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MidSouth Bancorp Reports Operating Results (10-Q)

May 10, 2010 | About:

MidSouth Bancorp (NYSE:MSL) filed Quarterly Report for the period ended 2010-03-31.

Midsouth Bancorp has a market cap of $137.58 million; its shares were traded at around $14.15 with a P/E ratio of 28.88 and P/S ratio of 2.11. The dividend yield of Midsouth Bancorp stocks is 1.98%. Midsouth Bancorp had an annual average earning growth of 2.6% over the past 10 years.

Highlight of Business Operations:

We reported net income available to common shareholders of $1,136,000 for the first quarter ended March 31, 2010, an increase of 18.8% above net income available to common shareholders of $956,000 reported for the first quarter of 2009. Diluted earnings per common share for the first quarter of 2010 were $0.12 per share, a decrease of 14.3% from the $0.14 per common share for the first quarter of 2009. Diluted earnings per share were impacted by our successful public offering of 2.7 million shares in the fourth quarter of 2009. An additional 405,000 shares were issued in January 2010 as the underwriter for the offering exercised in full their over-allotment option. Net earnings available to common shareholders was reduced by $299,000 for the first quarter of 2010, compared to $277,000 for the first quarter of 2009, due to dividends recorded on our Fixed Rate Cumulative Perpetual Preferred Stock, Series A, issued to the U. S. Department of the Treasury on January 9, 2009 under the Capital Purchase Plan (“CPP”).

First quarter 2010 net earnings available to common shareholders compared to the same period for the prior year were positively impacted by a $532,000 decrease in non-interest expense, which offset a $115,000 decrease in quarterly revenues and a $150,000 increase in provision for loan losses. Quarterly revenues, defined as net interest income and non-interest income, decreased primarily due to a $226,000 reduction in net interest income, which was driven by a decline in earning asset yields and loan volume in quarterly comparison. The decline in net interest income was partially offset by a $111,000 increase in non-interest income, primarily due to a $60,000 increase in service charges on deposit accounts and a $31,000 increase in ATM/debit card income. Non-interest expense declined primarily due to decreases of $229,000 in salaries and benefit costs, $143,000 in marketing costs, $87,000 in occupancy expenses, $61,000 in shares tax expense, $52,000 in credit reporting expense, and $50,000 in professional fees associated with a customer relationship management system. The decrease in salaries and benefit costs resulted primarily from a $237,000 decrease in group health insurance expense. Our partially self-funded group health insurance plan experienced a lower amount of insurance claims for the first quarter of 2010 compared to the first quarter of 2009.

Fully taxable-equivalent (“FTE”) net interest income totaled $10.3 million for the first quarter of 2010, a decrease of 2.6%, or $277,000, from the $10.6 million reported for the first quarter of 2009. The decrease in FTE net interest income resulted primarily from a $21.3 million decrease in average loan volume and a 16 basis point decrease in the average yield on loans. Additionally, the average yield on investment securities decreased 135 basis points in prior year comparison. Investment yields declined as cash flow from the securities portfolio was reinvested primarily in lower-yielding shorter-term agency and municipal bond securities in 2009 and excess cash held overnight earned interest at a rate of 25 basis points or less. The impact of lower investment yields was partially offset by a $51.4 million increase in the average volume of investment securities, which resulted primarily from the temporary investment of capital proceeds from our common stock offering in December 2009.

A 49 basis point reduction in the average rate paid on interest-bearing deposits lowered interest expense in prior year comparison and significantly reduced the impact of the decrease in interest income on earning assets. The average volume of interest-bearing deposits increased $29.6 million, from $566.0 million at March 31, 2009 to $595.6 million at March 31, 2010. A $45.8 million increase in the volume of NOW, money market and savings deposits, primarily in consumer and commercial Platinum money market accounts, offset a $16.2 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 $15.4 million in quarterly comparison, despite a 75 basis point reduction in rates.

The average rate paid on the Company s junior subordinated debentures decreased 65 basis points from first quarter of 2009 to first quarter of 2010 on the $8.2 million of outstanding debentures. The debentures carry a floating rate equal to the 3-month LIBOR plus 2.50%, adjustable and payable quarterly. The rate at March 31, 2010 was 2.77%. The debentures mature on September 20, 2034 but may be repaid sooner, under certain circumstances. The Company also has outstanding $7.2 million of junior subordinated debentures due 2031 that carry a fixed interest rate of 10.20%.

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