Midsouth Bancorp (MSL) 10-Q 2005 Q3 Quarterly report

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period endedSeptember 30, 2005

OR

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period fromto

COMMISSION FILE NUMBER 1-11826

MIDSOUTH BANCORP, INC.

(Exact name of registrant as specified in its charter)

Louisiana	72 –1020809
(State of other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

102 Versailles Boulevard, Lafayette, Louisiana 70501
(Address of principal executive offices, including zip code)

(337) 237-8343
(Registrant’s telephone number, including area code)

Indicate by checkmark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YESþ NOo

Indicate by checkmark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). YESo NOþ

As of October 31, 2005, there were approximately 4,941,614 shares of the registrant’s Common Stock, par value $.10 per share, outstanding.

INDEX TO FORM 10-Q REPORT

	Page
PART 1 — FINANCIAL INFORMATION
Item 1. Interim Financial Statements (Unaudited)
Consolidated Statements of Condition as of September 30, 2005 and December 31, 2004 (audited)		3
Consolidated Statements of Income for the Three and Nine Months Ended September 30, 2005 and 2004		4
Consolidated Statement of Stockholders’ Equity for the Nine Months Ended September 30, 2005		5
Statements of Cash Flows for the Nine Months Ended September 30, 2005 and 2004		6
Notes to Consolidated Financial Statements		7
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		9
Item 3. Quantitative and Qualitative Disclosures about Market Risk		23
Item 4. Controls and Procedures		23
PART II — OTHER INFORMATION
Item 1. Legal Proceedings		24
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		24
Item 3. Defaults upon Senior Securities		24
Item 4. Submission of Matters to a Vote of Security Holders		24
Item 5. Other Information		24
Item 6. Exhibits and Reports on Form 8-K		24
Signatures		26
Computation of earnings per share
Certification pursuant to Exchange Act Rules 13a-14a
Certification pursuant to Exchange Act Rules 13a-14a
Certification pursuant to Section 906
Certification pursuant to Section 906

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MIDSOUTH BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CONDITION

	September 30,			December 31,
	2005			2004
	(unaudited)			(audited)
ASSETS
Cash and due from banks	$	18,073,145		$	17,394,278
Federal funds sold		9,625,000			—
Total cash and cash equivalents		27,698,145			17,394,278
Interest bearing deposits in banks		34,591			2,572
Securities available-for-sale, at fair value (cost of $134,719,280 at September 30, 2005 and $142,682,304 at December 31, 2004)		133,917,557			143,261,605
Securities held-to-maturity (estimated fair value of $20,820,938 at September 30, 2005 and $24,170,815 at December 31, 2004)		20,085,604			22,851,772
Loans, net of allowance for loan losses of $4,211,053 at September 30, 2005 and $3,850,636 at December 31, 2004		430,267,192			382,620,785
Bank premises and equipment, net		21,680,008			19,338,275
Other real estate owned, net		111,079			444,527
Accrued interest receivable		4,777,422			3,880,475
Goodwill		9,386,649			9,175,488
Intangibles		1,067,570			1,468,370
Other assets		10,454,921			9,649,725
Total assets	$	659,480,738		$	610,087,872
LIABILITIES AND STOCKHOLDERS’ EQUITY
Deposits:
Non-interest bearing	$	148,895,347		$	124,659,052
Interest bearing		437,508,892			405,723,740
Total deposits		586,404,239			530,382,792
Securities sold under repurchase agreements and federal funds purchased		2,190,832			12,412,224
Accrued interest payable		595,287			751,112
Junior subordinated debenture		15,465,000			15,465,000
Other liabilities		2,448,995			2,503,843
Total liabilities		607,104,353			561,514,971
Commitments and contingencies		—			—
Stockholders’ Equity:
Common stock, $.10 par value— 10,000,000 shares authorized, 4,960,999 and 4,487,135 issued and 4,912,613 and 4,454,256 outstanding at Sept 30, 2005 and December 31, 2004, respectively		496,100			448,713
Surplus		41,512,397			30,247,142
Unearned ESOP shares		(51,797	)		(65,314	)
Accumulated other comprehensive income		(529,137	)		372,402
Treasury stock — 48,386 and 32,879 shares, at cost		(1,055,379	)		(759,987	)
Retained earnings		12,004,201			18,329,945
Total stockholders’ equity		52,376,385			48,572,901
Total liabilities and stockholders’ equity	$	659,480,738		$	610,087,872

See notes to unaudited consolidated financial statements.

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MIDSOUTH BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2005		2004		2005		2004
INTEREST INCOME:
Loans, including fees	$	8,342,155	$	5,436,767	$	23,331,518	$	15,447,843
Securities
Taxable		759,500		686,611		2,306,471		1,971,314
Nontaxable		706,266		630,328		2,014,437		1,741,695
Federal funds sold		49,057		47,034		141,840		98,618
Other Interest Income		25,433		14,418		58,320		35,589
TOTAL		9,882,411		6,815,158		27,852,586		19,295,059
INTEREST EXPENSE:
Deposits		2,634,764		1,230,361		6,649,432		3,203,073
Securities sold under repurchase agreements, federal funds purchased and advances		27,688		17,015		129,219		59,782
Long term debt		295,362		183,980		867,079		540,980
TOTAL		2,957,814		1,431,356		7,645,730		3,803,835
NET INTEREST INCOME		6,924,597		5,383,802		20,206,856		15,491,224
PROVISION FOR LOAN LOSSES		300,000		250,000		679,737		670,000
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES		6,624,597		5,133,802		19,527,119		14,821,224
OTHER OPERATING INCOME:
Service charges on deposits		2,088,513		1,738,591		6,414,593		4,664,809
Gains on securities, net		—		130,100		385		132,450
Credit life insurance		40,602		34,309		121,568		78,730
Other charges and fees		711,373		473,310		2,896,825		1,415,454
TOTAL OTHER INCOME		2,840,488		2,376,310		9,433,371		6,291,443
OTHER EXPENSES:
Salaries and employee benefits		3,653,280		2,419,190		10,160,905		6,829,102
Occupancy expense		1,462,505		1,030,877		4,047,115		3,002,457
Other		2,203,097		1,483,944		7,250,942		4,069,234
TOTAL OTHER EXPENSES		7,318,882		4,934,011		21,458,962		13,900,793
INCOME BEFORE INCOME TAXES		2,146,203		2,576,101		7,501,528		7,211,874
PROVISION FOR INCOME TAXES		512,315		621,985		1,903,964		1,851,443
NET INCOME	$	1,633,888	$	1,954,116	$	5,597,564	$	5,360,431
EARNINGS PER SHARE
Basic	$	0.33	$	0.45	$	1.14	$	1.22
Diluted	$	0.32	$	0.43	$	1.10	$	1.17

See notes to unaudited consolidated financial statements.

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MIDSOUTH BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2005 (UNAUDITED)

											UNREALIZED
											GAINS (LOSSES)
	COMMON STOCK							ESOP			ON SECURITIES			TREASURY			RETAINED
	SHARES		AMOUNT		SURPLUS			OBLIGATION			AFS, NET			STOCK			EARNINGS			TOTAL
Balance — January 1, 2005		4,487,135	$	448,713	$	30,247,142		($	65,314	)	$	372,402		($	759,987	)	$	18,329,945		$	48,572,901
Dividends on common stock, $.06 per share																		(828,722	)		(828,722	)
Issuance of common stock		23,297		2,330		118,302															120,632
Stock dividend 10%		450,567		45,057		11,038,889												(11,083,946	)
Cash in lieu resulting from stock div																		(10,640	)		(10,640	)
Tax benefit resulting from exercise of stock options						140,564															140,564
Purchase of treasury stock															(295,392	)					(295,392	)
Net income																		5,597,564			5,597,564
Excess of market value over book value of ESOP shares released, net adjustment						(32,500	)														(32,500	)
ESOP obligation repayments									13,517												13,517
Net change in unrealized gain/loss on securities available-for-sale, net of income taxes												(901,539	)								(901,539	)
Balance — September 30, 2005		4,960,999	$	496,100	$	41,512,397		($	51,797	)	($	529,137	)	($	1,055,379	)	$	12,004,201		$	52,376,385

See notes to unaudited consolidated financial statements.

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MIDSOUTH BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2005 AND 2004

	September 30,			September 30,
	2005			2004
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	5,597,564		$	5,360,431
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		1,573,702			1,132,575
Provision for loan losses		679,737			670,000
Deferred income taxes		56,699			55,720
Amortization of premiums on securities, net		669,026			774,959
Gain on sale of securities, net		(385	)		(132,450	)
Loss/(gain) on sale of other real estate owned		65,950			(45,823	)
Change in accrued interest receivable		(896,947	)		(341,337	)
Change in accrued interest payable		(155,825	)		(152,602	)
Other, net		287,816			76,643
NET CASH PROVIDED BY OPERATING ACTIVITIES		7,877,337			7,398,116
CASH FLOWS FROM INVESTING ACTIVITIES:
Net increase in interest-bearing deposits in banks		(32,019	)		(4,012	)
Proceeds from sales of securities available-for-sale		9,099,585			403,600
Proceeds from maturities and calls of securities held-to-maturity		1,973,244			—
Proceeds from maturities and calls of securities available-for-sale		26,958,865			29,618,961
Purchases of securities available-for-sale		(27,971,143	)		(47,469,321	)
Loan originations, net of repayments		(48,501,118	)		(33,160,442	)
Purchases of premises and equipment		(4,102,047	)		(1,651,966	)
Proceeds from sales of other real estate owned		455,726			651,246
NET CASH USED IN INVESTING ACTIVITIES		(42,118,907	)		(51,611,934	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in deposits		56,021,447			69,361,391
Net decrease in securities sold under repurchase agreements, federal funds purchased, and FHLB borrowings		(10,221,392	)		(12,354,541	)
Issuance of junior subordinated debentures		—			8,000,000
Purchase/transfer of treasury stock		(295,392	)		(639,790	)
Payment of dividends		(1,069,218	)		(894,442	)
Exercise of stock options		120,632			122,779
Cash for fractional shares		(10,640	)		—
NET CASH PROVIDED BY FINANCING ACTIVITIES		44,545,437			63,595,397
NET INCREASE IN CASH & CASH EQUIVALENTS		10,303,867			19,381,579
CASH & CASH EQUIVALENTS AT BEGINNING OF PERIOD		17,394,278			13,833,857
CASH & CASH EQUIVALENTS AT END OF PERIOD	$	27,698,145		$	33,215,436

See notes to unaudited consolidated financial statements.

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MIDSOUTH BANCORP, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

1.	STATEMENT BY MANAGEMENT CONCERNING UNAUDITED FINANCIAL INFORMATION
	The accompanying unaudited consolidated financial statements and notes thereto contain all adjustments, consisting only of normal recurring adjustments, necessary to present fairly, in accordance with accounting principles generally accepted in the United States of America, the financial position of MidSouth Bancorp, Inc. (“the Company”) and its subsidiaries as of September 30, 2005 and the results of their operations and their cash flows for the periods presented. These consolidated financial statements should be read in conjunction with the annual consolidated financial statements and the notes thereto included in the Company’s 2004 annual report and Form 10K.
	The results of operations for the three and nine month period ended September 30, 2005 are not necessarily indicative of the results to be expected for the entire year.
	The Company applies Accounting Practices Board (APB) Opinion No. 25 and related interpretations in accounting for its stock options. Accordingly, no compensation cost has been recognized. The Company has adopted the disclosure-only option under SFAS No. 123. Had compensation costs for the Company’s stock options been determined based on the fair value at the grant date, consistent with the method under SFAS No. 123, the Company’s net income and earnings per share would have been as indicated below:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2005		2004		2005		2004
(in thousands):
Net earnings available to common stockholders (in thousands):
As reported	$	1,634	$	1,954	$	5,598	$	5,360
Deduct total stock based compensation determined under fair value method		15		20		45		53
Pro forma	$	1,619	$	1,934	$	5,553	$	5,307
Basic earnings per share:
As reported	$	0.33	$	0.45	$	1.14	$	1.22
Pro forma	$	0.33	$	0.45	$	1.13	$	1.21
Diluted earnings per share:
As reported	$	0.32	$	0.43	$	1.10	$	1.17
Pro forma	$	0.32	$	0.42	$	1.09	$	1.16

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2.	ALLOWANCE FOR LOAN AND LOSSES
	An analysis of the activity in the allowance for loan losses is as follows:

	Nine Months Ended
	September 30,
	2005			2004
(in thousands)
Balance at beginning of period	$	3,851		$	2,790
Provision for loan losses		680			670
Recoveries		162			133
Loans charged off		(482	)		(644	)
Balance at end of period	$	4,211		$	2,949

3.	COMPREHENSIVE INCOME
	Comprehensive income includes net income and other comprehensive income (losses) which, in the case of the Company, only includes unrealized gains and losses on securities available-for-sale. Following is a summary of the Company’s comprehensive income for the three and nine month periods ended September 30, 2005 and 2004.

	Three Months Ended					Nine Months Ended
	September 30,					September 30,
(in thousands)	2005		2004			2005			2004
Net income	$	1,634	$	1,954		$	5,598		$	5,360
Other comprehensive income, net of tax:
Unrealized gains (losses) on securities available-for-sale:
Unrealized holding gains (losses) arising during the period, net of income tax (benefit) of $264, $589, $(465), and $(45), respectively		512		1,230			(902	)		(1	)
Reclassification adjustment for gains included in net income, net of income tax (benefit) of $0, $45, $0, and $45, respectively				(86	)					(87	)
Other comprehensive income (loss)		512		1,144			(902	)		(88	)
Total comprehensive income	$	2,146	$	3,098		$	4,696		$	5,272

	In December 2004, the FASB issued Statement 123R, Share-Based Payment, an Amendment of FASB Statement No. 123, which will require all companies to measure compensation cost for all share-based payments (including employee stock options) at fair value, and will be effective for public companies for annual periods beginning after June 15, 2005. This Statement will eliminate the ability to account for stock-based compensation transactions using APB 25 and, generally, will require instead that such transactions be accounted for using a fair-value based method. Had the Company adopted SFAS No. 123R in prior periods, the impact of the standard would have approximated the impact of SFAS No. 123 as described in the disclosure of pro-forma net income and earnings per share as set forth above. The Company will be required to begin expensing stock options in the first quarter of the year ended December 31, 2006.
4.	STOCK DIVIDEND
	During the third quarter of 2005, the Company declared a 10% stock dividend on common stock to holders of record on July 29, 2005 and payable on August 19, 2005.

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Part 1. Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL POSITION AND RESULTS OF OPERATIONS

MidSouth Bancorp, Inc. (“the Company”) is a multi-bank holding company that conducts substantially all of its business through its wholly-owned subsidiary banks (the “Banks”), MidSouth Bank, N. A. (“MidSouth Bank”), headquartered in Lafayette, Louisiana and Lamar Bank (“Lamar”), headquartered in Beaumont, Texas. The Banks provide a broad line of financial products and services to small and medium-sized businesses and consumers. MidSouth Bank operates 21 full-service banking offices throughout south Louisiana and construction is underway on two additional full service locations. Lamar operates six full-service banking offices in southeast Texas. Lamar’s Conroe, Texas loan production office was moved into new leased space and converted to a full service office in September 2005.

Following is management’s discussion of factors that management believes are among those necessary for an understanding of the Company’s consolidated financial statements. The discussion should be read in conjunction with the consolidated financial statements, the notes thereto and related Management’s Discussion & Analysis in the Company’s 10-K for the year ended December 31, 2004.

Forward Looking Statements

The Private Securities Litigation Act of 1995 provides a safe harbor for disclosure of information about a company’s anticipated future financial performance. This act protects a company from unwarranted litigation if actual results differ from management expectations. This management’s discussion and analysis reflects management’s current views and estimates of future economic circumstances, industry conditions, the Company’s performance and financial results based on assumptions considered reasonable. A number of factors and uncertainties could cause actual results to differ materially from the anticipated results and expectations expressed in the discussion. These factors and uncertainties include, but are not limited to:

• 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 that could adversely affect customers and their ability to repay borrowings under agreed upon terms and/or adversely affect the value of the underlying collateral related to the borrowings;

• increased competition for deposits and loans which could affect 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;

• a deviation in actual experience from the underlying assumptions used to determine and establish the Allowance for Loan Losses (“ALL”);

• changes in the availability of funds resulting from reduced liquidity or increased costs;

• 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;

9

• the ability to acquire, operate and maintain effective and efficient operating systems;

• increased asset levels and changes in the composition of assets which would impact capital levels and regulatory capital ratios;

• loss of critical personnel and the challenge of hiring qualified personnel at reasonable compensation levels;

• changes in government regulations applicable to financial holding companies and banking;

• and acts of terrorism, weather, or other events beyond the Company’s control.

Critical Accounting Policies

Certain critical accounting policies affect the more significant judgments and estimates used in the preparation of the consolidated financial statements. The Company’s most critical accounting policy relates to its allowance for loan losses, which reflects the estimated losses resulting from the inability of its borrowers to make loan payments. If the financial condition of its borrowers were to deteriorate, resulting in an impairment of their ability to make payments, the Company’s estimates would be updated and additional provisions for loan losses may be required. See “ — Asset Quality — Nonperforming Assets and Loans Past Due 90 Days and Over.” Another of the Company’s critical accounting policies relates to its goodwill and intangible assets. Goodwill represents the excess of the purchase price over the fair value of net assets acquired. In accordance with SFAS No. 142, “Goodwill and Other Intangible Assets,” goodwill is not amortized, but is evaluated for impairment annually. If the fair value of an asset exceeds the carrying amount of the asset, no charge to goodwill is made. If the carrying amount exceeds the fair value of the asset, goodwill will be adjusted through a charge to earnings.

Results of Operations

During the third quarter of 2005, the Company successfully met the challenges presented by two powerful hurricanes, Katrina and Rita. In the aftermath of both storms, the Company’s headquarters and data processing center were unaffected and access to customer accounts was not interrupted. The Company’s team of associates worked diligently to ensure customers’ needs were met.

With Katrina, MidSouth Bank experienced short-term power outages at its newly opened Baton Rouge office and the loan production office in Houma, but no physical property damage. Completion of the new Houma banking office has been delayed due to supply problems resulting from the hurricane. Hurricane Rita brought mandatory evacuations, extended power outages and minor damage to four of the Lamar offices in southeast Texas and three MidSouth Bank offices in southwest Louisiana. Within one week, limited services were available in all of the Company’s affected markets. Customers were also serviced through Lamar offices in College Station and Conroe and through MidSouth Bank’s Customer Care Center, operations departments and branch offices. All offices are currently fully functional and operating under normal conditions.

Although the total impact of the hurricanes affecting the Company’s service area may not be fully known at this time, management estimates service charge income, primarily NSF fees, was negatively impacted

10

by approximately $60,000 in August and September 2005. Despite the negative impact, service charge income increased in both quarterly and year-to-date comparison.

MidSouth Bank and Lamar lenders connected with their customers after the storms to assist in meeting their needs and to assess potential credit issues resulting from the storms. Initial discussions with customers and preliminary analysis of exposure in the affected areas reflected no significant immediate credit losses resulting directly from the hurricanes. Further analysis will be performed to assess credit-related risks resulting from the storms. At this time, management believes the $300,000 added to the provision for loan losses in the third quarter of 2005 is adequate to bring the Allowance for Loan Losses (“ALL”) to a sufficient level to cover probable losses within the loan portfolio.

The Company had third quarter 2005 net income of $1,633,888, a decrease of $320,228 from the $1,954,116 earned in the third quarter of 2004. Start up costs totaling approximately $178,000, including salaries, marketing and occupancy expenses, for four new retail store locations negatively impacted third quarter 2005 earnings. Provision expense increased $50,000 in comparison to the $250,000 expensed to the provision for loan losses in the third quarter of 2004, primarily due to the risk profile of the portfolio relative to growth. Finally, $130,000 in gains on sales of investment securities was recorded in the third quarter of 2004. No nonrecurring income was recorded in the third quarter of 2005.

Basic earnings per share were $.33 for the quarter ended September 30, 2005, compared to $.45 per share reported for the third quarter of 2004, and $.42 per share earned in the second quarter of 2005. Diluted earnings per share were $.32 for the third quarter of 2005 compared to $.43 per share for the third quarter of 2004 and $.40 for the second quarter of 2005. Earnings per share data have been adjusted to reflect a 10% stock dividend on common stock to holders of record on July 29, 2005 and payable on August 19, 2005.

Year-to-date earnings as of September 30, 2005 totaled $5,597,564, a 4.4% increase over the $5,360,431 reported for the nine months ended September 30, 2004. Basic earnings per share were $1.14 at September 30, 2005 versus $1.22 per share at September 30, 2004. Diluted earnings per share were $1.10 versus $1.17, respectively.

Earnings Analysis
Net Interest Income

The primary source of earnings for the Company is the difference between interest earned on loans and investments (earning assets) and interest paid on deposits and other liabilities (interest-bearing liabilities), which are used to fund the earning assets. Changes in the volume and mix of earning assets and interest-bearing liabilities combined with changes in market rates of interest greatly affect net interest income. The Company’s net interest margin (“NIM”) on a taxable-equivalent basis, which is net income as a percentage of average earning assets, was 4.87% for the quarter ended September 30, 2005, down 7 basis points from 4.94% for the quarter ended September 30, 2004. In nine-month comparison, the net interest margin also decreased 7 basis points, from 5.00% at September 30, 2004 to 4.93% at

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September 30, 2005. Although net interest income increased, the NIM declined in both quarterly and year-to-date comparisons primarily due to narrowing spreads between earning asset yields and interest-bearing liability costs. The tables following this discussion reflect the changes in taxable-equivalent net interest income for the quarters ended and nine months ended September 30, 2005 and 2004.

In quarterly comparison, the impact of a $134.0 million increase in volume and a 66 basis point increase in the taxable equivalent yield on earning assets was partially offset by the $107.5 million increase in average interest-bearing liabilities and a 94 basis point increase in the cost of interest-bearing liabilities. Approximately $103.5 million in earning assets and $75.6 million in interest-bearing liabilities were acquired from Lamar.

Average loan volume increased $137.7 million in quarterly comparison and loan yields improved 24 basis points, from 7.59% in September 2004 to 7.83% in September 2005. Commercial loan yields increased 63 basis points, from 7.14% to 7.77% and reflected the impact of prime rate increases on the Company’s approximately $204 million variable rate loan portfolio. Consumer loan yields decreased 190 basis points in quarterly comparison, from 9.96% to 8.06% due primarily to the addition of Lamar’s approximately $41.7 million consumer portfolio that yields an average rate of 6.04%. Indirect financial for automobiles represented approximately $31.3 million of Lamar’s consumer portfolio.

A deposit promotion held during 2004 resulted in an increase of $50.0 million in average NOW and Money Market Accounts in quarterly comparison, excluding approximately $39.3 million acquired from Lamar. Most of the $50 million net growth in this deposit category was in money market accounts. The yield on the money market accounts reflected changes in market rates, and increased approximately 98 basis points over the past twelve months. The competitive yield on the new money market deposits contributed greatly to the 102 basis point increase in the average yield on NOW and money market deposits in quarterly comparison. Certificates of deposit (“CD”) yields were not impacted to the same degree, reflecting a 79 basis point increase in quarterly comparison. During the deposit promotion in 2004, CD offering rates were kept low to market in order to protect the existing CD base. CD yields have risen in 2005 due to promotional rates offered on specific terms for a limited time.

Additionally, the average volume of junior subordinated debentures and related trust preferred securities increased $6.2 million from third quarter 2004 to third quarter 2005. The Company issued $8.2 million of junior subordinated debentures and related trust preferred securities in the third quarter of 2004 to partially fund the Lamar acquisition. The impact of the higher volume of debentures was partially offset by a lower rate on the new debentures and resulted in increased interest expense of $111,000 in quarterly comparison. The volume and rate changes discussed above resulted in a $1.6 million quarterly increase in net interest income, on a taxable-equivalent basis, from $5.6 million at September 30, 2004 to $7.2 million at September 30, 2005.

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Net interest income, on a taxable-equivalent basis, increased $4.8 million for the nine-month period ended September 30, 2005, from $16.2 million at September 30, 2004 to $21.0 million at September 30, 2005. During the same period, the average volume of earning assets increased $137.9 million or 31.9%, from $432.7 million in 2004 to $570.6 million in 2005. The average yield on earning assets improved 54 basis points in nine-month comparison, from 6.18% at September 30, 2004 to 6.72% at September 30, 2005. The volume of total interest-bearing liabilities increased $111.2 million or 33.5%, from $331.8 million for the nine months ended September 30, 2004 to $443.0 million for the nine months ended September 30, 2005. The average yield on total interest-bearing liabilities increased 78 basis points in the same period, from 1.53% to 2.31%. As in quarterly comparison, strong loan growth contributed significantly to increased interest income for the nine months ended September 30, 2005 and more than offset NIM compression.

13

Consolidated Average Balances, Interest and Rates
Taxable-equivalent basis (2)
(in thousands)

			Three Months Ended								Three Months Ended
			September 30, 2005								September 30, 2004
			Average					Average			Average					Average
			Volume			Interest		Yield/Rate			Volume			Interest		Yield/Rate
ASSETS
Investment Securities	(1	)
Taxable			$	77,891		$	766		3.93	%	$	81,118		$	687		3.39	%
Tax Exempt	(2	)		78,697			987		5.02	%		72,134			887		4.92	%
Equity Securities				2,686			25		3.79	%		1,595			14		3.62	%
Total Investments				159,274			1,778		4.46	%		154,847			1,588		4.10	%
Federal Funds Sold and Securities Purchased Under Agreements to Resell				5,926			49		3.28	%		14,071			47		1.33	%
Loans	(3	)
Commercial and Real Estate				327,941			6,418		7.77	%		239,762			4,305		7.14	%
Installment				94,646			1,924		8.06	%		45,078			1,132		9.96	%
Total Loans				422,587			8,342		7.83	%		284,840			5,437		7.59	%
Total Earning Assets				587,787			10,169		6.86	%		453,758			7,072		6.20	%
Allowance for Loan Losses				(4,073	)							(2,847	)
Nonearning Assets				66,505								33,106
Total Assets			$	650,219							$	484,017
LIABILITIES AND STOCKHOLDERS’ EQUITY
NOW, Money Market, and Savings			$	320,864		$	1,811		2.24	%	$	231,592		$	711		1.22	%
Certificates of Deposits				117,194			824		2.79	%		103,494			520		2.00	%
Total Interest Bearing Deposits				438,058			2,635		2.39	%		335,086			1,231		1.46	%
Federal Funds Purchased, Securities Sold Under Agreements to Repurchase				2,895			24		3.28	%		4,935			17		1.37	%
Junior Subordinated Debentures				15,465			295		7.58	%		9,279			184		7.89	%
Federal Home Loan Bank Advances				389			4		3.83	%
Total Interest Bearing Liabilities				456,807			2,958		2.57	%		349,300			1,432		1.63	%
Demand Deposits				136,696								98,890
Other Liabilities				4,903								1,214
Stockholders’ Equity				51,813								34,613
Total Liabilites and Stockholders’ Equity			$	650,219							$	484,017
NET TAXABLE-EQUIVALENT INTEREST INCOME AND SPREAD						$	7,211		4.29	%				$	5,640		4.57	%
NET TAXABLE-EQUIVALENT YIELD ON EARNING ASSETS									4.87	%							4.94	%

(1)	Securities classified as available-for-sale are included in average balances and interest income figures reflect interest earned on such securities.
(2)	Interest income of $286,350 for 2005 and $256,405 for 2004 is added to interest earned on tax-exempt obligations to reflect tax equivalent yields using a 34% tax rate.
(3)	Interest income includes loan fees of $752,394 for 2005 and $532,840 for 2004. Nonaccrual loans are included in average balances and income on such loans is recognized on a cash basis.

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Changes in Taxable-Equivalent Net Interest Income
(in thousands)

	Three Months Ended
	Sept 30, 2005 compared to Sept 30, 2004
	Total		Change
	Increase		Attributable to
	(Decrease)		Volume			Rates
Taxable-equivalent interest earned on:
Investment Securities
Taxable	$	79	($	28	)	$	107
Tax Exempt		100		82			18
Equity Securities		11		10			1
Federal Funds Sold and Securities
Purchased Under Agreement to Resell		2		(1	)		3
Loans, including fees		2,905		2,714			191
TOTAL		3,097		2,777			320
Interest Paid On:
Interest Bearing Deposits		1,404		456			948
Federal Funds Purchased and Securities
Sold Under Agreement to Repurchase		7		(3	)		10
Federal Home Loan Bank Advances		4		4			0
Junior Subordinated Debentures		111		118			(7	)
TOTAL		1,526		575			951
Taxable-equivalent net interest income	$	1,571	$	2,202		($	631	)

NOTE: Changes due to both volume and rate has generally been allocated to volume and rate changes in proportion to the relationship of the absolute dollar amounts to the changes in each.

15

Consolidated Average Balances, Interest and Rates
Taxable-equivalent basis (2)
(in thousands)

			Nine Months Ended								Nine Months Ended
			September 30, 2005								September 30, 2004
			Average					Average			Average					Average
			Volume			Interest		Yield/Rate			Volume			Interest		Yield/Rate
ASSETS
Investment Securities	(1	)
Taxable			$	79,718		$	2,306		3.86	%	$	80,633		$	1,971		3.26	%
Tax Exempt	(2	)		76,583			2,835		4.94	%		65,085			2,454		5.03	%
Equity Securities				2,631			58		2.96	%		1,809			36		2.62	%
Total Investments				158,932			5,199		4.36	%		147,527			4,461		4.03	%
Federal Funds Sold and Securities Purchased Under Agreements to Resell				6,801			142		2.79	%		12,577			99		1.05	%
Loans	(3	)
Commercial and Real Estate				316,447			17,958		7.59	%		228,641			12,173		7.11	%
Installment				88,428			5,374		8.13	%		43,960			3,275		9.95	%
Total Loans				404,875			23,332		7.70	%		272,601			15,448		7.57	%
Total Earning Assets				570,608			28,673		6.72	%		432,705			20,008		6.18	%
Allowance for Loan Losses				(3,979	)							(2,818	)
Nonearning Assets				63,202								34,170
Total Assets			$	629,831							$	464,057
LIABILITIES AND STOCKHOLDERS’ EQUITY
NOW, Money Market, and Savings			$	303,893		$	4,502		1.98	%	$	212,472		$	1,626		1.02	%
Certificates of Deposits				117,271			2,147		2.45	%		104,542			1,577		2.02	%
Total Interest Bearing Deposits				421,164			6,649		2.11	%		317,014			3,203		1.35	%
Federal Funds Purchased, Securities Sold Under Agreements to Repurchase				5,091			102		2.67	%		5,479			49		1.20	%
Federal Home Loan Bank Advances				1,310			28		2.81	%		1,314			11		1.09	%
Notes Payable
Junior Subordinated Debentures				15,465			867		7.50	%		8,041			541		8.99	%
Total Interest Bearing Liabilities				443,030			7,646		2.31	%		331,848			3,804		1.53	%
Demand Deposits				131,923								96,476
Other Liabilities				4,354								1,181
Stockholders’ Equity				50,524								34,552
Total Liabilites and Stockholders’ Equity			$	629,831							$	464,057
NET TAXABLE-EQUIVALENT INTEREST INCOME AND SPREAD						$	21,027		4.41	%				$	16,204		4.65	%
NET TAXABLE-EQUIVALENT YIELD ON EARNING ASSETS									4.93	%							5.00	%

(1)	Securities classified as available-for-sale are included in average balances and interest income figures reflect interest earned on such securities.
(2)	Interest income of $820,322 for 2005 and $712,336 for 2004 is added to interest earned on tax-exempt obligations to reflect tax equivalent yields using a 34% tax rate.
(3)	Interest income includes loan fees of $2,270,575 for 2005 and $1,466,509 for 2004. Nonaccrual loans are included in average balances and income on such loans is recognized on a cash basis.

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Changes in Taxable-Equivalent Net Interest Income
(in thousands)

	Nine Months Ended
	Sept 30, 2005 compared to Sept 30, 2004
	Total		Change
	Increase		Attributable to
	(Decrease)		Volume			Rates
Taxable-equivalent interest earned on:
Investment Securities
Taxable	$	335		($22	)	$	357
Tax Exempt		381		423			(42	)
Equity Securities		22		18			4
Federal Funds Sold and Securities
Purchased Under Agreement to Resell		43		(16	)		59
Loans, including fees		7,884		7,627			257
TOTAL		8,665		8,030			635
Interest Paid On:
Interest Bearing Deposits		3,446		1,271			2,175
Federal Funds Purchased and Securities
Sold Under Agreement to Repurchase		53		(3	)		56
Federal Home Loan Bank Advances		17					17
Notes Payable Junior Subordinated Debentures		326		398			(72	)
TOTAL		3,842		1,666			2,176
Taxable-equivalent net interest income	$	4,823	$	6,364			($1,541	)

NOTE: Changes due to both volume and rate has generally been allocated to volume and rate changes in proportion to the relationship of the absolute dollar amounts to the changes in each.

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Non-interest Income
Excluding Securities Transactions

The Company’s primary source of non-interest income is service charges and fees on deposit accounts, which include insufficient funds (“NSF”) fees. Income from service charges on deposit accounts totaled $2.1 million for the third quarter of 2005 compared to $1.7 million for the third quarter of 2004, an increase of $350,000 or 20%. For the nine months ended September 30, 2005, service charges on deposit accounts totaled $6.4 million compared to $4.7 million for the nine months ended September 30, 2004, an increase of $1.7 million or 38%. The increases during both periods resulted primarily from services charges and fees earned on approximately 9,700 deposit accounts acquired from Lamar in October 2004. Management estimates service charge income, primarily NSF fees, was negatively impacted by approximately $60,000 in August and September 2005 because of the two hurricanes that affected the Company’s market in those months. It is anticipated that NSF fee income for the fourth quarter of 2005 will also be negatively impacted.

Income from other charges and fees, including fees earned on the sale of credit life insurance, increased $244,356 for the three months ended September 30, 2005 and $1.5 million for the nine months ended September 30, 2005 as compared to the same periods in 2004. Non-recurring income totaling $130,000 from gains on sales of investment securities was recorded during the third quarter of 2004 and affected the change in total non-interest income in quarterly and year-to-date comparison. The increase for the nine months ended September 30, 2005 included $631,000 received on the PULSE distribution.

Lamar’s contribution to the Company’s total non-interest income was approximately $500,000 for the three months ended and $1.6 million for the nine months ended September 30, 2005.

Non-interest Expense

Non-interest expense increased $2.4 million in quarterly comparison and $7.6 million in nine-month comparison from September 30, 2004 to September 30, 2005, primarily from the addition of Lamar’s expenses. Lamar contributed $1.8 million to the quarterly increase and $5.0 million to the increase reported for the nine months ended September 30, 2005. The increases for both periods are primarily the result of the additional salaries and benefit costs for Lamar’s 68 full-time equivalent (“FTE”) employees and an increase of 22 FTE employees at MidSouth Bank over the past twelve months.

Salaries and employee benefit expenses increased $1.2 million and totaled $3.6 million for the quarter ended September 30, 2005, a 51% increase over the $2.4 million for the quarter ended September 30, 2004. For the nine months ended September 30, 2005, salaries and benefit expenses totaled $10.1 million, up $3.3 million or 49% over the $6.8 million for the nine months ended September 30, 2004. The total number of FTE associates employed by the Company increased from 233 at September 30, 2004 to 323 at September 30, 2005. The

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increase in staff reflected the Company’s investment in growing the franchise and investing in people and the infrastructure to support that growth. MidSouth Bank’s new Baton Rouge office opened during the third quarter of 2005 and the River Ranch office in Lafayette opened in October 2005. The Houma full service banking facility was delayed because of supply problems resulting from Hurricane Katrina, but should be opened during the fourth quarter of 2005. Lamar’s full service banking facility in Conroe opened early in October 2005, in the aftermath of Hurricane Rita.

Total occupancy expenses increased $431,628 in quarterly comparison and $1,044,658 in nine month comparison from September 30, 2004 to September 30, 2005 due to the addition of Lamar’s banking locations and the new banking offices added in 2005. Lamar contributed
$298,393 to the quarterly increase and $697,821 to the year-to-date increase in occupancy expenses. Net of Lamar’s occupancy expenses, increases were recorded in lease expense, building depreciation, maintenance expenses and utilities costs, reflecting the Company’s strategic expansion.

Other non-interest expenses increased $.7 million, from $1.5 million for the quarter ended September 30, 2004 to $2.2 million for the quarter ended September 30, 2005. For the nine months ended September 30, 2005, other non-interest expenses totaled $7.3 million, up $3.2 million over the $4.1 million reported for the nine months ended September 30, 2004. The increases for both periods resulted primarily from the addition of Lamar’s other non-interest expenses, which totaled approximately $.6 million for the quarter ended and $2.1 million for the nine months ended September 30, 2005. Other non-interest expenses for the nine month period included approximately $100,000 in conversion costs, $137,000 in amortization of valuations, and $232,000 in amortization of intangibles, net of tax affect.

Additionally, MidSouth Bank incurred other non-interest expense increases in quarterly comparison of primarily marketing and advertising expenses, printing and supplies costs, and postage. Year-to-date increases in MidSouth Bank’s other non-interest expenses occurred primarily in marketing and advertising expenses, education and travel expenses, accounting fees, and data processing costs. ATM/Debit Card processing charges also increased but was offset by increased income from ATM/Debit card processing fees due to a higher volume of debit card transactions processed. The increased non-interest expenses reflect the Company’s recent growth and development of the franchise within its markets.

Analysis of Statement of Condition

Consolidated assets totaled $659.5 million at September 30, 2005, up $49.4 million from $610.1 million at December 31, 2004. The increase resulted primarily from growth in deposits of $56.0 million of which $24.2 million was non-interest bearing balances, primarily in commercial deposit accounts. The growth in interest-bearing deposits resulted primarily in MidSouth’s Platinum Money Market accounts, which offer a competitive yield that adjusts weekly to market rates. Cash flows from the increase in deposits funded a 12% or $48.0 million increase in loans over the nine months ended September 30, 2005, primarily in

19

commercial and real estate credits. The securities available-for sale portfolio decreased $9.3 million over the same period as a result of mutual fund sales totaling $8.3 million for Lamar and $1.0 million for MidSouth Bank during the first quarter of 2005. Held-to-maturity securities decreased $2.8 million for the nine months ended September 30, 2005 because of calls and maturities within the portfolio. Fixed assets increased $2.3 million over the past nine months as the Company continued its expansion plans. Final accounting adjustments on Lamar’s fixed asset portfolio and on other assets acquired resulted in an increase of $211,161 to goodwill associated with the acquisition.

Liquidity

Liquidity is the availability of funds to meet contractual obligations as they become due and to fund operations. The Banks’ primary liquidity needs involve their ability to accommodate customers’ demands for deposit withdrawals as well as their requests for credit. Liquidity is deemed adequate when sufficient cash to meet these needs can be promptly raised at a reasonable cost to the Banks. Liquidity is provided primarily by three sources: a stable base of funding sources, an adequate level of assets that can be readily converted into cash, and borrowing lines with correspondent banks. The Banks’ core deposits are their most stable and important source of funding. Further, the low variability of the core deposit base lessens the need for liquidity. Cash deposits at other banks, federal funds sold, principal payments received on loans and mortgage-backed securities, and maturities of investment securities provide additional primary sources of asset liquidity for the Banks. The Banks also have significant borrowing capacity with the FHLB of Dallas, Texas and borrowing lines with other correspondent banks.

At the parent company level, cash is needed primarily to meet interest payments on the junior subordinated debentures and pay dividends on common stock. An $8.2 million issuance of junior subordinated debentures and related trust preferred securities was completed on September 20, 2004, the proceeds of which were partially used to fund the Lamar Bancshares merger. The parent company previously issued $7.2 million in junior subordinated debentures and related trust preferred securities in February 2001. Dividends from MidSouth Bank primarily provide liquidity for the parent company. As a publicly traded company, the parent company also has the ability to issue additional trust preferred and other securities instruments to provide funds as needed for operations and future growth.

Capital

MidSouth and the Banks are required to maintain certain minimum capital levels. Risk-based capital requirements are intended to make regulatory capital more sensitive to the risk profile of an institution’s assets. At September 30, 2005, MidSouth and the Banks were in compliance with statutory minimum capital requirements. Minimum capital requirements include a total risk-based capital ratio of 8.0%, with Tier 1 capital not less than 4.0%, and a leverage ratio (Tier 1 to total average adjusted assets) of 4.0% based upon the regulators latest composite rating of the institution. MidSouth’s leverage ratio was 8.97%, Tier 1

20

capital to risk-weighted assets was 11.67% and total capital to risk-weighted assets was 12.53% at the end of the third quarter of 2005. Both MidSouth Bank and Lamar’s risk-based capital ratios were above the levels required for designation as “well capitalized” by the FDIC. MidSouth Bank had a leverage ratio of 8.26%, a Tier 1 capital to risk-weighted assets ratio of 11.09% and an 11.98% total capital to risk weighted assets ratio at September 30, 2005. Lamar had a leverage ratio of 11.42%, a Tier 1 capital to risk-weighted assets ratio of 13.14% and a 13.83% total capital to risk weighted assets ratio at September 30, 2005.

Asset Quality
Credit Risk Management

MidSouth manages its credit risk by observing written, board approved policies which govern all underwriting activities. The risk management program requires that each individual loan officer review his or her portfolio on a quarterly basis and assign recommended credit ratings on each loan. These efforts are supplemented by independent reviews performed by the loan review officer and other validations performed by the internal audit department. Bank concentrations are monitored and reported to the Board of Directors quarterly whereby individual customer and aggregate industry leverage, profitability, risk rating distributions, and liquidity are evaluated for each major standard industry classification segment.

Nonperforming Assets and Loans Past Due 90 Days and Over

The following table summarizes MidSouth’s nonperforming assets and loans past due 90 days and over for the quarters ending September 30, 2005 and 2004 and for the year-ended December 31, 2004.

										Period
Asset Quality Data	Period Ended									Ended
(in thousands)	Sept. 30,						%			Dec. 31,
	2005			2004			Chg			2004
Nonaccrual loans	$	2,125		$	482			340.9	%	$	472
Loans past due 90 days and over		561			283			98.2	%		488
Total nonperforming loans		2,686			765			251.1	%		960
Other real estate owned		111			86			29.1	%		445
Other foreclosed assets		154									283
Total nonperforming assets	$	2,951		$	851			246.8	%	$	1,688
Nonperforming assets to total assets		0.45	%		0.17	%		164.7	%		0.28	%
Nonperforming assets to total loans + OREO + other foreclosed assets		0.68	%		0.29	%		134.5	%		0.44	%
ALL to nonperforming assets		142.70	%		346.53	%		-58.8	%		228.08	%
ALL to nonperforming loans		156.78	%		385.49	%		-59.3	%		401.04	%
ALL to total loans		0.97	%		1.00	%		-3.0	%		1.00	%
Year-to-date charge-offs	$	482		$	644			-25.2	%	$	1,067
Year-to-date recoveries		162			133			21.8	%		182
Year-to-date net charge-offs	$	320		$	511			-37.4	%	$	885
Net YTD charge-offs to total loans		0.07	%		0.17	%		-58.8	%		0.23	%

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Nonperforming assets, including loans 90 days or more past due, totaled $2.95 million at September 30, 2005. As a percentage of total assets, nonperforming assets increased to .45% at September 30, 2005, up from .17% at September 30, 2004 and .28% at December 31, 2004. Nonperforming assets increased primarily as a result of the placement of a single oil and gas service relationship aggregating $1.3 million on nonaccrual status during the second quarter of 2005. The relationship is well secured and there is currently no expectation of loss should the loan relationship be liquidated. Charge-off volume decreased with net charge-offs to total loans at .07% for September 30, 2005 compared to .17% for September 30, 2004 and .23% for December 31, 2004.

Preliminary analysis of exposure in the Company’s markets affected by the Hurricanes Katrina and Rita reflected no significant immediate credit losses resulting directly from the hurricanes. However, approximately 100 commercial customers, primarily in southwest Louisiana, and a few participated commercial credits were provided temporary assistance in the form of payment extensions for a period of 60 to 90 days as recovery efforts continued in the affected markets. The extensions totaled approximately $23 million and were granted to provide customers with short-term cash flow. Lenders in the affected markets have discussed potential credit issues resulting from the hurricanes with their customers and no significant long-term credit issues have been identified.

Specific reserves have been established in the ALL to cover probable losses on nonperforming assets. The ALL is analyzed quarterly and additional reserves, if needed, are allocated at that time. Factors considered in determining provisions include estimated losses in significant credits; known deterioration in concentrations of credit; historical loss experience; trends in nonperforming assets; volume, maturity and composition of the loan portfolio; off balance sheet credit risk; lending policies and control systems; national and local economic conditions; the experience, ability and depth of lending management and the results of examinations of the loan portfolio by regulatory agencies and others.

The processes by which management determines the appropriate level of the allowance, and the corresponding provision for probable credit losses, involves considerable judgment; therefore, no assurance can be given that future losses will not vary from current estimates. The $300,000 in provisions for loan losses for the third quarter 2005 was deemed necessary to support the risk profile of the loan portfolio relative to growth. Management believes the

22

$4,211,053 in the allowance as of September 30, 2005 is sufficient to cover probable losses in nonperforming assets and in the loan portfolio.

Impact of Inflation and Changing Prices

The consolidated financial statements of MidSouth and notes thereto, presented herein, have been prepared in accordance with generally accepted accounting principles, which require the measurement of financial position and operating results in terms of historical dollars without considering the change in the relative purchasing power of money over time and due to inflation. The impact of inflation is reflected in the increased cost of MidSouth’s operations. Unlike most industrial companies, nearly all the assets and liabilities of MidSouth are financial. As a result, interest rates have a greater impact on MidSouth’s performance than do the effects of general levels of inflation. Interest rates do not necessarily move in the same direction or to the same extent as the prices of goods and services.

Part I. Item 3. Qualitative and Quantitative Disclosures About Market Risk

In the normal course of conducting business, MidSouth is exposed to market risk, principally interest rate risk, through operation of its subsidiaries. Interest rate risk arises from market fluctuations in interest rates that affect cash flows, income, expense and values of financial instruments. The Asset/Liability Management Committee (“ALCO”) is responsible for managing MidSouth’s interest rate risk position in compliance with policy approved by the Board of Directors.

There have been no significant changes from the information regarding market risk disclosed under the heading “Interest Rate Sensitivity” in MidSouth’s Annual Report for the year ended December 31, 2004.

Part I. Item 4. Controls and Procedures

MidSouth’s Chief Executive Officer and Chief Financial Officer have evaluated the effectiveness of the disclosure controls and procedures (as such term is defined in Rules 13a-14(c) and 15d-14(c) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). As of the end of the period covered by this Quarterly Report on Form 10-Q (the “Evaluation Date”), the principal executive officer and principal financial officer have concluded that such disclosure controls and procedures are effective to ensure that information required to be disclosed by MidSouth in reports that it submits under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Commission rules and forms.

During the third quarter of 2005, there were no significant changes in MidSouth’s internal controls over financial reporting that has materially affected, or is reasonably likely to affect, MidSouth’s internal control over financial reporting.

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Part II. Other Information

Item 1. Legal Proceedings

The Banks have been named as a defendant in various legal actions arising from normal business activities in which damages of various amounts are claimed. While the amount, if any, of ultimate liability with respect to such matters cannot be currently determined, management believes, after consulting with legal counsel, that any such liability will not have a material adverse effect on MidSouth’s consolidated financial position, results of operations, or cash flows.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

The following table provides information with respect to purchases made by or on behalf of MidSouth or any “affiliated purchaser,” as defined in Securities Exchange Act Rule 10b-8(a)(3), of equity securities during the third quarter ended September 30, 2005.

					Total Number of		Maximum Number
	Total Number				Shares Purchased		of Shares That May
	of Shares		Average Price Paid		as Part of a Publicly		Yet be Purchased
	Purchased		per Share		Announced Plan1		Under the Plan1
July 2005	none							200,100
August 2005	none							200,100
September 2005		464	$	31.40		464		199,636

1 — Under a share repurchase program approved by MidSouth’s Board of Directors on November 13, 2002, MidSouth can repurchase up to 5% of its common stock outstanding through open market or privately negotiated transactions. The repurchase program does not have an expiration date.

Item 3. Defaults Upon Senior Securities

     None

Item 4. Submission of Matters to a Vote of Security Holders

     None

Item 5. Other Information

     None

Item 6. Exhibits and Reports on Form 8-K

(a) Exhibits

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Exhibit Number	Document Description
3.1	Amended and Restated Articles of Incorporation of MidSouth Bancorp, Inc. is included as Exhibit 3.1 to MidSouth’s Report on Form 10-K for the year ended December 31, 1993 and is incorporated herein by reference.
3.2	Articles of Amendment to Amended and Restated Articles of Incorporation dated July 19, 1995 are included as Exhibit 4.2 to MidSouth’s Registration Statement on Form S-8 filed September 20, 1995 and are incorporated herein by reference.
3.3	Amended and Restated By-laws adopted by the Board of Directors on April 12, 1995 are included as Exhibit 3.2 to Amendment No. 1 to MidSouth’s Registration Statement on Form S-4/A (Reg. No. 33-58499) filed on June 1, 1995.
11	Computation of earnings per share
31.1	Certification pursuant to Exchange Act Rules 13(a) – 14(a)
31.2	Certification pursuant to Exchange Act Rules 13(a) – 14(a)
32.1	Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2	Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

(b) Reports Filed on Form 8-K

     A press release regarding MidSouth’s earnings for the quarter ended June 30, 2005 was attached as Exhibit 99.1 to the Form 8-K filed on July 26, 2005.

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Signatures

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	MidSouth Bancorp, Inc. (Registrant)
Date:November 14, 2005	/s/ Teri S. Stelly
	Teri S. Stelly, SVP/Chief Accounting Officer

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Exhibit Index

Exhibit Number	Document Description
3.1	Amended and Restated Articles of Incorporation of MidSouth Bancorp, Inc. is included as Exhibit 3.1 to MidSouth’s Report on Form 10-K for the year ended December 31, 1993 and is incorporated herein by reference.
3.2	Articles of Amendment to Amended and Restated Articles of Incorporation dated July 19, 1995 are included as Exhibit 4.2 to MidSouth’s Registration Statement on Form S-8 filed September 20, 1995 and are incorporated herein by reference.
3.3	Amended and Restated By-laws adopted by the Board of Directors on April 12, 1995 are included as Exhibit 3.2 to Amendment No. 1 to MidSouth’s Registration Statement on Form S-4/A (Reg. No. 33-58499) filed on June 1, 1995.
11	Computation of earnings per share
31.1	Certification pursuant to Exchange Act Rules 13(a) — 14(a)
31.2	Certification pursuant to Exchange Act Rules 13(a) — 14(a)
32.1	Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2	Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

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