MidSouth Bancorp Reports Operating Results (10-Q)
Midsouth Bancorp has a market cap of $136.34 million; its shares were traded at around $14.02 with a P/E ratio of 26.96 and P/S ratio of 2.09. The dividend yield of Midsouth Bancorp stocks is 2%. Midsouth Bancorp had an annual average earning growth of 2.6% over the past 10 years.
Highlight of Business Operations:We reported net earnings available to common shareholders of $951,000 for the second quarter of 2010, an increase of 113% compared to net earnings available to common shareholders of $446,000 reported for the second quarter of 2009. Diluted earnings for the second quarter of 2010 were $0.10 per common share, an increase of 42.9% from $0.07 per common share reported for the second quarter of 2009.
Second quarter net earnings available to common shareholders compared to the same period for the prior year were positively impacted by a $600,000 decrease in the provision for loan losses, which offset a $326,000 increase in tax expense. Quarterly revenues, defined as net interest income and non-interest income, increased $268,000 in quarterly comparison. Net interest income increased $102,000 as a decrease in interest expense on deposits and borrowings exceeded the decrease in interest income from earning assets. Non-interest income increased $166,000, primarily due to increases of $66,000 in letters of credit income, $59,000 in ATM/debit card income and $34,000 in service charges on deposit accounts. Non-interest expense increased $37,000 in quarterly comparison as increases primarily consisting of $259,000 in marketing costs, $180,000 in expenses on other real estate owned (“OREO”), $101,000 in data processing costs, $92,000 in ATM and debit card expenses, and $87,000 in professional and consulting fees were offset by decreases of $334,000 in salaries and benefit costs and $415,000 in FDIC assessments. The significant decrease in FDIC premiums is due to the one-time assessment recorded in the second quarter of 2009. The decrease in salaries and benefit costs resulted primarily from a $313,000 decrease in group health insurance expense as MidSouth s partially self-funded group health insurance plan experienced a lower amount of insurance claims for the first six months of 2010 compared to the first six months of 2009.
In year-to-date comparison, a $495,000 reduction in non-interest expenses, a $450,000 decrease in the provision for loan losses and a $277,000 increase in non-interest income had a positive impact on earnings. A $124,000 decrease in net interest income and a $391,000 increase in tax expense lowered the impact to a net $685,000 increase in net income available to common shareholders for the six months ended June 30, 2010 compared to the six months ended June 30, 2009. The $495,000 reduction in non-interest expenses was primarily driven by a $401,000 decrease in FDIC premiums related to the one-time assessment recorded in the second quarter of 2009. Increases in marketing, professional and consulting fees, and OREO expenses were offset by reductions in several non-interest expense categories. The $277,000 improvement in non-interest income was primarily driven by increases in service charges on deposit accounts and ATM and debit card income.
Fully taxable-equivalent (“FTE”) net interest income totaled $10.43 million for the second quarter of 2010, an increase of 0.5%, or $56,000, from the $10.38 million reported for the second quarter of 2009. The increase in FTE net interest income resulted primarily from a 45 basis point reduction in the average rate paid on interest-bearing liabilities, from 1.63% at June 30, 2009 to 1.18% at June 30, 2010. The $669,000 reduction in interest expense offset a $613,000 decrease in interest income on earning assets for the period. Interest income on loans declined due to a $14.4 million decrease in the average volume and an 8 basis point decrease in the average yield on loans in quarterly comparison. Interest income on investments decreased as the impact of the 150 basis point decline in the average yield on investments offset a $67.5 million increase in the average volume. Investments yields declined throughout 2009 as cash flows from maturing and called securities earning higher yields were reinvested primarily in lower-yielding shorter-term agency bonds. Investment yields were further impacted by an increase in cash held overnight earning interest at a rate of 25 basis points or less. The $67.5 million increase in the average volume of investments resulted primarily from the temporary investment of capital proceeds from our common stock offering in December 2009.
A 45 basis point reduction in the average rate paid on interest-bearing deposits lowered interest expense in prior year quarterly comparison and significantly reduced the impact of the decrease in interest income on earning assets. The average volume of interest-bearing deposits increased $12.0 million, from $575.1 million at June 30, 2009 to $587.1 million at June 30, 2010. A $30.3 million increase in the volume of NOW, money market and savings deposits, primarily in consumer and commercial Platinum money market accounts, offset an $18.3 million decrease in the average volume of time deposits. We offer competitive market rates of interest on our Platinum money market accounts, and in the current rate environment those rates are comparable to rates earned on time deposits. The average volume of retail repurchase agreements, included in securities sold under agreements to repurchase, increased $2.2 million in quarterly comparison, despite a 41 basis point reduction in rates.
In year-to-date comparison, FTE net interest income decreased $221,000 as interest income from loans and investments decreased $1.5 million, partially offset by a $1.3 million reduction in interest expense. The decrease in interest income on average earning assets resulted primarily from a 64 basis point decline in the average yield earned on interest earning assets, from 6.28% at June 30, 2009 to 5.64% at June 30, 2010, driven by lower investment yields. An average volume increase of $42.3 million in average earning assets partially offset the impact of lower yields. Interest expense decreased primarily due to a 45 basis point reduction in the average rate paid on interest-bearing liabilities, from 1.67% at June 30, 2009 to 1.22% at June 30, 2010, driven by a decrease in the average rate paid on interest-bearing deposits. As a result, the taxable-equivalent net interest margin declined 29 basis points, from 5.03% for the six months ended June 30, 2009 to 4.74% for the six months ended June 30, 2010.
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