MidSouth Bancorp, Inc. Reports First Quarter 2013 Results
| · | Diluted EPS $0.27 per common share versus $0.24 per common share for 1Q 2012 |
| · | Operating EPS per common share excluding merger-related charges of $0.28 |
| · | Nonperforming assets 0.82% of total assets compared to 1.00% for 4Q 2012 |
| · | Core FTE NIM of 4.03% versus 4.21% for 4Q 2012 primarily due to acquisition |
LAFAYETTE, LA., April 30, 2013/PRNewswire-FirstCall/ -- MidSouth Bancorp, Inc. (“MidSouth”) (NYSE MKT:MSL) today reported record quarterly net earnings available to common shareholders of $3.1 million for the first quarter of 2013, compared to net earnings available to common shareholders of $2.5 million reported for the first quarter of 2012 and $1.3 million in net earnings available to common shareholders for the fourth quarter of 2012. Diluted earnings for the first quarter of 2013 were $0.27 per common share, compared to $0.24 per common share reported for the first quarter of 2012 and $0.12 per common share reported for the fourth quarter of 2012. The first quarter of 2013 included after-tax merger and conversion related expenses of $0.01 per share and the fourth quarter of 2012 included $0.06 per share of after-tax merger related expenses. Excluding these non-operating expenses, operating earnings per share for the first quarter of 2013 were $0.28 compared to fourth quarter of 2012 of $0.18.
Dividends paid on the Series B Preferred Stock issued to the Treasury as a result of our participation in the Small Business Lending Fund (“SBLF”) totaled $192,000 for the first quarter of 2013 based on a dividend rate of 2.40%. The Series C Preferred Stock issued with the December 28, 2012 acquisition of PSB Financial Corporation (“PSB”) paid dividends totaling $100,000 for the three months ended March 31, 2013.
Rusty Cloutier, President and CEO, commenting on first quarter 2013 said, “During the first quarter, we transitioned the operations of our branches of The Peoples State Bank as the new Timber Region for our MidSouth Bank franchise and converted the core processing system late in the quarter. Combined with the 2011 acquisitions and de novo expansion, our franchise has roughly doubled over the past eighteen months. We believe this growth will greatly benefit shareholders long term as we continue to expand in some of the most attractive growth markets in the country. Loan demand is increasing in the second quarter and we have a very solid loan pipeline. Our roadmap for 2013 includes a continued focus on strong asset quality, growing the loan portfolio, and realizing the cost savings from the PSB acquisition.”
Balance Sheet
Total consolidated assets at March 31, 2013 and December 31, 2012 were $1.9 billion, compared to $1.4 billion at March 31, 2012. Deposits totaled $1.6 billion at March 31, 2013 and December 31, 2012, compared to $1.2 billion at March 31, 2012. Our stable core deposit base, excluding time deposits, accounted for 83% of deposits at March 31, 2013 compared to 80% of deposits at year end 2012. The low cost of our interest-bearing deposits declined 3 basis points from 0.42% compared to 0.39% over the three months ended March 31, 2013.
Loans totaled $1.0 billion at March 31, 2013 and December 31, 2012, compared to $747.8 million at March 31, 2012. Total loans declined $9.1 million in the first quarter of 2013 primarily due to pay-offs related to asset quality improvement in the portfolio. The loan mix reflected a minimal decrease in commercial and residential real estate loans, which was partially offset by an increase in real estate construction loans.
MidSouth’s Tier 1 leverage capital ratio was 8.98% at March 31, 2013 compared to 11.82% at December 31, 2012. The Tier 1 leverage capital ratio declined as a result of a full quarter’s impact of the PSB assets acquired on total average assets. Tier 1 risk-based capital and total risk-based capital ratios were 13.75% and 14.41% at March 31, 2013, compared to 13.46% and 14.10% at December 31, 2012, respectively. The Tier 1 common equity to total risk-weighted assets at March 31, 2013 was 7.71%. Tangible common equity totaled $97.4 million at March 31, 2013, compared to $95.4 million at December 31, 2012. Tangible book value per share at March 31, 2013 was $8.67 versus $8.49 at December 31, 2012.
Asset Quality
Nonperforming assets totaled $15.3 million at March 31, 2013, a decrease of $3.2 million over the $18.5 million reported for year-end 2012. The decrease resulted from a $1.4 million reduction in nonaccrual loans and a $1.8 million decrease in loans past due 90 days and over. Allowance coverage for nonperforming loans was 96.98% at March 31, 2013 compared to 67.78% at December 31, 2012. The ALL/total loans ratio remained relatively constant at 0.72% compared to 0.70% for the fourth quarter of 2012. The ratio of annualized net charge-offs to total loans was 0.18% for the three months ended March 31, 2013 compared to 0.19% for the three months ended December 31, 2012.
Total nonperforming assets to total loans plus ORE and other assets repossessed decreased to 1.46% at March 31, 2013 from 1.76% at December 31, 2012. Loans classified as troubled debt restructurings (“TDRs”) totaled $5.0 million at March 31, 2013 compared to $5.1 million at December 31, 2012. A total of $4.8 million in TDRs were acquired with PSB and included four credits, two of which are large commercial credits. Classified assets, including ORE, decreased $5.2 million, or 15.1% during the three months ended March 31, 2013, from $34.4 million at December 31, 2012 to $29.2 million. The decrease in classified assets resulted primarily from
approximately $2.9 million in pay-offs received on three loan relationships and the upgrade of a $1.0 million loan. The exposure on other classified loans decreased an additional $1.2 million due to charge-offs and scheduled payments in the first quarter of 2013.
First Quarter 2013 vs. First Quarter 2012 Earnings Comparison
First quarter 2013 net earnings available to common shareholders totaled $3.1 million compared to $2.5 million for the first quarter of 2012. The first quarter of 2013 included a full quarter of revenues and expenses from PSB operations. Revenues from consolidated operations increased $5.5 million in quarterly comparison and included $2.2 million in purchase accounting adjustments on the 2012 and 2011 acquisitions. Noninterest income increased $903,000 in quarterly comparison, from $3.5 million for the three months ended March 31, 2012 to $4.4 million for the three months ended March 31, 2013. Increases in noninterest income consisted primarily of $347,000 in service charges on deposit accounts, $230,000 in ATM/debit card income and $204,000 in gain on sales of securities.
Non-interest expenses increased $4.8 million for the first quarter 2013 compared to first quarter 2012 and included approximately $1.6 million in operating expenses for the Timber Region and approximately $0.5 million in operating costs for five new branches opened in late 2012 and early 2013. Additionally, first quarter 2013 included an increase of $94,000 in core deposit intangibles expense and $214,000 of net merger and conversion related expenses. The increased operating costs consisted primarily of $2.3 million in salaries and benefits costs, $1.0 million in occupancy expense, $260,000 in marketing expense, $223,000 in the cost of printing and supplies and $226,000 in data processing costs. Expenses on ORE and other assets repossessed decreased $189,000 in prior year quarterly comparison. The provision for loan losses decreased $125,000 and income tax expense increased $331,000 in quarterly comparison.
Fully taxable-equivalent (“FTE”) net interest income totaled $18.8 million and $14.1 million for the quarters ended March 31, 2013 and 2012, respectively. The FTE net interest income increased $4.7 million in prior year quarterly comparison primarily due to a $388.3 million increase in the volume of average earning assets as a result of the PSB acquisition. The average volume of loans increased $301.2 million in quarterly comparison and the average yield on loans decreased 7 basis points, from 6.72% to 6.65%. Purchase accounting adjustments on acquired loans added 80 basis points to the average yield on loans for the first quarter of 2013 and 32 basis points to the average yield on loans for the first quarter of 2012. Net of the impact of the purchase accounting adjustments, average loan yields declined 55 basis points in prior year quarterly comparison, from 6.40% to 5.85%. Loan yields have declined primarily as the result of a sustained low market interest rate environment.
Investment securities totaled $555.4 million, or 29.7% of total assets at March 31, 2013, versus $462.8 million, or 32.7% of total assets at March 31, 2012. The investment portfolio had an effective duration of 3.5 years and an unrealized gain of $11.2 million at March 31, 2013. The average volume of investment securities increased $81.7 million in quarterly comparison primarily due to $152.7 million in securities acquired with the PSB acquisition at year end December 2012, of which $28.8 million were sold early in the first quarter of 2013. Additionally, a portion of excess cash from the 2011 acquisitions was used to purchase securities for the investment portfolio in 2012. The average tax equivalent yield on investment securities decreased 36 basis points, from 2.80% to 2.44% primarily due to lower reinvestment rates. The average yield on all earning assets increased 5 basis points in prior year quarterly comparison, from 4.98% for the first quarter of 2012 to 5.03% for the first quarter of 2013. Net of the impact of purchase accounting adjustments, the average yield on total earning assets declined 27 basis points, from 4.80% to 4.53% for the three month periods ended March 31, 2012 and 2013, respectively.
The impact to interest expense of a $278.0 million increase in the average volume of interest bearing liabilities was partially offset by an 8 basis point decrease in the average rate paid on interest-bearing liabilities, from 0.64% at March 31, 2012 to 0.56% at March 31, 2013. Net of purchase accounting adjustments on acquired certificates of deposit, the average rate paid on interest bearing liabilities was 0.80% for the first quarter of 2012 compared to 0.67% for the first quarter of 2013.
As a result of these changes in volume and yield on earning assets and interest bearing liabilities, the FTE net interest margin increased 12 basis points, from 4.49% for the first quarter of 2012 to 4.61% for the first quarter of 2013. Net of purchase accounting adjustments on loans, deposits and FHLB borrowings, the FTE margin decreased 17 basis points, from 4.20% for the first quarter of 2012 to 4.03% for the first quarter of 2013, primarily due to the addition of the relatively low margin on the earning assets acquired from PSB.
First Quarter 2013 vs. Fourth Quarter 2012 Earnings Comparison
In sequential quarter comparison, net earnings available to common shareholders increased $1.9 million primarily due to increased revenues as a result of the PSB acquisition, net of operating costs associated with the fifteen PSB branches acquired. Noninterest income increased $734,000 in sequential quarter comparison. The improvement in noninterest income resulted primarily from increases of $331,000 in service charges on deposit accounts, $204,000 in gain on sales of securities and an increase of $149,000 in ATM/debit card income.
Noninterest expenses increased $2.9 million and consisted primarily of increases of $2.2 million in salaries and benefits costs (approximately $1.1 million from the Timber Region and five new branches added in late 2012 and early 2013), $560,000 in occupancy expenses, $170,000 in shares tax expense, $133,000 in regulatory fees, $80,000 in corporate development expenses, and $79,000 in the costs of printing and supplies. The provision for loan losses increased $50,000 to $550,000 for the first quarter of 2013 compared to $500,000 the fourth quarter of 2012.
FTE net interest income increased $4.8 million in sequential quarter comparison primarily due to the increase in volume of average earning assets as a result of the 2012 PSB acquisition. Average earning assets increased $387.7 million, from $1.3 billion for the quarter ended December 31, 2012 to $1.7 billion for the quarter ended March 31, 2013. The average yield on earning assets increased 21 basis points for the same period, from 4.82% to 5.03%, respectively. The average volume of interest-bearing liabilities increased $310.0 million, from $929.1 million for the fourth quarter of 2012 compared to $1.2 billion for the first quarter of 2013. As a result of these changes in volume and yield on earning assets and interest bearing liabilities, the FTE net interest margin increased 21 basis points in sequential quarter comparison, from 4.40% to 4.61%. Net of purchase accounting adjustments, the FTE net interest margin decreased 18 basis points, from 4.21% for the quarter ended December 31, 2012 to 4.03% for the quarter ended March 31, 2013.
About MidSouth Bancorp, Inc.
MidSouth Bancorp, Inc. is a financial holding company headquartered in Lafayette, Louisiana, with assets of $1.9 billion as of March 31, 2013. 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 59 banking centers in Louisiana and Texas and is connected to a worldwide ATM network that provides customers with access to more than 50,000 surcharge-free ATMs. Additional corporate information is available at www.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, the expected impacts of the recently completed PSB acquisition, future expansion plans and future operating results. Actual results may differ materially from the results anticipated in these forward-looking statements. Factors that might cause such a difference include, among other matters, the ability of MidSouth to integrate the PSB operations and capitalize on new market opportunities resulting from the acquisition; the effect of the PSB acquisition on relations with customers and employees; 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, 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; the timing and ability to reach any agreement to restructure nonaccrual loans; increased competition for deposits and loans which could affect compositions, rates and terms; the timing and impact of future acquisitions, the success or failure of integrating operations, and the ability to capitalize on growth opportunities upon entering new markets; loss of critical personnel and the challenge of hiring qualified personnel at reasonable compensation levels; legislative and regulatory changes, including 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; and other factors discussed under the heading “Risk Factors” in MidSouth’s Annual Report on Form 10-K for the year ended December 31, 2012 filed with the SEC on March 18, 2013 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.
