Attached files
| file | filename |
|---|---|
| EX-99.1 - EXHIBIT 99.1 - MIDSOUTH BANCORP INC | mslq309302017er-8kex991.htm |
| 8-K - MIDSOUTH BANCORP FORM 8-K - MIDSOUTH BANCORP INC | form8-kxxoctober242017.htm |
3Q17 Update
3Q17 Financial Update
Quarterly earnings of $856,000, $0.05 per diluted share
Loan loss provision of $4.3 million, or $0.17 per share
Operating earnings was $0.07 per share excluding restructuring charges noted
below and pre-tax gain on sale of bonds of $338,000
Restructuring charges of $903,000 (pre-tax), or $0.03 per share after-tax
Includes write-offs of leasehold improvements and furniture & equipment as well as lease
termination costs
Closed 7 branches with sale of 2 branches on schedule for Q4 close
Minimal impact from Hurricane Harvey, approximately $250,000
Deferred interest and waiving of ATM and NSF fees; no significant credit impact
Minor disruption to branch operations and employees
Dramatically stronger capital levels after completion of capital raise
Tangible Common Equity/Tangible Assets increased to 9.5% at September 30,
2017, from 9.2% at June 30, 2017 and 6.8% at March 31, 2017
Overallotment from capital raise exercised July, 2017 adding $5.8 million to capital
Cash at Holding Company of $61.5 million at September 30, 2017
2
3Q17 Financial Update (cont’d)
Other key operating metrics
Loans declined $4.3 million
Payoff/paydown of $15.8 million of classified relationships
Continued paydown of energy portfolio – decline of $11.0 million
Charge-offs of $2.5 million of loans rated as classified at June 30,
2017.
Core Deposits remain stable at 88% of deposit mix with low
funding cost of 0.35%
Core Net Interest Margin of 4.12% vs. 4.09% for 2Q17
Core Noninterest Expense of $16.9 million vs. $17.2 million for
2Q17
3Q17 Pre-Tax, Pre-Provision earnings, operating $7.1 million vs.
$6.2 million for 2Q17
3
3Q17 Asset Quality Summary
Loan loss reserve/loans 2.03% at 9/30/17 vs. 1.99% at 6/30/17
3Q17 Loan Loss Provision of $4.3 million
Total net charge-offs for quarter $3.9 million
Includes $2.3 million of charge-offs on seven collateral dependent loans
on non-accrual
Charge-offs on collateral dependent loans – more aggressive approach
consistent with regulatory guidance
Non-performing assets $53.9 million at 9/30/17 vs. $56.4 million at
6/30/17
Classified/Capital (Bank Level) was 66.2% vs. 72.0% at 6/30/17
Energy loans decreased $11.0 million to 16.0% of loans, down from
16.8% at 6/30/17
4
3Q17 Energy Highlights
Energy outstandings down $11 million in 3Q, or 5.3%, to $198 million
16.0% of loans, down from 16.8% at 6/30/17
Direct C&I – 82% of balances, Indirect – 18% (CRE and RRE)
C&I Wtd Average Maturity – 3.1 years
Reserves on C&I energy loans 5.7%; Other energy related 4.5%
Energy reserve stands at 5.5% of energy loans at 9/30/17
Three energy-related C/Os during quarter totaling $862,000
One new energy-related impairment totaling $103,000 was identified
during 3Q and two impairment charges of $104,000 were recorded
related to existing impaired loans identified prior to 3Q17
Cycle to date NCO’s - $10.8 million or 4.08% of 12/31/14 energy
loans
5
3Q17 Energy Highlights (cont’d)
Total criticized energy loans 44.7% of total energy loans
Unchanged from 44.7% at 6/30/17
Total criticized down $5.1 million to $88.4 million (down 5.5%)
Seven energy-related rating changes during quarter
2 relationships downgraded to Special Mention (SM) - $3.6 million
5 relationships downgraded to Substandard (SS) - $1.8 Million
2 Shared National Credits – $12.7 million or 6.4% of energy loans
Unfunded Commitments – Only 21% of outstanding balances
$42.5 million at 9/30/17 - Utilization rate of 57.5% vs. 53.4% at 6/30/17
A/R – 75% of commitments, Equipment 11%, CRE 9%
A/R customers have lockbox agreements and/or at minimum provide
monthly borrowing base certificates
Houston non-owner occupied CRE - $29.6 million, 2.4% of total loans
6
Energy Portfolio as of 9/30/2017 (*)
*Includes loans where the borrower's ability to repay could be disproportionately impacted by prolonged low oil and gas prices
($’s in Millions)
7
Collateral
Total $’s
(Millions)
% of Loan
Portfolio
# of
Loans
# of
Relationships
Avg $ per
Relationship
Wt'd Avg
Maturity (Yrs)
Accounts Receivables $ 44.5 22.5% 61 56 $ 0.8 0.4
Barges, Crew Boats, Marine Vessels 50.0 25.3% 25 18 2.8 5.5
Equipment 59.3 30.0% 155 79 0.8 3.3
Inventory 2.1 1.1% 6 6 0.3 1.6
CD/Mkt. Securities 2.3 1.1% 13 11 0.2 1.2
All Other 3.1 1.6% 74 63 0.0 0.0
Sub Total C & I $ 161.3 81.5% 334 233 $ 0.7 3.1
Commercial Real Estate 32.9 16.6% 63 50 0.7 15.1
Consumer Real Estate 3.4 1.7% 41 36 0.1 11.5
Other 0.3 0.2% 18 18 0.0 0.0
Sub Total Non C & I $ 36.5 18.5% 122 104 0.4 14.7
Total $ 197.8 100.0% 456 337 $ 0.6 5.3
Past Due Energy Loans as of 9/30/2017 (*)
*Includes loans where the borrower's ability to repay could be disproportionately impacted by prolonged low oil and gas prices
> 30 days + nonaccruals =
13.46% of energy loans
($’s in Millions)
8
Collateral
Total $’s
(Millions)
% of
Loan
Portfolio
Total Past
Due $’s
(Millions)
% of
Loan
Portfolio
0-29
30-59
60-89
90+
Non-
Accruals
Accounts Receivables $44.5 22.5% $ 1.58 0.8%
$ 0.47
-
-
- $1.11
Barges, Crew Boats, Marine Vessels 50.0 25.3% 14.72 7.4%
2.60
-
-
-
12.12
Equipment 59.3 30.0% 9.16 4.6%
0.09
0.18
0.11
- 8.78
Commercial Real Estate 32.9 16.6% 3.98 2.0%
0.93
-
-
- 3.06
Consumer Real Estate 3.4 1.7% 0.33 0.2%
0.07
0.07
-
- 0.19
Inventory 2.1 1.1% 1.04 0.5%
0.06
-
-
- 0.98
CD/Mkt. Securities 2.3 1.1% 0.23 0.1%
0.23
-
-
- -
All Other 3.4 1.7% 0.61 0.3%
0.59
0.01
-
- 0.02
Total $ 197.8 100.0% $ 31.67 16.0% $ 5.04 $ 0.26 $ 0.11 $ - $ 26.26
Accruing – Past Due ($ Millions)
Energy Loans by Risk Rating & Loan Type as of 9/30/2017 (*)
($’s in Millions)
*Includes loans where the borrower's ability to repay could be disproportionately impacted by prolonged low oil and gas prices
9
Risk Rating
Rating
# C & I
R/E
Comm
Consumer
Real
Estate
CD/Mkt.
Securities Other
3Q17
Total
2Q17
Total
3Q17 %
of Loan
Portfolio
2Q17 %
of Loan
Portfolio
Prime 1 $ - $ - $ - $ 0.7 $ - $ 0.7 $ 0.7 0.4% 0.4%
Excellent 2 0.0 0.1 - 1.0 - 1.1 1.1 0.6% 0.5%
Above Average 3 24.9 1.5 0.1 - 0.0 26.5 28.9 13.4% 13.8%
Satisfactory 4 58.5 18.4 2.3 0.5 1.3 81.2 84.6 41.0% 40.5%
Total Pass Rated $ 83.4 $ 20.0 $ 2.4 $ 2.3 $ 1.3 $ 109.5 $ 115.3 55.3% 55.2%
Other Assets
Special Mention 5 4.6 0.4 - - - 5.0 3.3 2.5% 1.6%
Substandard 6 71.0 11.3 1.0 - 0.0 83.4 90.2 42.1% 43.2%
Doubtful 7 0.0 - - - - 0.0 0.0 0.0% 0.0%
Total $ 159.0 $ 31.7 $ 3.4 $ 2.3 $ 1.3 $197.8 $208.8 100.0% 100.0%
Energy Loans by Risk Rating & Collateral as of 9/30/2017 (*)
($’s in Millions)
*Includes loans where the borrower's ability to repay could be disproportionately impacted by prolonged low oil and gas prices
10
Collateral
Pass
Other Assets
Special
Mention
Substandard
Doubtful
3Q17
Total
2Q17
Total
3Q17 %
of Loan
Portfolio
2Q17 %
of Loan
Portfolio
Accounts Receivables $ 20.7 $ 0.6 $ 23.3 $ - $ 44.5 $ 43.4 22.5% 20.8%
Barges, Crew Boats, Marine
Vessels 21.1 - 28.9 - 50.0 51.2 25.3% 24.5 %
Equipment 38.3 3.3 17.7 - 59.3 69.5 30.0% 33.3 %
Commercial Real Estate 21.1 0.4 11.3 - 32.9 33.7 16.6% 16.1 %
Real Estate 2.3 - 1.0 - 3.4 3.3 1.7% 1.6 %
Inventory 0.4 0.7 1.0 - 2.1 2.1 1.1% 1.0 %
CD Secured 2.3 - - - 2.3 2.3 1.1% 1.1 %
All Other 3.3 - 0.1 0.0 3.4 3.3 1.7% 1.6 %
Total $ 109.5 $ 5.0 $ 83.3 $ 0.0 $ 197.8 $ 208.8 100.0% 100.0 %
Energy Loans by Type of Facility as of 9/30/2017 (*)
* Includes loans where the borrower's ability to repay could be disproportionately impacted by prolonged low oil and gas prices
11
Facility Type
Bal 09.30.17
($'s in Millions)
% of Loan
Portfolio
Bal 06.30.17
($'s in Millions)
% of Loan
Portfolio
Net Change
3Q17
Closed-End $ 132.2 66.8% $ 146.1 70.0 % - $ 13.9
Revolving LOC 59.1 29.9% 57.1 27.3 % 2.0
Other 6.5 3.3% 5.7 2.7 % 0.9
Total $ 197.8 100.0% $ 208.8 100.0 % - $ 11.0
Energy Loans Unfunded Commitment as of 9/30/2017 (*)
* Includes loans where the borrower's ability to repay could be disproportionately impacted by prolonged low oil and gas prices
Combined utilization rate (including straight lines of credit) was 57.5% compared to
53.4% at 06/30/2017.
Revolving Lines of Credit ($’s in Millions)
12
Collateral
Original Line
Amount
Current
Balance
Unfunded
Amount
Accounts Receivables $ 76.4 $ 44.5 $ 31.9
Barges, Crew Boats, Marine Vessels 0.4 0.4 -
Equipment 16.4 11.6
4.8
Commercial Real Estate 4.1 0.2
3.9
Real Estate 0.4 0.3
0.0
Inventory 0.8 0.8 -
CD Secured 1.7 0.7
1.0
All Other 1.5 0.6
0.9
Total $ 101.6 $ 59.1 $ 42.5
Reconciliation of Non-GAAP Measures
13
9/30/2017 6/30/2017 3/31/2017
Tangible Common Equity to Tangible Assets
Total equity 267,643$ 261,570$ 216,062$
Less preferred equity 40,987 41,092 41,110
Total common equity 226,656$ 220,478$ 174,952$
Less intangible assets 45,963 46,239 46,516
Tangible common equity A 180,693$ 174,239$ 128,436$
Total assets 1,947,066$ 1,945,569$ 1,934,939$
Less intangible assets 45,963 46,239 46,516
Tangible assets B 1,901,103$ 1,899,330$ 1,888,423$
Tangible common equity to tangible assets A/B 9.5% 9.2% 6.8%
Core Net Interest Margin
Net interest income (FTE) 19,003$ 18,442$
Less purchase accounting adjustments (355) (380)
Net interest income, net of purchase accounting adjustments C 18,648$ 18,062$
Total average earnings assets 1,793,754$ 1,768,862$
Add average balance of loan valuation discount 1,504 1,720
Average earnings assets, excluding loan valuation discount D 1,795,258$ 1,770,582$
Core net interest margin C/D 4.12% 4.09%
Core Noninterest expense
Total noninterest expense 17,759$ 19,604$
Severance and retention accruals - (1,341)
One-time charge related to discontinued branch projects - (465)
One-time charge related to closure of branches (903) -
Write-down of assets held for sale - (570)
Total core noninterest expense 16,856$ 17,228$
Pre-tax, Pre-provision Earnings, Operating
Earnings (loss) before income taxes 2,240$ (8,635)$
Severance and retention accruals - 1,341
One-time charge related to discontinued branch projects - 465
One-time charge related to closure of branches 903 -
Write-down of assets held for sale - 570
Net gain on sale of securities (338) (3)
Provision for loan losses 4,300 12,500
Pre-tax, pre-provision earnings, operating 7,105$ 6,238$
For the Quarter Ended