MIDSOUTH BANCORP INC - FORM 8-K - EX-99.1 - EXHIBIT 99.1

Attached files

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EX-99.2 - EXHIBIT 99.2 - MIDSOUTH BANCORP INC	q22018earningsreleaseene.htm
8-K - 8-K - MIDSOUTH BANCORP INC	form8-kxxjuly302018.htm



Investor Contacts: Jim McLemore, CFA President & CEO 337.237.8343 Lorraine Miller, CFA EVP & CFO 337.593.3143

MidSouth Bancorp, Inc. Reports Second Quarter Results

Quarterly Highlights


•	Diluted operating EPS for Q2 2018 was $0.16 versus $0.21 for Q1 2018


•	Reported EPS for Q2 2018 was a loss of $0.09 versus a loss of $0.03 for Q1 2018


•	Bank level classified assets to capital declined sequentially to 53% from 54%


•	FTE net interest margin decreased 19 bps sequentially to 3.98% on lower loan yields due to loan paydowns


•	Core deposits were stable at 88.5% of $1.5 billion total deposits and funding costs remain low at 45 bps. Cost of deposits increased 6 bps sequentially for a 15% Deposit Beta for the quarter


•	Tangible common equity to tangible assets declined 11 bps sequentially to 8.96%

LAFAYETTE, LA., July 30, 2018/BUSINESS WIRE/ -- MidSouth Bancorp, Inc. (“MidSouth”) (NYSE:MSL) today reported a quarterly net loss available to common shareholders of $1.5 million for the second quarter of 2018, compared to net loss available to common shareholders of $6.2 million reported for the second quarter of 2017 and a $450,000 net loss available to common shareholders for the first quarter of 2018. The second quarter of 2018 included an after-tax charge of $4.2 million for regulatory remediation costs, and an after-tax charge of $15,000 for costs associated with the bulk loan sale. For comparison purposes, the first quarter of 2018 included an after-tax charge of $761,000 resulting from costs associated with the bulk loan sale, an after-tax charge of $3.1 million for regulatory remediation costs, and an after-tax charge of $115,000 related to the branch closures during the quarter. Excluding these non-operating expenses, diluted earnings for the second quarter of 2018 were $0.16 per common share, compared to $0.21 per diluted share for the first quarter of 2018, and a loss of $0.38 per diluted share for the second quarter of 2017.

Commenting on the quarter, Jim McLemore, President and CEO, noted “As indicated in our fourth quarter 2017 earnings release, we expected 2018 to be a heavy year for costs to remediate issues resulting from our 2017 Written Agreement with the OCC. This continues to be the case as we incurred over $5 million of expenses in the second quarter. As a result of these costs, we reported a loss for the quarter of $1.5 million. Excluding these expenses, the after-tax operating earnings of the Bank would have been $2.6 million.”

Mr. McLemore, commenting on MidSouth Bank’s ongoing transformation remarked, “It’s been roughly a year since we began our transformation and we are making good progress in our efforts to significantly improve franchise value. Our path to increasing franchise value means reducing risk, becoming more efficient and becoming a more focused commercial banking franchise. In the second quarter, we completed the build out of our senior management team and believe we have put an extremely talented management team in place. Our new talent additions come to us from larger institutions where they bring us insights and experience from a process maturity standpoint that will greatly aid in our transformation efforts. At the same time, these individuals understand the competitive strengths an institution our size has to offer our customers and will help us capitalize on these strengths.”

“On the credit transformation, we continue to meaningfully reduce credit risk while we make good progress improving the Bank’s credit culture. Credit costs were muted again this quarter at only $440,000. We have reduced our level of classified assets from a high of 80% of capital in the second quarter of 2017 down to 53% of capital at the end of the second quarter of 2018.”

“We have rationalized our branch network and reduced our number of branches by 25% over the last year, reflecting the reduction in branch traffic most banks are experiencing. We reallocated $2 million of annual operating costs from these branches to remediation investments to improve the long-term value of the Bank. Despite the closure of these branches, the loss of deposits from these branches has been significantly less than what we estimated. Overall, our deposit franchise continues to perform very well, with steady balances and our cost of funds increasing only 14bps over the second quarter of 2017.”

Remediation Update

Mr. McLemore continued, “In the third quarter of 2017, we began a process of a top-to-bottom review to identify opportunities to strengthen the Bank. Some of the areas we identified for review directly resulted from remediation issues identified in the OCC Written Agreement. At mid-year 2018, expenses in 5 of the 6 major areas are almost complete. In the second quarter, we substantially completed the evaluation phase of the last of these major areas to strengthen our BSA/AML/OFAC program. As a result, we are increasing our total estimated remediation costs for 2018 to $18-$20 million from our previous estimate of $10-$12 million. We recognize there is a significant cost to these remediation efforts but we believe these investments will pay off many times over in terms of increasing the value of the franchise through the reduction of risk and through more efficient and effective processes. We are focused on doing the right things and doing them well.”

Balance Sheet

Consolidated assets remained constant at $1.9 billion for the quarters ended June 30, 2018 and 2017 and March 31, 2018. Our stable core deposit base, which excludes time deposits, totaled $1.3 billion at June 30, 2018 and March 31, 2018 and accounted for 88.5% and 88.3% of deposits at June 30, 2018 and March 30, 2018, respectively. Net loans totaled $1.0 billion at June 30, 2018, compared to $1.1 billion at March 31, 2018 and $1.2 billion at June 30, 2017.

MidSouth’s Tier 1 leverage capital ratio was 12.71% at June 30, 2018, compared to 12.80% at March 31, 2018. Tier 1 risk-based capital and total risk-based capital ratios were 18.07% and

19.33% at June 30, 2018, compared to 17.08% and 18.34% at March 31, 2018, respectively. Tier 1 common equity to total risk-weighted assets at June 30, 2018 was 13.20%, compared to 12.50% at March 31, 2018. Tangible common equity totaled $162.6 million at June 30, 2018, compared to $164.4 million at March 31, 2018. Tangible book value per share at June 30, 2018 was $9.78 versus $9.89 at March 31, 2018.

Asset Quality

Nonperforming assets totaled $74.9 million at June 30, 2018, a decrease of $10.2 million compared to $85.1 million reported at March 31, 2018. The decrease in non-performing assets was primarily attributable to customer payoffs/ paydowns of $17 million of non-accrual loans in the second quarter. These decreases were partially offset by $8.6 million of loans placed on non-accrual during the quarter. Allowance coverage for nonperforming loans increased to 31.97% at June 30, 2018, compared to 30.84% at March 31, 2018. The ALLL/total loans ratio was 2.22% at June 30, 2018 and 2.23% at March 31, 2018. Including valuation accounting adjustments on acquired loans, the total valuation accounting adjustment plus ALLL was 2.30% of loans at June 30, 2018. The ratio of annualized net charge-offs to total loans increased to 0.87% for the three months ended June 30, 2018 compared to 0.54% for the three months ended March 31, 2018.

Total nonperforming assets to total loans plus ORE and other assets repossessed was 7.07% at June 30, 2018 compared to 7.47% at March 31, 2018. Loans classified as troubled debt restructurings, accruing (“TDRs, accruing”) totaled $1.0 million at June 30, 2018 compared to $1.2 million at March 31, 2018. Also included in nonperforming assets were nonperforming loans transferred to held for sale that totaled $808,000 at March 31, 2018; no loans were transferred to held for sale in the second quarter of 2018. Total classified assets, including ORE, were $105.8 million at June 30, 2018 compared to $113.7 million at March 30, 2018. The classified to capital ratio at MidSouth Bank was 52.9% at June 30, 2018 versus 54.3% at March 31, 2018.

More information on our energy loan portfolio and other information on quarterly results can be found on our website at MidSouthBank.com under Investor Relations/Presentations.

Mr. McLemore noted, “The second quarter’s credit costs continue to be muted, with the provision for loan losses totaling $440,000 this quarter. This follows a $0 loan loss provision in the first quarter. As we’ve cautioned before, credit costs could very well be choppy and should be evaluated over a longer-term horizon. We did see a reduction in NPA’s this quarter of $10 million and our classified/capital ratio came down to 53%. Overall, we are seeing good progress on asset quality so far in 2018, but also understand the nature of our credit transformation could be uneven in terms of downgrades of credit and charge-off content. Since the Bank’s turnaround began in the second quarter of 2017, credit costs have been $28 million versus an initial estimate of $31-$50 million.”

Second Quarter 2018 vs. First Quarter 2018 Earnings Comparison

MidSouth reported a net loss available to common shareholders of $1.5 million for the three months ended June 30, 2018, compared to a net loss available to common shareholders of $450,000 for the three months ended March 31, 2018. Revenues from consolidated operations decreased $341,000 in sequential-quarter comparison, not including the loss on mutual fund of $51,000. Net interest income decreased $445,000 in sequential-quarter comparison, resulting from a $258,000 decrease in interest income and a $187,000 increase in interest expense. Operating noninterest income decreased $53,000 in sequential-quarter comparison.

The second quarter of 2018 included non-operating expenses totaling $5.3 million which consisted of $5.3 million of regulatory remediation costs compared to $3.9 million of regulatory remediation costs for the three months ended March 31, 2017. Excluding these non-operating expenses, noninterest expense increased $91,000 in sequential-quarter comparison and consisted primarily of a $663,000 increase in noninterest expense, and offset by a $587,000 decrease in legal expense. The provision for loan losses increased $440,000 in sequential-quarter comparison. We recorded an income tax benefit of $237,000 for the second quarter of 2018 compared to an income tax benefit of $34,000 in the first quarter of 2018.

Dividends on the Series B Preferred Stock issued to the U.S. Treasury as a result of our participation in the Small Business Lending Fund totaled $720,000 for the second quarter of 2018 based on a dividend rate of 9%, unchanged from $720,000 for the first quarter of 2018. Dividends on the Series C Preferred Stock issued with the December 28, 2012 acquisition of PSB Financial Corporation totaled $90,000 for the three months ended June 30, 2018 and March 31, 2018.

Fully taxable-equivalent (“FTE”) net interest income decreased $455,000 in sequential-quarter comparison, primarily due to a decrease of $671,000 in interest income on loans, a $171,000 increase in interest expense on deposits, offset primarily by a $403,000 increase in other interest income. Interest income on loans decreased in sequential-quarter comparison due to a decrease in the average yield on loans of 5 bps from 5.60% to 5.55%, as well as a $50.3 million decrease in the average balance of loans. There was no change in the average yield on investment securities in sequential quarters and remained at 2.54%, and the average balance of investment securities decreased $1.0 million. The average yield on total earning assets decreased 16 bps for the same period, from 4.56% to 4.40%, respectively. The FTE net interest margin decreased 19 bps in sequential-quarter comparison, from 4.17% for the first quarter of 2018 to 3.98% for the second quarter of 2018. Excluding purchase accounting adjustments, the FTE net interest margin decreased 19 bps, from 4.14% for the first quarter of 2018 to 3.95% for the second quarter of 2018.

Second Quarter 2018 vs. Second Quarter 2017 Earnings Comparison

MidSouth reported a net loss available to common shareholders of $1.5 million for the three months ended June 30, 2018, compared to net loss available to common shareholders of $6.2 million for the three months ended June 30, 2017. Revenues from consolidated operations decreased $1.6 million in quarterly comparison, from $23.5 million for the three months ended June 30, 2017 to $21.8 million for the three months ended June 30, 2018. Net interest income decreased $1.3 million

in quarterly comparison, resulting from a $1.0 million decrease in interest income and a $302,000 increase in interest expense. Noninterest income decreased $341,000 in quarterly comparison.

Excluding non-operating expenses of $5.3 million for the second quarter of 2018 and $2.4 million for the second quarter of 2017, noninterest expenses decreased $298,000 in quarterly comparison and consisted primarily of a $194,000 decrease in salaries and employee benefits costs and a $235,000 decrease in occupancy expense, which were partially offset by a $164,000 increase in legal and professional fees. The provision for loan losses decreased $12.1 million in quarterly comparison. The provision decrease is primarily due to payoffs and charge offs of large energy nonaccrual loans and a release of general energy reserves. A $237,000 income tax benefit was reported for the second quarter of 2018, compared to a $3.2 million income tax benefit that was reported in the second quarter of 2017.

Dividends on preferred stock totaled $810,000 for the three months ended June 30, 2018 and $811,000 for the three months ended June 30, 2017. Dividends on the Series B Preferred Stock were $720,000 for the second quarter of 2018, unchanged from $720,000 for the second quarter of 2017. Dividends on the Series C Preferred Stock totaled $90,000 for the three months ended June 30, 2018 and $91,000 for the three months ended June 30, 2017.

FTE net interest income decreased $1.4 million in prior year quarterly comparison. Interest income on loans decreased $1.4 million due to a decrease in the average balance of loans of $145.0 million in prior year quarterly comparison. The average yield on loans increased 20 bps in prior year quarterly comparison, from 5.35% to 5.55%.

Investment securities totaled $376.7 million, or 20.3% of total assets at June 30, 2018, versus $436.0 million, or 22.4% of total assets at June 30, 2017. The investment portfolio had an effective duration of 3.53 years and a net unrealized loss of $9.3 million at June 30, 2018. FTE interest income on investments decreased $544,000 in prior year quarterly comparison. The average volume of investment securities decreased $60.1 million in prior year quarterly comparison, and the average tax equivalent yield on investment securities decreased 15 bps, from 2.69% to 2.54%.

The average yield on all earning assets decreased 12 bps in prior year quarterly comparison, from 4.52% for the second quarter of 2017 to 4.40% for the second quarter of 2018.

Interest expense increased $302,000 in prior year quarterly comparison. Increases in interest expense included a $437,000 increase in interest expense on deposits and a $29,000 increase in interest expense on FHLB advances, which were partially offset by a $211,000 decrease in interest expense on repurchase agreements. Excluding purchase accounting adjustments on acquired certificates of deposit and FHLB borrowings, the average rate paid on interest-bearing liabilities was 0.63% for the three months ended June 30, 2018 and 0.51% for the three months ended June 30, 2017.

As a result of these changes in volume and yield on earning assets and interest-bearing liabilities, the FTE net interest margin decreased 20 bps, from 4.18% for the second quarter of 2017 to 3.98% for the second quarter of 2018. Excluding purchase accounting adjustments on loans, deposits and FHLB borrowings, the FTE margin decreased 14 bps, from 4.09% for the second quarter of 2017 to 3.95% for the second quarter of 2018.

Year-To-Date Earnings Comparison

MidSouth reported a net loss available to common shareholders of $1.9 million for the six months ended June 30, 2018, compared to net loss available to common shareholders of $4.5 million for the six months ended June 30, 2017. Revenues from consolidated operations decreased $2.6 million in year-over-year comparison, from $46.6 million for the six months ended June 30, 2017 to $44.0 million for the six months ended June 30, 2018. Net interest income decreased $2.0 million in year-over-year comparison, resulting from a $1.6 million decrease in interest income and a $464,000 increase in interest expense. Noninterest income decreased $556,000 in year-over-year comparison and consisted primarily of a $605,000 decrease in service charges on deposits accounts with an offset of a $192,000 increase in ATM/debit card income.

Excluding non-operating expenses of $10.4 million for the six months ended June 30, 2018 and $2.4 million for the six months ended June 30, 2017, noninterest expenses decreased $690,000 in year-over-year comparison and consisted primarily of a $1.2 million decrease in salaries and benefits costs, a $814,000 decrease in occupancy expense, and a $211,000 decrease in ATM/debit card expense, which were partially offset by increases of $1.5 million in legal and professional fees and $110,000 in FDIC premiums. The provision for loan losses decreased $14.9 million in year-over-year comparison, from $15.3 million for the six months ended June 30, 2017 to $440,000 for the six months ended June 30, 2018. A $271,000 income tax benefit was reported for the first six months of 2018, compared to an income tax benefit of $2.6 million for the first six months of 2017.

In year-to-date comparison, FTE net interest income decreased $2.3 million primarily due to a $2.0 million decrease in interest income from total loans as a result of lower average balances of loans of $130,000 for the period as problem loans have been sold or reduced and exposure to energy credits has been limited. This more than offset the 24bps increase in average loan yields from 5.33% to 5.57%. The average volume of investment securities decreased $60.0 million in year-over-year comparison, and the average yield on investment securities decreased from 2.68% to 2.58% for the same period primarily as a result of recent tax law changes that have reduced yield on tax-exempt municipal bonds. The average yield on earning assets decreased from 4.53% at June 30, 2017 to 4.48% at June 30, 2018. The purchase accounting adjustments added 4 bps to the average yield on loans for the six months ended June 30, 2018 and 18 bps for the six months ended June 30, 2017. Net of purchase accounting adjustments, the average yield on earning assets decreased 11 bps, from 4.18% at June 30, 2017 to 4.07% at June 30, 2018.

Interest expense increased $464,000 in year-over-year comparison. Increases in interest expense included a $739,000 increase in interest expense on deposits. This increase was partially offset by a $502,000 decrease in interest expense on repurchase agreements and short-term FHLB advances. The average rate paid on interest-bearing liabilities was 0.59% for the six months ended June 30, 2018, compared to 0.47% for the six months ended June 30, 2017. Net of purchase accounting adjustments, the average rate paid on interest-bearing liabilities increased 9 bps, from 0.50% for the six months ended June 30, 2017 to 0.59% for the six months ended June 30, 2018. The FTE net interest margin decreased from 4.19% for the six months ended June 30, 2017 to 4.07% for the

six months ended June 30, 2018. Net of purchase accounting adjustments, the FTE net interest margin decreased from 4.11% to 4.05% for the six months ended June 30, 2017 and 2018, respectively.

About MidSouth Bancorp, Inc.

MidSouth Bancorp, Inc. is a bank holding company headquartered in Lafayette, Louisiana, with total assets of $1.9 billion as of June 30, 2018. MidSouth Bancorp, Inc. trades on the NYSE under the symbol “MSL.” Through its wholly owned subsidiary, MidSouth Bank, N.A., MidSouth offers a full range of banking services to commercial and retail customers in Louisiana and Texas. MidSouth Bank currently has 42 locations in Louisiana and Texas and is connected to a worldwide ATM network that provides customers with access to more than 55,000 surcharge-free ATMs. Additional corporate information is available at MidSouthBank.com.

Forward-Looking Statements

Certain statements contained herein are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 and subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, which involve risks and uncertainties. These statements include, among others, statements regarding expected future financial results, the strength of the Company's balance sheet and its positioning to address problem assets and achieve operating efficiencies and the implementation of the provisions of the formal agreement with the OCC. The words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “plan,” “will,” “would,” “could,” “should,” “guidance,” “potential,” “continue,” “project,” “forecast,” “confident,” and similar expressions are typically used to identify forward-looking statements.

These statements are based on assumptions and assessments made by management in light of their experience and their perception of historical trends, current conditions, expected future developments and other factors they believe to be appropriate. Any forward-looking statements are not guarantees of our future performance and are subject to risks and uncertainties and may be affected by various factors that may cause actual results, developments and business decisions to differ materially from those in the forward-looking statements. Factors that might cause such a difference include, among other matters, changes in interest rates and market prices that could affect the net interest margin, asset valuation, and expense levels; changes in local economic and business conditions in the markets we serve, including, without limitation, changes related to the oil and gas industries that could adversely affect customers and their ability to repay borrowings under agreed upon terms, adversely affect the value of the underlying collateral related to their borrowings, and reduce demand for loans; increases in competitive pressure in the banking and financial services industries; increased competition for deposits and loans which could affect compositions, rates and terms; changes in the levels of prepayments received on loans and investment securities that adversely affect the yield and value of the earning assets; our ability to successfully implement and manage our recently announced strategic initiatives; costs and expenses associated with our strategic initiatives and possible changes in the size and components of the expected costs and charges associated with our strategic initiatives; our ability to realize the anticipated benefits and cost savings from our strategic initiatives within the anticipated time frame, if at all; the ability of the Company to comply with the terms of the formal agreement with the Office of the Comptroller of the Currency; credit losses due to loan concentration, particularly our energy lending and commercial real estate portfolios; a deviation in actual experience from the underlying assumptions used to determine and establish our allowance for loan losses (“ALLL”), which could result in greater than expected loan losses; the adequacy of the level of our ALLL and the amount of loan loss provisions required in future periods including the impact of implementation of the new CECL (current expected credit loss) methodology; future examinations by our regulatory authorities, including the possibility that the regulatory authorities may, among other things, impose conditions on our operations or require us to increase our allowance for loan losses or write-down assets; changes in the availability of funds resulting from reduced liquidity or increased costs; the timing and impact of future acquisitions or divestitures, the success or failure of integrating acquired operations, and the ability to capitalize on growth opportunities upon entering new markets; the ability to acquire, operate, and maintain effective and efficient operating systems; increased asset levels and changes in the composition of assets that would impact capital levels and regulatory capital ratios; loss of critical personnel and the challenge of hiring qualified personnel at reasonable compensation levels; legislative and regulatory changes, including the impact of regulations under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 and other changes in banking, securities and tax laws and regulations and their application by our regulators, changes in the scope and cost of FDIC insurance and other coverage; regulations and restrictions resulting from our participation in government-sponsored programs such as the U.S. Treasury’s Small Business Lending Fund, including

potential retroactive changes in such programs; changes in accounting principles, policies, and guidelines applicable to financial holding companies and banking; increases in cybersecurity risk, including potential business disruptions or financial losses; acts of war, terrorism, cyber intrusion, weather, or other catastrophic events beyond our control; and other factors discussed under the heading “Risk Factors” in MidSouth’s Annual Report on Form 10-K for the year ended December 31, 2017 filed with the SEC on March 16, 2018 and in its other filings with the SEC.

MidSouth does not undertake any obligation to publicly update or revise any of these forward-looking statements, whether to reflect new information, future events or otherwise, except as required by law.



MIDSOUTH BANCORP, INC. and SUBSIDIARIES
Condensed Consolidated Financial Information (unaudited)
(in thousands except per share data)

	Quarter			Quarter			Quarter			Quarter			Quarter
	Ended			Ended			Ended			Ended			Ended
EARNINGS DATA	6/30/2018			3/31/2018			12/31/2017			9/30/2017			6/30/2017
Total interest income	$	18,739		$	18,997		$	20,955		$	20,379		$	19,758
Total interest expense	1,814			1,627			1,483			1,566			1,512
Net interest income	16,925			17,370			19,472			18,813			18,246
FTE net interest income	16,996			17,451			19,658			19,003			18,442
Provision for loan losses	440			—			10,600			4,300			12,500
Non-interest income	4,882			4,829			6,028			5,486			5,223
Non-interest expense	22,273			21,873			25,944			17,759			19,604
Earnings (loss) before income taxes	(906		)	326			(11,044		)	2,240			(8,635		)
Income tax (benefit) expense	(237		)	(34		)	(540		)	574			(3,221		)
Net earnings (loss)	(669		)	360			(10,504		)	1,666			(5,414		)
Dividends on preferred stock	810			810			810			810			811
Net (loss) earnings available to common shareholders	$	(1,479	)	$	(450	)	$	(11,314	)	$	856		$	(6,225	)

PER COMMON SHARE DATA
Basic (loss) earnings per share	(0.09		)	(0.03		)	(0.69		)	0.05			(0.51		)
Diluted (loss) earnings per share	(0.09		)	(0.03		)	(0.69		)	0.05			(0.51		)
Diluted earnings (loss) per share, operating (Non-GAAP)(*)	0.16			0.21			(0.15		)	0.10			(0.38		)
Quarterly dividends per share	0.01			0.01			0.01			0.01			0.09
Book value at end of period	12.50			12.62			12.87			13.70			13.76
Tangible book value at period end (Non-GAAP)(*)	9.78			9.89			10.11			10.92			10.87
Market price at end of period	13.25			12.65			13.25			12.05			11.75
Shares outstanding at period end	16,619,894			16,621,811			16,548,829			16,548,829			16,026,355
Weighted average shares outstanding
Basic	16,525,571			16,495,438			16,460,124			16,395,317			12,227,456
Diluted	16,529,128			16,500,230			16,462,550			16,395,740			12,237,299

AVERAGE BALANCE SHEET DATA
Total assets	$	1,860,906		$	1,860,070		$	1,907,735		$	1,954,343		$	1,926,408
Loans and leases	1,109,371			1,159,671			1,238,846			1,254,885			1,254,402
Total deposits	1,514,321			1,495,907			1,513,156			1,546,837			1,551,498
Total common equity	210,291			214,183			228,385			227,948			187,762
Total tangible common equity (Non-GAAP)(*)	165,024			168,629			182,567			181,851			141,389
Total equity	251,278			255,170			269,373			269,035			228,871

SELECTED RATIOS
Annualized return on average assets, operating (Non-GAAP)(*)	0.60		%	0.77		%	(0.52		)%	0.36		%	(0.97		)%
Annualized return on average common equity, operating (Non-GAAP)(*)	5.30		%	6.68		%	(4.36		)%	3.10		%	(10.00		)%
Annualized return on average tangible common equity, operating (Non-GAAP)(*)	6.76		%	8.48		%	(5.45		)%	3.88		%	(13.28		)%
Pre-tax, pre-provision annualized return on average assets, operating (Non-GAAP)(*)	1.06		%	1.17		%	1.58		%	1.62		%	1.30		%
Efficiency ratio, operating (Non-GAAP)(*)	77.00		%	75.64		%	68.05		%	66.85		%	73.11		%
Average loans to average deposits	73.26		%	77.52		%	81.87		%	81.13		%	80.85		%
Taxable-equivalent net interest margin	3.98		%	4.17		%	4.45		%	4.20		%	4.18		%
Tier 1 leverage capital ratio	12.71		%	12.80		%	12.53		%	12.84		%	12.66		%

CREDIT QUALITY
Allowance for loan and lease losses (ALLL) as a % of total loans	2.22		%	2.23		%	2.27		%	2.03		%	1.99		%
Nonperforming assets to tangible equity + ALLL	32.99		%	36.86		%	24.35		%	21.83		%	23.50		%
Nonperforming assets to total loans, other real estate owned and other repossessed assets	7.07		%	7.47		%	4.83		%	4.35		%	4.54		%
Annualized QTD net charge-offs to total loans	0.87		%	0.54		%	2.94		%	1.26		%	4.01		%

(*) See reconciliation of Non-GAAP financial measures on pages 17-19.



MIDSOUTH BANCORP, INC. and SUBSIDIARIES
Condensed Consolidated Balance Sheets (unaudited)
(in thousands)


BALANCE SHEET	June 30,			March 31,			December 31,			September 30,			June 30,
	2018			2018			2017			2017			2017
Assets
Cash and cash equivalents	$	278,776		$	211,486		$	152,964		$	163,123		$	131,437
Securities available-for-sale	308,937			293,970			309,191			326,222			348,580
Securities held-to-maturity	67,777			73,255			81,052			83,739			87,462
Total investment securities	376,714			367,225			390,243			409,961			436,042
Other investments	14,927			12,896			12,214			12,200			11,666
Loans held for sale	—			1,117			15,737			—			—
Total loans	1,057,963			1,137,255			1,183,426			1,235,969			1,240,253
Allowance for loan losses	(23,514		)	(25,371		)	(26,888		)	(25,053		)	(24,674		)
Loans, net	1,034,449			1,111,884			1,156,538			1,210,916			1,215,579
Premises and equipment	56,834			57,848			59,057			64,969			65,739
Goodwill and other intangibles	45,133			45,409			45,686			45,963			46,239
Other assets	52,084			49,890			48,713			39,934			38,867
Total assets	$	1,858,917		$	1,857,755		$	1,881,152		$	1,947,066		$	1,945,569


Liabilities and Shareholders' Equity
Non-interest bearing deposits	$	419,517		$	427,504		$	416,547		$	428,183		$	428,419
Interest-bearing deposits	1,103,503			1,076,433			1,063,142			1,127,752			1,107,801
Total deposits	1,523,020			1,503,937			1,479,689			1,555,935			1,536,220

Securities sold under agreements to repurchase	14,886			33,026			67,133			54,875			90,799
Short-term FHLB advances	27,500			27,500			40,000			12,500			—
Long-term FHLB advances	10,011			10,016			10,021			25,110			25,211
Junior subordinated debentures	22,167			22,167			22,167			22,167			22,167
Other liabilities	12,661			10,272			8,127			8,836			9,602
Total liabilities	1,610,245			1,606,918			1,627,137			1,679,423			1,683,999
Total shareholders' equity	$	248,672		$	250,837		$	254,015		$	267,643		$	261,570



Total liabilities and shareholders' equity	$	1,858,917	$	1,857,755	$	1,881,152	$	1,947,066	$	1,945,569



MIDSOUTH BANCORP, INC. and SUBSIDIARIES
Condensed Consolidated Income Statements (unaudited)
(in thousands except per share data)

										Percent Change
EARNINGS STATEMENT	Three Months Ended									2Q18 vs. 1Q18		2Q18 vs. 2Q17		Six Months Ended						Percent
	6/30/2018			3/31/2018			6/30/2017			2Q18 vs. 1Q18		2Q18 vs. 2Q17		6/30/2018			6/30/2017			Change

Interest income:
Loans, including fees	$	15,251		$	15,905		$	16,440		(4.1	)%	(7.2	)%	$	31,156		$	32,877		(5.2	)%
Investment securities	2,370			2,363			2,790			0.3	%	(15.1	)%	4,733			5,524			(14.3	)%
Accretion of purchase accounting adjustments	93			110			291			(15.5	)%	(68.0	)%	203			476			(57.4	)%
Other interest income	1,025			619			237			65.6	%	332.5	%	1,644			412			299.0	%
Total interest income	18,739			18,997			19,758			(1.4	)%	(5.2	)%	37,736			39,289			(4.0	)%

Interest expense:
Deposits	1,410			1,238			973			13.9	%	44.9	%	2,647			1,908			38.7	%
Borrowings	150			174			416			(13.8	)%	(63.9	)%	325			827			(60.7	)%
Junior subordinated debentures	259			220			212			17.7	%	22.2	%	479			420			14.0	%
Accretion of purchase accounting adjustments	(5		)	(5		)	(89		)	—	%	(94.4	)%	(10		)	(178		)	(94.4	)%
Total interest expense	1,814			1,627			1,512			11.5	%	20.0	%	3,441			2,977			15.6	%

Net interest income	16,925			17,370			18,246			(2.6	)%	(7.2	)%	34,295			36,312			(5.6	)%
Provision for loan losses	440			—			12,500			—	%	(96.5	)%	440			15,300			(97.1	)%
Net interest income after provision for loan losses	16,485			17,370			5,746			(5.1	)%	186.9	%	33,855			21,012			61.1	%

Noninterest income:
Service charges on deposit accounts	2,065			2,206			2,396			(6.4	)%	(13.8	)%	4,271			4,876			(12.4	)%
ATM and debit card income	1,877			1,784			1,766			5.2	%	6.3	%	3,661			3,469			5.5	%
Mortgage Lending	66			92			167			(28.3	)%	(60.5	)%	158			310			(49.0	)%
Gain on securities, net (non-operating)(*)	—			—			3			—	%	(100.0	)%	—			9			(100.0	)%
Gain/(loss) on equity securities not trading, net	(51		)	—			—			—	%	—	%	(51		)	—			—	%
Gain on sale of branches (non-operating)(*)	—			—			—			—	%	—	%	—			—			—	%
Other charges and fees	925			747			891			23.8	%	3.8	%	1,672			1,603			4.3	%
Total non-interest income	4,882			4,829			5,223			1.1	%	(6.5	)%	9,711			10,267			(5.4	)%

Noninterest expense:
Salaries and employee benefits	7,916			7,719			8,110			2.6	%	(2.4	)%	15,635			16,799			(6.9	)%
Occupancy expense	3,193			3,045			3,428			4.9	%	(6.9	)%	6,238			7,052			(11.5	)%
ATM and debit card	648			576			713			12.5	%	(9.1	)%	1,223			1,434			(14.7	)%
Legal and professional fees	1,100			1,689			936			(34.9	)%	17.5	%	2,789			1,321			111.1	%
FDIC premiums	507			430			430			17.9	%	17.9	%	937			827			13.3	%
Marketing	281			195			262			44.1	%	7.3	%	476			542			(12.2	)%
Corporate development	248			237			253			4.6	%	(2.0	)%	485			569			(14.8	)%
Data processing	666			665			667			0.2	%	(0.1	)%	1,331			1,288			3.3	%
Printing and supplies	133			123			135			8.1	%	(1.5	)%	256			318			(19.5	)%
Expenses on ORE, net	138			76			92			81.6	%	50.0	%	214			171			25.1	%
Amortization of core deposit intangibles	276			277			276			(0.4	)%	—	%	553			553			—	%
Severance and retention accruals (non-operating)(*)	—			—			1,341			—	%	(100.0	)%	—			1,341			(100.0	)%
One-time charge related to closure of branches (non-operating)(*)	—			145			—			(100.0	)%	—	%	145			—			—	%
Write-down of assets held for sale (non-operating) (*)	—			—			570			—	%	(100.0	)%	—			570			(100.0	)%
Loss on transfer of loans to held for sale (non-operating)(*)	8			875			—			(99.1	)%	—	%	883			—			—	%
Regulatory remediation costs (non-operating)(*)	5,323			3,926			—			35.6	%	—	%	9,249			—			—	%
Legal fees related to bulk loan sale (non-operating)(*)	12			88			—			(86.4	)%	—	%	100			—			—	%
Other non-interest expense	1,824			1,807			1,926			0.9	%	(5.3	)%	3,631			3,584			1.3	%
Total non-interest expense	22,273			21,873			19,604			1.8	%	13.6	%	44,145			36,834			19.8	%
Earnings (loss) before income taxes	(906		)	326			(8,635		)	(377.9	)%	(89.5	)%	(579		)	(5,555		)	(89.6	)%
Income tax (benefit) expense	(237		)	(34		)	(3,221		)	597.1	%	(92.6	)%	(271		)	(2,632		)	(89.7	)%
Net earnings (loss)	(669		)	360			(5,414		)	(285.8	)%	(87.6	)%	(308		)	(2,923		)	(89.5	)%
Dividends on preferred stock	810			810			811			—	%	(0.1	)%	1,620			1,622			(0.1	)%
Net (loss) earnings available to common shareholders	$	(1,479	)	$	(450	)	$	(6,225	)	228.7	%	(76.2	)%	$	(1,928	)	$	(4,545	)	(57.6	)%

(Loss) earnings per common share, diluted	$	(0.09	)	$	(0.03	)	$	(0.51	)	200.0	%	(82.4	)%	$	(0.12	)	$	(0.39	)	(69.2	)%

Operating earnings (loss) per common share, diluted (Non-GAAP)(*)	$	0.16		$	0.21		$	(0.38	)	(23.8	)%	(142.1	)%	$	0.37		$	(0.26	)	(242.3	)%

(*) See reconciliation of Non-GAAP financial measures on pages 17-19.



MIDSOUTH BANCORP, INC. and SUBSIDIARIES
Composition of Loans and Deposits and Asset Quality Data (unaudited)
(in thousands)

COMPOSITION OF LOANS	June 30,			March 31,			Jun 18 vs Mar 18 % Change		December 31,			September 30,			June 30,			Jun 18 vs Jun 17 % Change
COMPOSITION OF LOANS	2018			2018					2017			2017			2017
Commercial, financial, and agricultural	$	354,944		$	401,048		(11.5	)%	$	435,207		$	447,482		$	451,767		(21.4	)%
Lease financing receivable	632			692			(8.7	)%	732			760			866			(27.0	)%
Real estate - construction	98,108			94,679			3.6	%	90,287			90,088			98,695			(0.6	)%
Real estate - commercial	414,526			438,779			(5.5	)%	448,406			473,046			461,064			(10.1	)%
Real estate - residential	141,104			145,671			(3.1	)%	146,751			155,676			156,394			(9.8	)%
Installment loans to individuals	47,406			50,888			(6.8	)%	56,398			63,148			70,031			(32.3	)%
Other	1,243			5,498			(77.4	)%	5,645			5,769			1,436			(13.4	)%

Total loans	$	1,057,963		$	1,137,255		(7.0	)%	$	1,183,426		$	1,235,969		$	1,240,253		(14.7	)%

COMPOSITION OF DEPOSITS
COMPOSITION OF DEPOSITS	June 30,			March 31,			Jun 18 vs Mar 18 % Change		December 31,			September 30,			June 30,			Mar 18 vs Mar 17 % Change
	2018			2018					2017			2017			2017
Noninterest bearing	$	419,517		$	427,504		(1.9	)%	$	416,547		$	428,183		$	428,419		(2.1	)%
NOW & other	461,726			459,394			0.5	%	434,646			461,740			465,505			(0.8	)%
Money market/savings	466,711			441,801			5.6	%	446,215			473,023			493,232			(5.4	)%
Time deposits of less than $100,000	111,758			113,665			(1.7	)%	116,309			120,685			75,196			48.6	%
Time deposits of $100,000 or more	63,308			61,573			2.8	%	65,972			72,304			73,868			(14.3	)%

Total deposits	$	1,523,020		$	1,503,937		1.3	%	$	1,479,689		$	1,555,935		$	1,536,220		(0.9	)%

ASSET QUALITY DATA
ASSET QUALITY DATA	June 30,			March 31,					December 31,			September 30,			June 30,
	2018			2018					2017			2017			2017
Nonaccrual loans	$	73,538		$	82,275				$	49,278		$	51,289		$	54,810
Loans past due 90 days and over	3			1					728			402			165
Total nonperforming loans	73,541			82,276					50,006			51,691			54,975
Nonperforming loans held for sale	—			808					5,067			—			—
Other real estate	1,365			1,803					2,001			1,931			1,387
Other repossessed assets	—			194					192			234			36
Total nonperforming assets	$	74,906		$	85,081				$	57,266		$	53,856		$	56,398

Troubled debt restructurings, accruing	$	1,010		$	1,153				$	1,360		$	1,557		$	1,653

Nonperforming assets to total assets	4.03		%	4.58		%			3.04		%	2.77		%	2.90		%
Nonperforming assets to total loans + ORE + other repossessed assets	7.07		%	7.47		%			4.83		%	4.35		%	4.54		%
ALLL to nonperforming loans	31.97		%	30.84		%			53.77		%	48.47		%	44.88		%
ALLL to total loans	2.22		%	2.23		%			2.27		%	2.03		%	1.99		%

Quarter-to-date charge-offs	2,801			1,836					8,931			4,381			12,659
Quarter-to-date recoveries	505			319					166			460			255
Quarter-to-date net charge-offs	2,296			1,517					8,765			3,921			12,404
Annualized QTD net charge-offs to total loans	0.87		%	0.54		%			2.94		%	1.26		%	4.01		%



MIDSOUTH BANCORP, INC. and SUBSIDIARIES
Loan Portfolio - Quarterly Roll Forward (unaudited)
(in thousands)

	Three Months Ended
	June 30,			March 31,			June 30,
	2018			2018			2017
LOAN ACTIVITY

Loans originated	$	35,030		$	26,121		$	72,316
Repayments	(118,118		)	(62,884		)	(116,885		)
Increases on renewals	2,574			3,026			2,531
Change in lines of credit	(919		)	(10,051		)	9,151
Change in allowance for loan losses	1,857			1,517			(96		)
Transfer of loans to held for sale	—			(769		)	—
Other	2,141			(1,614		)	1,140
Net change in loans	$	(77,435	)	$	(44,654	)	$	(31,843	)



MIDSOUTH BANCORP, INC. and SUBSIDIARIES
Tangible Common Equity to Tangible Assets and Regulatory Ratios (unaudited)
(in thousands)

COMPUTATION OF TANGIBLE COMMON EQUITY TO TANGIBLE ASSETS	June 30,			June 30,
	2018			2017
Total equity	$	248,672		$	261,570
Less preferred equity	40,987			41,092
Total common equity	207,685			220,478
Less goodwill	42,171			42,171
Less intangibles	2,962			4,068
Tangible common equity	$	162,552		$	174,239

Total assets	$	1,858,917		$	1,945,569
Less goodwill	42,171			42,171
Less intangibles	2,962			4,068
Tangible assets	$	1,813,784		$	1,899,330

Tangible common equity to tangible assets	8.96		%	9.17		%

REGULATORY CAPITAL

Common equity tier 1 capital	$	169,388		$	175,827
Tier 1 capital	231,874			238,418
Total capital	248,014			256,589

Regulatory capital ratios:
Common equity tier 1 capital ratio	13.20		%	12.15		%
Tier 1 risk-based capital ratio	18.07		%	16.48		%
Total risk-based capital ratio	19.33		%	17.73		%
Tier 1 leverage ratio	12.71		%	12.66		%



MIDSOUTH BANCORP, INC. and SUBSIDIARIES
Quarterly Yield Analysis (unaudited)
(in thousands)

YIELD ANALYSIS	Three Months Ended						Three Months Ended						Three Months Ended						Three Months Ended						Three Months Ended
	June 30, 2018						March 31, 2018						December 31, 2017						September 30, 2017						June 30, 2017

			Tax						Tax						Tax						Tax						Tax
	Average		Equivalent		Yield/		Average		Equivalent		Yield/		Average		Equivalent		Yield/		Average		Equivalent		Yield/		Average		Equivalent		Yield/
	Balance		Interest		Rate		Balance		Interest		Rate		Balance		Interest		Rate		Balance		Interest		Rate		Balance		Interest		Rate

Taxable securities	$	340,080	$	2,093	2.46	%	$	334,419	$	2,047	2.45	%	$	348,267	$	2,161	2.48	%	$	372,648	$	2,276	2.44	%	$	387,441	$	2,416	2.49	%
Tax-exempt securities	43,858		349		3.18	%	50,550		397		3.14	%	53,998		540		4.00	%	55,129		553		4.01	%	56,622		570		4.03	%
Total investment securities	383,938		2,442		2.54	%	384,969		2,444		2.54	%	402,265		2,701		2.69	%	427,777		2,829		2.65	%	444,063		2,986		2.69	%
Federal funds sold	5,008		21		1.63	%	4,978		18		1.45	%	4,441		15		1.32	%	4,319		13		1.18	%	3,573		9		1.00	%
Time and interest bearing deposits in other banks	201,281		912		1.79	%	132,940		514		1.55	%	94,394		314		1.30	%	94,675		305		1.26	%	55,331		150		1.07	%
Other investments	14,924		91		2.45	%	12,721		87		2.74	%	12,201		85		2.79	%	12,098		93		3.07	%	11,493		78		2.71	%
Loans	1,109,371		15,344		5.55	%	1,159,671		16,015		5.60	%	1,238,846		18,026		5.77	%	1,254,885		17,329		5.48	%	1,254,402		16,731		5.35	%
Total interest earning assets	1,714,522		18,810		4.40	%	1,695,279		19,078		4.56	%	1,752,147		21,141		4.79	%	1,793,754		20,569		4.55	%	1,768,862		19,954		4.52	%
Non-interest earning assets	146,384						164,791						155,588						160,589						157,546
Total assets	$	1,860,906					$	1,860,070					$	1,907,735					$	1,954,343					$	1,926,408

Interest-bearing liabilities:
Deposits	$	1,087,746	$	1,409	0.52	%	$	1,071,484	$	1,238	0.47	%	$	1,085,349	$	1,097	0.40	%	$	1,118,593	$	1,094	0.39	%	$	1,125,482	$	973	0.35	%
Repurchase agreements	26,230		25		0.39	%	40,115		40		0.40	%	54,799		66		0.48	%	75,654		149		0.78	%	90,807		236		1.04	%
Short-term FHLB advances	27,500		75		1.08	%	28,722		84		1.17	%	18,478		58		1.23	%	6,522		19		1.14	%	—		—		—	%
Long-term FHLB advances	10,014		45		1.79	%	10,019		45		1.80	%	21,803		64		1.15	%	25,155		92		1.43	%	25,260		91		1.43	%
Junior subordinated debentures	22,167		260		4.63	%	22,167		220		3.97	%	22,167		198		3.50	%	22,167		212		3.74	%	22,167		212		3.78	%
Total interest bearing liabilities	1,173,657		1,814		0.62	%	1,172,507		1,627		0.57	%	1,202,596		1,483		0.49	%	1,248,091		1,566		0.50	%	1,263,716		1,512		0.48	%
Non-interest bearing liabilities	435,971						447,460						435,766						437,217						433,821
Shareholders' equity	251,278						255,170						269,373						269,035						228,871
Total liabilities and shareholders' equity	1,860,906						1,875,137						1,907,735						1,954,343						1,926,408

Net interest income (TE) and spread			$	16,996	3.78	%			$	17,451	3.99	%			$	19,658	4.30	%			$	19,003	4.05	%			$	18,442	4.04	%

Net interest margin					3.98	%					4.17	%					4.45	%					4.20	%					4.18	%

Core net interest margin (Non-GAAP)(*)					3.95	%					4.14	%					4.36	%					4.12	%					4.09	%


(*) See reconciliation of Non-GAAP financial measures on pages 17-19.



MIDSOUTH BANCORP, INC. and SUBSIDIARIES
Reconciliation of Non-GAAP Financial Measures (unaudited)
(in thousands except per share data)

Certain financial information included in the earnings release and the associated Condensed Consolidated Financial Information (unaudited) is determined by methods other than in accordance with GAAP. We are providing disclosure of the reconciliation of these non-GAAP financial measures to the most comparable GAAP financial measures. "Tangible common equity" is defined as total common equity reduced by intangible assets. "Core net interest margin" is defined as reported net interest margin less purchase accounting adjustments. "Annualized return on average assets, operating" is defined as net earnings available to common shareholders adjusted for specified one-time items divided by average assets. "Annualized return on average common equity, operating" is defined as net earnings available to common shareholders adjusted for specified one-time items divided by average common equity. "Annualized return on average tangible common equity, operating" is defined as net earnings available to common shareholders adjusted for specified one-time items divided by average tangible common equity. "Pre-tax, pre-provision annualized return on average assets, operating" is defined as pre-tax, pre-provision earnings adjusted for specified one-time items divided by average assets. "Tangible book value per common share" is defined as tangible common equity divided by total common shares outstanding. "Diluted earnings per share, operating" is defined as net earnings available to common shareholders adjusted for specified one-time items divided by diluted weighted-average shares. The GAAP-based efficiency ratio is measured as noninterest expense as a percentage of net interest income plus noninterest income. The non-GAAP efficiency ratio excludes specified one-time items in addition to securities gains and losses and gains and losses on the sale/valuation of other real estate owned and other assets repossessed.
We use non-GAAP measures because we believe they are useful for evaluating our financial condition and performance over periods of time, as well as in managing and evaluating our business and in discussions about our performance. We also believe these non-GAAP financial measures provide users of our financial information with a meaningful measure for assessing our financial condition as well as comparison to financial results for prior periods. These results should not be viewed as a substitute for results determined in accordance with GAAP, and are not necessarily comparable to non-GAAP performance measures that other companies may use.


		Three Months Ended
		June 30,		March 31,		December 31,		September 30,		June 30,
		2018		2018		2017		2017		2017
Average Balance Sheet Data

Total average assets	A	$	1,860,906	$	1,860,070	$	1,907,735	$	1,954,343	$	1,926,408

Total equity		$	251,278	$	255,170	$	269,373	$	269,035	$	228,871
Less preferred equity		40,987		40,987		40,988		41,087		41,109
Total common equity	B	$	210,291	$	214,183	$	228,385	$	227,948	$	187,762
Less intangible assets		45,267		45,554		45,818		46,097		46,373
Tangible common equity	C	$	165,024	$	168,629	$	182,567	$	181,851	$	141,389



MIDSOUTH BANCORP, INC. and SUBSIDIARIES
Reconciliation of Non-GAAP Financial Measures (unaudited) (continued)
(in thousands except per share data)

		Three Months Ended
		June 30,			March 31,			December 31,			September 30,			June 30,
Core Net Interest Margin		2018			2018			2017			2017			2017

Net interest income (FTE)		$	16,996		$	17,451		$	19,658		$	19,003		$	18,442
Less purchase accounting adjustments		(98		)	(115		)	(384		)	(355		)	(380		)
Core net interest income, net of purchase accounting adjustments	D	$	16,898		$	17,336		$	19,274		$	18,648		$	18,062

Total average earnings assets		$	1,714,522		$	1,695,279		$	1,752,147		$	1,793,754		$	1,768,862
Add average balance of loan valuation discount		859			971			1,242			1,504			1,720
Average earnings assets, excluding loan valuation discount	E	$	1,715,381		$	1,696,250		$	1,753,389		$	1,795,258		$	1,770,582

Core net interest margin	D/E	3.95		%	4.14		%	4.36		%	4.12		%	4.09		%

		Three Months Ended
		June 30,			March 31,			December 31,			September 30,			June 30,
Return Ratios		2018			2018			2017			2017			2017

Net (loss) earnings available to common shareholders		$	(1,479	)	$	(450	)	$	(11,314	)	$	856		$	(6,225	)
Net loss on equity securities not trading, after-tax		40
Severance and retention accruals, after-tax		—			—			111			—			872
One-time charge related to discontinued branch projects, after-tax		—			—			—			—			302
One-time charge related to closure of branches, after-tax		—			115			—			587			—
Write-down of assets held for sale, after-tax		—			—			512			—			371
Write-down of net deferred tax asset resulting from the Tax Cuts and Jobs Act		—			—			3,595			—			—
Loss on transfer of loans to held for sale, after-tax		6			691			3,920			—			—
Regulatory remediation costs, after-tax		4,205			3,102			1,152			556			—
Gain on sale of branches, after-tax		—			—			(484		)	—			—
Legal fees related to bulk loan sale		9			70			—			—			—
Net gain on sales of securities, after-tax		—			—			—			(220		)	(2		)
Net earnings (loss) available to common shareholders, operating	F	$	2,781		$	3,528		$	(2,508	)	$	1,779		$	(4,682	)

Earnings (loss) before income taxes		$	(906	)	$	326		$	(11,044	)	$	2,240		$	(8,635	)
Severance and retention accruals		—			—			171			—			1,341
One-time charge related to discontinued branch projects		—			—			—			—			465
One-time charge related to closure of branches		—			145			—			903			—
Write-down of assets held for sale		—			—			789			—			570
Loss on transfer of loans to held for sale		8			875			6,030			—			—
Regulatory remediation costs		5,323			3,926			1,772			856			—
Gain on sale of branches		—			—			(744		)	—			—
Net gain on sales of securities		—			—			—			(338		)	(3		)
Net loss on equity securities not trading		51			—			—			—			—
Legal fees related to bulk loan sale		12			88			—			—			—
Provision for loan losses		440			—			10,600			4,300			12,500
Pre-tax, pre-provision earnings, operating	G	$	4,928		$	5,360		$	7,574		$	7,961		$	6,238

Annualized return on average assets, operating	F/A	0.60		%	0.77		%	(0.52		)%	0.36		%	(0.97		)%
Annualized return on average common equity, operating	F/B	5.30		%	6.68		%	(4.36		)%	3.10		%	(10.00		)%
Annualized return on average tangible common equity, operating	F/C	6.76		%	8.48		%	(5.45		)%	3.88		%	(13.28		)%
Pre-tax, pre-provision annualized return on average assets, operating	G/A	1.06		%	1.17		%	1.58		%	1.62		%	1.30		%



MIDSOUTH BANCORP, INC. and SUBSIDIARIES
Reconciliation of Non-GAAP Financial Measures (unaudited) (continued)
(in thousands except per share data)

		Three Months Ended
		June 30,			March 31,			December 31,			September 30,			June 30,
Per Common Share Data		2018			2018			2017			2017			2017

Diluted (loss) earnings per share		$	(0.09	)	$	(0.03	)	$	(0.69	)	$	0.05		$	(0.51	)
Effect of severance and retention accruals		—			—			0.01			—			0.08
Effect of one-time charge related to discontinued branch projects		—			—			—			—			0.02
Effect of one-time charge related to closure of branches		—			0.01			—			0.03			—
Effect of loss on transfer of loans to held for sale		—			0.04			0.24			—			—
Effect of regulatory remediation costs		0.25			0.19			0.07			0.03			—
Effect of gain on sale of branches		—			—			(0.03		)	—			—
Effect of write-down of assets held for sale		—			—			0.03			—			0.03
Effect of write-down of net deferred tax asset resulting from the Tax Cuts and Jobs Act		—			—			0.22			—			—
Effect of gain on sales of securities		—			—			—			(0.01		)	—
Diluted earnings (loss) per share, operating		$	0.16		$	0.21		$	(0.15	)	$	0.10		$	(0.38	)

Book value per common share		$	12.50		$	12.62		$	12.87		$	13.70		$	13.76
Effect of intangible assets per share		2.72			2.73			2.76			2.78			2.89
Tangible book value per common share		$	9.78		$	9.89		$	10.11		$	10.92		$	10.87


		Three Months Ended
		June 30,			March 31,			December 31,			September 30,			June 30,
Efficiency Ratio		2018			2,018			2017			2017			2017

Net interest income		$	16,925		$	17,370		$	19,472		$	18,813		$	18,246

Noninterest income		$	4,882		$	4,829		$	6,028		$	5,486		$	5,223
Net gain on sale of securities		—			—			—			(338		)	(3		)
Net loss on equity securities not trading		51			—			—			—			—
Gain on sale of branches		—			—			(744		)	—			—
Noninterest income (non-GAAP)		$	4,933		$	4,829		$	5,284		$	5,148		$	5,220

Total revenue	H	$	21,807		$	22,199		$	25,500		$	24,299		$	23,469
Total revenue (non-GAAP)	I	$	21,858		$	22,199		$	24,756		$	23,961		$	23,466

Noninterest expense	J	$	22,273		$	21,873		$	25,944		$	17,759		$	19,604
Severance and retention accruals		—			—			(171		)	—			(1,341		)
One-time charge related to discontinued branch projects		—			—			—			—			(465		)
One-time charge related to closure of branches		—			(145		)	—			(903		)	—
Write-down of assets held for sale		—			—			(789		)	—			(570		)
Loss on transfer of loans to held for sale		(8		)	(875		)	(6,030		)	—			—
Regulatory remediation costs		(5,323		)	(3,926		)	(1,772		)	(856		)	—
Legal fees related to bulk loan sale		(12		)	(88		)	—			—			—
Net (loss) gain on sale/valuation of other real estate owned		(100		)	(47		)	(335		)	19			(72		)
Noninterest expense (non-GAAP)	K	$	16,830		$	16,792		$	16,847		$	16,019		$	17,156

Efficiency ratio (GAAP)	J/H	102.14		%	98.53		%	101.74		%	73.09		%	83.53		%

Efficiency ratio (non-GAAP)	K/I	77.00		%	75.64		%	68.05		%	66.85		%	73.11		%

MIDSOUTH BANCORP INC - FORM 8-K - EX-99.1 - EXHIBIT 99.1 - July 30, 2018

Attached files

MIDSOUTH BANCORP INC Reports