 for 2006. Fourth quarter and annual earnings for 2006 were reduced by a $248,000 pre-tax impairment charge related to network and phone assets replaced or upgraded. Excluding the $164,000 after-tax effect of the impairment charge, fourth quarter and annual earnings for 2006 were $1,913,000 and $8,384,000, respectively.
Fourth quarter 2007 earnings were negatively impacted by a $345,000 increase in the provision for loan losses in quarterly comparison. Provisions totaling $525,000 were recorded in the fourth quarter of 2007, compared to $180,000 recorded in provisions for the fourth quarter of 2006. Of the $525,000 in provision expense, $300,000 was necessary to cover probable losses identified in the Company's indirect auto financing portfolio during the fourth quarter 2007 as a result of fraudulent activity by one auto dealership in Texas. The remaining provision expense was primarily related to the overall risk assessed in the Company's residential real estate development credits based on current economic conditions.
A lower effective tax rate for the fourth quarter of 2007 reduced the impact of the increase in the provision for loan losses. The effective tax rate during the fourth quarter of 2007 was approximately 15.86%, as compared to 20.82% for the same period of 2006. The provision for income taxes reflects an effective tax rate of 20.62% for 2007 as compared to 24.92% in 2006. The lower rate for the fourth quarter and twelve-month period resulted from the Company's recognition of the Work Opportunity Tax Credit under the Katrina Emergency Tax Relief Act of 2005. As a result, income tax expense for the quarter and for the year was reduced by approximately $87,000 and $255,000, respectively.
Quarterly revenues for the Company, defined as net interest income and non-interest income, increased $1,886,000, or 16.5%, for the fourth quarter of 2007 compared to the fourth quarter of 2006. The improvement in revenues resulted primarily from an increase of $1,169,000 in net interest income, which was driven by a 13.0% increase in average loan volume in quarterly comparison. Non-interest income increased $717,000, primarily due to an increase in insufficient funds ("NSF") fees and ATM and debit card income that resulted from a higher volume of transactions processed. The improvement in quarterly revenues was offset by a $1,499,000 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 seven new facilities in 2007, three of which replaced existing facilities.
The Company's total assets for the fourth quarter ended December 31, 2007 were $854.0 million, a 6.1% increase over the $805.0 million in total assets recorded at December 31, 2006. Deposits were $733.5 million as of December 31, 2007, compared to $716.2 million as of December 31, 2006, an increase of $17.3 million, or 2.4%. Total loans were $569.5 million, an increase of $70.5 million, or 14.1%, from $499.0 million as of December 31, 2006. Nonperforming assets to total assets were 0.35% as of December 31, 2007, compared to 0.29% for the fourth quarter of 2006 and 0.22% in linked-quarter comparison.
Earnings Analysis
Net Interest Income. Net interest income totaled $9,613,000 for the fourth quarter of 2007, an increase of 13.8%, or $1,169,000, from the $8,444,000 reported for the fourth quarter of 2006. The improvement in net interest income resulted primarily from an increase of $45.6 million in average earning assets. Total interest income from earning assets increased $1.3 million for the fourth quarter of 2007 compared to 2006. The volume increase in earning assets was supported by a 7 basis point increase in the yield on loans, from 8.75% to 8.82%, and a 26 basis point increase in the taxable-equivalent yield on investment securities, from 4.88% to 5.14% in quarterly comparison.
Interest expense for the fourth quarter of 2007 increased $170,000 in comparison to the fourth quarter of 2006. A 15 basis point decrease in the average rate paid on interest-bearing liabilities lessened the impact of a $43.5 million increase in the average volume of interest-bearing liabilities in quarterly comparison. The taxable-equivalent net interest margin improved 34 basis points, from 4.83% for the fourth quarter of 2006 to 5.17% for the fourth quarter of 2007.
Net interest income increased $4,062,000, or 12.5%, for the year ended December 31, 2007, compared to 2006. The Company's taxable-equivalent net interest margin improved 20 basis points, from 4.90% at December 31, 2006, to 5.10% at December 31, 2007.
In linked-quarter comparison, average earning assets increased $13.9 million, with $12.3 million of the increase occurring in the loan portfolio. The improvement in loan volume was partially offset by a 15 basis point decrease in the average yield on loans, from 8.97% for the third quarter of 2007 to 8.82% for the fourth quarter of 2007. The taxable equivalent net yield on earning assets decreased 9 basis points, from 7.90% for the third quarter of 2007 to 7.81% for the fourth quarter of 2007. A 12 basis point decrease in the average rate paid on interest-bearing liabilities offset the impact of an $8.6 million increase in average volume and resulted in a $103,000 decrease in interest expense. The taxable-equivalent net interest margin remained relatively constant in linked-quarter comparison, with a 1 basis point improvement, from 5.16% to 5.17%.
Non-interest income. Non-interest income for the fourth quarter of 2007 totaled $3.7 million, or 24.3% above the $3.0 million earned in the fourth quarter of 2006 and 2.8% above the $3.6 million earned in the third quarter of 2007. For the year ended December 31, 2007, non-interest income increased $1.9 million, or 15.2% above non-interest income earned for 2006. The increase resulted primarily from an increase in service charges on deposit accounts related to insufficient funds fees ("NSF"). A higher volume of NSF transactions increased non-interest income by $502,000 in prior-year quarterly comparison, by $211,000 in linked-quarter comparison, and by $1,185,000 in twelve-month comparison. Additional increases to non-interest income were recorded in ATM and debit card fees and mortgage processing fees.
Operating Expenses. Non-interest expense increased $1.5 million in prior year quarterly comparison and $5.5 million in year-to-date comparison, primarily due to increased salary and benefits costs and occupancy expenses. The number of full-time equivalent employees increased from 375 at December 31, 2006, to 410 at December 31, 2007, as a result of franchise expansion and recruitment of talented leaders to support corporate growth initiatives. Additional increases were recorded in data processing expenses, professional fees, education and travel costs, and other growth-related expenses. In linked-quarter comparison, non-interest expenses increased $827,000 in the same growth-related categories, and also in marketing expenses and printing and supplies costs.
In the fourth quarter of 2007, the Company recorded FDIC assessments totaling $74,000, in addition to the $21,000 in FICO assessments. FDIC and FICO assessments for 2008, based on current deposit growth projections, will average approximately $127,000 per quarter, or $508,000 for the year. For several years, the Company has only been required to pay FICO (the Financing Corporation) assessments that currently total approximately $21,000 a quarter, or $84,000 annually. Beginning January 2007, the FDIC resumed deposit insurance assessments and also issued one-time credits against the assessments to qualifying institutions. The Company qualified for a one-time credit totaling approximately $240,000, which offset the new FDIC assessment through the third quarter of 2007.
Asset Quality. At December 31, 2007, nonperforming assets, including loans past due 90 days and over, totaled $3,005,000, or 0.35% of total assets, as compared to the $2,314,000, or 0.29% of total assets recorded at December 31, 2006. The increase in nonperforming assets in prior year comparison resulted primarily from an increase of $882,000 in loans past due 90 days and over, primarily attributable to four commercial loans. Of the $980,000 in loans past due 90 days and over at December 31, 2007, two commercial loans totaling $355,000 were paid off in January 2008. The increase in past due loans was partially offset by a decrease of $191,000 in nonaccrual loans, from $1,793,000 at December 31, 2006 to $1,602,000 at December 31, 2007.
Allowance coverage for nonperforming assets was 186.76% at December 31, 2007, compared to 215.08% at December 31, 2006. Net year-to-date charge-offs were 0.09% of total loans for the fourth quarter 2007, compared to 0.05% at December 31, 2006. The increase resulted primarily from indirect auto financing loans charged-off during the fourth quarter of 2007 totaling $65,000 and a decrease of $228,000 in recoveries of charged-off loans in 2007.
Management's most recent analysis of the Allowance for Loan and Lease Losses ("ALLL") indicated that the ALLL/total loans ratio of 0.99% was appropriate at December 31, 2007.
About MidSouth Bancorp, Inc.
MidSouth Bancorp, Inc. is a bank holding company headquartered in Lafayette, Louisiana with 33 locations in Louisiana and Texas and more than 120 ATMs. Through its wholly owned subsidiaries -- MidSouth Bank, N.A. and MidSouth Bank N.A. , Texas -- 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.
Established in 1985, MidSouth Bank, N.A. has 26 offices extending along the Interstate 10 corridor in south Louisiana located in Lafayette (9), Baton Rouge (2), New Iberia (3), Lake Charles, Sulphur, Jeanerette, Jennings, Thibodaux, Cutoff, Opelousas, Breaux Bridge, Cecilia, Morgan City, and Houma. In addition, a second retail location in Lake Charles recently held a grand opening event and a new banking facility in the Baton Rouge market is scheduled to open in March 2008.
Established in 1959, MidSouth Bank, Texas currently has six full-service offices in the southeast region of Texas, including Beaumont (3), Vidor, College Station and Conroe. It also has a commercial loan production office in the greater Houston market that will be converted to a full-service banking facility in early 2008. New facilities in Conroe and College Station opened in December 2007 and November 2007, respectively. Grand opening events were recently held for both of these new facilities.
The Company plans to combine the two banks late 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 December 31, % September 30, % EARNINGS DATA 2007 2006 Change 2007 Change Total interest income $14,744 $13,405 10.0% $14,651 0.6% Total interest expense 5,147 4,961 3.7% 5,234 -1.7% Net interest income 9,597 8,444 13.7% 9,417 1.9% Provision for loan losses 525 180 191.7% 300 75.0% Non-interest income 3,748 3,015 24.3% 3,574 4.9% Non-interest expense 10,569 9,070 16.5% 9,742 8.5% Provision for income tax 357 460 -22.4% 508 -29.7% Net income $1,894 $1,749 8.3% $2,441 -22.4% PER COMMON SHARE DATA Basic earnings per share (2) $0.29 $0.27 8.7% $0.37 -21.6% Diluted earnings per share (2) $0.28 $0.27 3.7% $0.37 -24.3% Book value at end of period (2) $10.41 $9.12 14.1% $10.07 3.4% Market price at end of period (2) $23.30 $29.68 -21.5% $22.90 1.7% Weighted avg shares outstanding Basic (2) 6,570,644 6,541,830 0.4% 6,572,740 0.0% Diluted (2) 6,638,199 6,668,768 -0.5% 6,637,362 0.0% AVERAGE BALANCE SHEET DATA Total assets $850,172 $796,305 6.8% $831,378 2.3% Earning assets 770,948 725,384 6.3% 757,037 1.8% Loans and leases 563,612 498,681 13.0% 551,340 2.2% Interest-bearing deposits 543,436 529,741 2.6% 534,610 1.7% Total deposits 726,221 709,703 2.3% 711,503 2.1% Total stockholders' equity 67,219 59,369 13.2% 63,763 5.4% SELECTED RATIOS 12/31/2007 12/31/2006 9/30/2007 Return on average assets 0.88% 0.87% 1.6% 1.16% -24.1% Return on average total equity 11.18% 11.69% -4.4% 15.19% -26.4% Return on average realized equity (1) 11.01% 11.49% -4.2% 14.94% -26.3% Average equity to average assets 7.91% 7.46% 6.0% 7.67% 3.1% Leverage capital ratio 8.68% 8.34% 4.1% 8.72% -0.5% Taxable-equivalent net interest margin 5.17% 4.83% 7.0% 5.16% 0.2% CREDIT QUALITY Allowance for loan loses as a % of total loans 0.99% 1.00% -1.5% 0.96% 2.6% Nonperforming assets to total assets 0.35% 0.29% 21.3% 0.22% 57.4% Net YTD charge-offs to total loans 0.09% 0.02% 374.1% 0.06% 58.9% (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 December 31, December 31, % September 30, June 30, 2007 2006 Change 2007 2007 Assets Cash and cash equivalents $30,873 $57,404 -46.2% $30,974 $25,241 Securities available- for-sale 181,452 180,674 0.3% 181,719 185,626 Securities held-to-maturity 10,746 15,901 -32.4% 11,515 12,132 Total investment securities 192,198 196,575 -2.3% 193,234 197,758 Total loans 569,506 499,046 14.1% 553,048 545,447 Allowance for loan losses (5,612) (4,977) 12.8% (5,297) (5,182) Loans, net 563,894 494,069 14.1% 547,751 540,265 Premises and equipment 39,229 30,609 28.2% 36,450 33,477 Goodwill and other intangibles 9,759 9,957 -2.0% 9,800 9,852 Other assets 18,103 16,408 11.6% 18,678 17,433 Total assets $854,056 $805,022 6.1% $836,887 $824,026 Liabilities and Stockholders' Equity Non-interest bearing deposits $182,588 $182,596 0.0% $179,860 $176,526 Interest bearing deposits 550,929 533,584 3.3% 534,494 540,366 Total deposits 733,517 716,180 2.4% 714,354 716,892 Securities sold under agreements to repurchase and FHLB borrowings 30,717 10,125 203.4% 36,346 25,737 Junior subordinated debentures 15,465 15,465 0.0% 15,465 15,465 Other liabilities 5,888 3,509 67.8% 4,435 3,235 Total liabilities 785,587 745,279 5.4% 770,600 761,329 Total shareholders' equity 68,469 59,743 14.6% 66,287 62,697 Total liabilities and shareholders' equity $854,056 $805,022 6.1% $836,887 $824,026 MIDSOUTH BANCORP, INC. and SUBSIDIARIES Condensed Consolidated Financial Information (unaudited) (in thousands except per share data) Three Months Ended Twelve Months Ended INCOME STATEMENT December 31, % December 31, % 2007 2006 Change 2007 2006 Change Interest income $14,744 $13,405 10.0% $57,139 $50,235 13.7% Interest expense 5,147 4,961 3.7% 20,534 17,692 16.1% Net interest income 9,597 8,444 13.% 36,605 32,543 12.5% Provision for loan losses 525 180 191.7% 1,175 850 38.2% Service charges on deposit accounts 2,636 2,197 20.0% 9,881 8,757 12.8% Losses on sales of securities, net 0 0 - 0 (7) -100.0% Other charges and fees 1,112 818 35.9% 4,378 3,629 20.6% Total non-interest income 3,748 3,015 24.3% 14,259 12,379 15.2% Salaries and employee benefits 5,231 4,357 20.1% 19,947 16,329 22.2% Occupancy expense 1,929 1,530 26.1% 6,877 5,988 14.8% Intangible amortization 41 52 -21.2% 198 299 -33.8% Other non-interest expense 3,368 3,131 7.6% 11,612 10,508 10.5% Total non-interest expense 10,569 9,070 16.5% 38,634 33,124 16.6% Income before income taxes 2,251 2,209 1.9% 11,055 10,948 1.0% Provision for income taxes 357 460 -22.4% 2,279 2,728 -16.5% Net income $1,894 $1,749 8.3% $8,776 $8,220 6.8% Earnings per share, diluted (1) $0.28 $0.27 5.0% $1.32 $1.24 6.6% (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 Fourth Third Second First Fourth Quarterly Trends Quarter Quarter Quarter Quarter Quarter 2007 2007 2007 2007 2006 Interest income $14,744 $14,651 $14,302 $13,442 $13,405 Interest expense 5,147 5,234 5,065 5,104 4,961 Net interest income 9,597 9,417 9,237 8,338 8,444 Provision for loan losses 525 300 350 0 180 Net interest income after provision for loan loss 9,072 9,117 8,887 8,338 8,264 Total non-interest income 3,748 3,574 3,690 3,263 3,015 Total non-interest expense 10,569 9,742 9,245 9,079 9,070 Income before income taxes 2,251 2,949 3,332 2,522 2,209 Income taxes 357 508 837 576 460 Net income $1,894 $2,441 $2,495 $1,946 $1,749 Earnings per share, basic (1) $0.29 $0.37 $0.38 $0.30 $0.27 Earnings per share, diluted (1) $0.28 $0.37 $0.38 $0.29 $0.27 Book value per share (1) $10.41 $10.07 $9.53 $9.36 $9.12 Return on Average Equity 11.18% 15.19% 16.03% 13.07% 11.69% (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) December 31, December 31, % September 30, June 30, 2007 2006 Change 2007 2007 Composition of Loans Commercial, financial, and agricultural $187,545 $155,098 20.9% $175,150 $176,093 Lease financing receivable 8,089 7,902 2.4% 10,017 9,362 Real estate - mortgage 204,291 192,583 6.1% 205,200 200,966 Real estate - construction 80,864 64,126 26.1% 73,787 75,809 Installment loans to individuals 87,775 78,613 11.7% 88,166 82,514 Other 942 724 30.1% 728 703 Total loans $569,506 $499,046 14.1% $553,048 $545,447 MIDSOUTH BANCORP, INC. and SUBSIDIARIES Condensed Consolidated Financial Information (unaudited) (in thousands) December 31, December 31, % September 30, June 30, 2007 2006 Change 2007 2007 Asset Quality Data Nonaccrual loans $1,602 $1,793 -10.7% $1,084 $840 Loans past due 90 days and over 980 98 900.0% 510 596 Total nonperforming loans 2,582 1,891 36.5% 1,594 1,436 Other real estate owned 143 368 -61.1% 143 251 Other foreclosed assets 280 55 409.1% 134 76 Total nonperforming assets $3,005 $2,314 29.9% $1,871 $1,763 Nonperforming assets to total assets 0.35% 0.29% 21.3% 0.22% 0.21% Nonperforming assets to total loans + OREO + other foreclosed assets 0.53% 0.46% 14.6% 0.34% 0.32% ALL to nonperforming assets 186.76% 215.08% -13.2% 283.11% 293.93% ALL to nonperforming loans 217.35% 263.19% -17.4% 332.31% 360.86% ALL to total loans 0.99% 1.00% -1.5% 0.96% 0.95% Year-to-date charge-offs $626 $542 15.5% $408 $187 Year-to-date recoveries 86 314 -72.6% 78 42 Year-to-date net charge-offs $540 $228 136.8% $330 $145 Net YTD charge-offs to total loans 0.09% 0.05% 89.6% 0.06% 0.03% MIDSOUTH BANCORP, INC. AND SUBSIDIARIES Yield Analysis (unaudited) (in thousands) Three Months Ended Three Months Ended 12/31/2007 12/31/2006 Tax Tax Average Equivalent Yield/ Average Equivalent Yield/ Balance Interest Rate Balance Interest Rate Taxable securities $83,393 $1,013 4.86% $93,643 $1,081 4.62% Tax-exempt securities 109,306 1,467 5.37% 102,439 1,323 5.17% Equity securities 4,377 52 4.75% 2,690 19 2.83% Federal funds sold 10,260 116 4.42% 27,930 365 5.11% Loans 563,612 12,525 8.82% 498,682 11,002 8.75% Total interest earning assets 770,948 15,173 7.81% 725,384 13,790 7.54% Noninterest earning assets 79,224 70,921 Total assets $850,172 $796,305 Interest bearing liabilities: Deposits $543,436 $4,393 3.21% $529,741 $4,535 3.40% Repurchase agreements and federal funds purchased 24,645 247 3.92% 3,976 43 4.23% Short term borrowings 11,717 138 4.61% 2,576 33 5.01% Junior subordinated debentures 15,465 353 8.93% 15,465 350 8.86% Total interest bearing liabilities 595,263 5,131 3.42% 551,758 4,961 3.57% Noninterest bearing liabilities 187,690 185,178 Shareholders' equity 67,219 59,369 Total liabilities and shareholders' equity $850,172 $796,305 Net interest income (TE) and margin $10,042 5.17% $8,829 4.83% Net interest spread 4.39% 3.98% MIDSOUTH BANCORP, INC. AND SUBSIDIARIES Yield Analysis (unaudited) (in thousands) Twelve Months Ended Twelve Months Ended 12/31/2007 12/31/2006 Tax Tax Average Equivalent Yield/ Average Equivalent Yield/ Balance Interest Rate Balance Interest Rate Taxable securities $86,076 $4,096 4.76% $98,378 $4,471 4.54% Tax-exempt securities 110,256 5,846 5.30% 93,918 4,804 5.12% Equity securities 3,533 156 4.42% 2,377 80 3.37% Federal Funds Sold 15,554 788 5.00% 23,528 1134 4.75% Loans 535,726 47,965 8.95% 474,520 41,145 8.67% Total interest earning assets 751,145 58,851 7.83% 692,721 51,634 7.45% Noninterest earning assets 74,289 68,882 Total assets $825,434 $761,603 Interest bearing liabilities: Deposits $541,221 $18,106 3.35% $506,029 $16,137 3.19% Repurchase agreements and federal funds purchased 13,880 610 4.33% 3,365 151 4.43% Short term borrowings 8,309 421 5.00% 649 33 5.02% Junior subordinated debentures 15,465 1,397 8.91% 15,465 1371 8.74% Total interest bearing liabilities 578,875 20,534 3.55% 525,508 17,692 3.37% Noninterest bearing liabilities 183,091 180,086 Shareholders' equity 63,468 56,009 Total liabilities and shareholders' equity $825,434 $761,603 Net interest income (TE) and margin $38,317 5.10% $33,942 4.90% Net interest spread 4.29% 4.09%
