UNITED STATES SECURITIES AND EXCHANGE
COMMISSION
WASHINGTON, D.C. 20549
FORM 10Q
__X__QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended............... June 30, 2004
_____TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ..... to .....
COMMISSION FILE NUMBER 1-11826
MIDSOUTH BANCORP, INC.
Louisiana 72 -1020809
102 Versailles Boulevard, Lafayette, Louisiana
70501
(337) 237-8343
Check whether the issuer (1) filed all reports required to be
filed by Section 13 or 15(d) of the Exchange Act during the
past 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. YES __X__ NO _____
Check whether the issuer is an accelerated filer (as defined
in Rule 12b-2 of the Exchange Act.)
YES _____ NO __X__
State the number of shares outstanding of each of the
issuer's classes of common equity, as of the latest
practicable date. Outstanding as of July 31, 2004
Common stock, $.10 par value 3,218,933
1
INDEX TO FORM 10-Q REPORT
PART 1 - FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited) Page
Consolidated Statements of Condition -
June 30, 2004 and December 31, 2003 3
Consolidated Statements of Income -
Three and Six Months
Ended June 30, 2004 and 2003 4
Consolidated Statement of Stockholders'
Equity - Six Months Ended June 30, 2004 5
Consolidated Statements of Cash Flows -
Six Months Ended June 30, 2004 and 2003 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 19
Item 4. Controls and Procedures 20
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 20
Item 2. Changes in Securities, Use of Proceeds,
and Issuer Purchases of Equity Securities 20
Item 3. Defaults upon Senior Securities 20
Item 4. Submission of Matters to a Vote of Security
Holders 20
Item 5. Other Information 20
Item 6. Exhibits and Reports on Form 8-K 21
Signatures 22
2
MIDSOUTH BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CONDITION (UNAUDITED)
____________________________________________________________________________________
June 30, December 31,
ASSETS 2004 2003
Cash and due from banks $13,295,273 $13,833,857
Federal funds sold 12,400,000
____________ ____________
Total cash and cash equivalents 25,695,273 13,833,857
Interest bearing deposits in banks 2,248 6,594
Securities available-for-sale, at fair value
(cost of $133,445,252 at June 30, 2004 and
$116,863,702 at December 31, 2003) 132,949,916 118,226,723
Securities held-to-maturity (estimated fair
value of $24,455,855 at June 30, 2004 and
$25,455,609 at December 31,2003) 23,132,909 23,366,709
Loans, net of allowance for loan losses of
$2,974,175 at June 30, 2004 and $2,789,761
at December 31, 2003 276,460,123 259,083,015
Bank premises and equipment, net 12,038,741 11,984,276
Other real estate owned, net 76,973 218,199
Accrued interest receivable 3,165,221 2,883,376
Goodwill 431,987 431,987
Other assets 3,435,078 2,662,568
____________ ____________
Total assets $477,388,469 $432,697,305
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Non-interest bearing $100,689,280 $96,948,642
Interest bearing 330,491,103 277,439,840
____________ ____________
Total deposits 431,180,383 374,388,482
Securities sold under repurchase
agreements and federal funds purchased 4,158,670 10,067,503
Accrued interest payable 604,358 558,416
FHLB Advances 7,500,000
Junior subordinated debenture 7,000,000 7,000,000
Other liabilities 600,371 954,997
____________ ____________
Total liabilities 443,543,782 400,469,398
____________ ____________
Commitments and contingencies - -
Stockholders' Equity:
Common stock, $.10 par value- 10,000,000
shares authorized, 3,215,933 and
3,198,879 issued and 3,197,624 and
3,192,561 outstanding at June 30, 2004
and December 31, 2003, respectively 321,593 319,888
Surplus 18,885,282 18,733,991
Unearned ESOP shares (74,107) (82,724)
Unrealized (losses) gains on securities
available-for-sale, net of deferred taxes
of ($154,814) at June 30, 2004 and
$471,647 at December 31, 2003 (340,522) 891,374
Treasury stock - 18,309 and 6,318 shares,
at cost (442,648) (106,922)
Retained earnings 15,495,089 12,472,300
_____________ ____________
Total stockholders' equity 33,844,687 32,227,907
_____________ ____________
Total liabilities and stockholders' equity $477,388,469 $432,697,305
============= ============
See notes to unaudited consolidated financial statements.
3
MIDSOUTH BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
______________________________________________________________________________________________
Three Months Ended Six Months Ended
June 30, June 30,
2004 2003 2004 2003
________________________ __________________________
INTEREST INCOME:
Loans, including fees $5,067,144 $4,905,225 $10,011,076 $9,639,030
Securities
Taxable 678,330 499,589 1,305,874 1,140,184
Nontaxable 572,860 487,213 1,111,367 955,124
Federal funds sold 31,326 20,419 51,584 31,020
__________ __________ ___________ __________
TOTAL 6,349,660 5,912,446 12,479,901 11,765,358
__________ __________ ___________ __________
INTEREST EXPENSE:
Deposits 1,077,513 962,199 1,972,712 2,035,148
Securities sold under repurchase
agreements, federal funds
purchased and advaces 14,131 17,230 42,767 30,600
Long term debt 184,033 189,435 357,000 368,825
__________ __________ ___________ __________
TOTAL 1,275,677 1,168,864 2,372,479 2,434,573
__________ __________ ___________ __________
NET INTEREST INCOME 5,073,983 4,743,582 10,107,422 9,330,785
PROVISION FOR LOAN LOSSES 190,000 100,000 420,000 300,000
__________ __________ ___________ __________
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES 4,883,983 4,643,582 9,687,422 9,030,785
__________ __________ ___________ __________
OTHER OPERATING INCOME:
Service charges on deposits 1,523,232 1,335,728 2,926,218 2,543,281
Gains on securities, net 2,350 92,935 2,350 87,632
Credit life insurance 24,248 49,525 44,421 100,987
Other charges and fees 503,931 550,962 942,144 1,010,349
__________ __________ ___________ __________
TOTAL OTHER INCOME 2,053,761 2,029,150 3,915,133 3,742,249
__________ __________ ___________ __________
OTHER EXPENSES:
Salaries and employee benefits 2,258,612 2,120,394 4,409,912 4,198,122
Occupancy expense 990,987 965,191 1,971,580 1,871,536
Other 1,319,603 1,352,869 2,585,290 2,680,670
__________ __________ ___________ __________
TOTAL OTHER EXPENSES 4,569,202 4,438,454 8,966,782 8,750,328
__________ __________ ___________ __________
INCOME BEFORE INCOME TAXES 2,368,542 2,234,278 4,635,773 4,022,706
PROVISION FOR INCOME TAXES 623,175 610,137 1,229,458 1,089,013
__________ __________ ___________ __________
NET INCOME $1,745,367 $1,624,141 $3,406,315 $2,933,693
========== ========== =========== ==========
BASIC EARNINGS PER COMMON SHARE $0.55 $0.51 $1.07 $0.92
========== ========== =========== ==========
DILUTED EARNINGS PER COMMON SHARE $0.52 $0.49 $1.02 $0.89
========== ========== =========== ==========
See notes to unaudited consolidated financial statements.
4
MIDSOUTH BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE SIX MONTHS ENDED JUNE 30, 2004 (UNAUDITED)
_____________________________________________________________________________________
UNREALIZED
GAINS(LOSSES)
ON
COMMON STOCK ESOP SECURITIES TREASURY RETAINED
SHARES AMOUNT SURPLUS OBLIGATION AFS, NET STOCK EARNINGS TOTAL
BALANCE, __________________ ___________ _________ _________ __________ ___________ ___________
JANUARY 1, 2004 3,198,879 $319,888 $18,733,991 ($82,724) $891,374 ($106,922) $12,472,300 $32,227,907
Dividends on
common stock,
$.06 per share (383,526) (383,526)
Issuance of
common stocK 17,054 1,705 102,894 104,599
Tax benefit
resulting
from exercise
of stock options 28,397 28,397
Purchase of
treasury stock (356,920) (356,920)
Transfer of
treasury stock
to ESOP 21,194 21,194
Net income 3,406,315 3,406,315
Excess of market
value over
book value of
ESOP shares
released 20,000 20,000
ESOP obligation
repayments 8,617 8,617
Net change in
unrealized
gain/loss on
securities
available-for
-sale, net of
income taxes (1,231,896) (1,231,896)
_________ ________ ___________ ________ _________ _________ ___________ ___________
BALANCE,
JUNE 30, 2004 3,215,933 $321,593 $18,885,282 ($74,107) ($340,522) ($442,648) $15,495,089 $33,844,687
========= ======== =========== ======== ========= ========= =========== ===========
See notes to unaudited consolidated financial statements.
5
MIDSOUTH BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE SIX MONTHS ENDED JUNE 30, 2004 AND 2003
_______________________________________________________
June 30, 2004 June 30, 2003
CASH FLOWS FROM OPERATING ACTIVITIES: _______________ _______________
Net income $3,406,315 $2,933,693
Adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation and amortization 754,153 751,667
Provision for loan losses 420,000 300,000
Deferred income taxes 57,899 (82,359)
Amortization of premiums on securities, net 510,966 543,817
Gain on sale of securities, net (2,350) (87,632)
Gain on sale of premises and equipment (2,000) (14,834)
(Gain)/loss on sale of other assets repossessed/OREO 9,800 (6,152)
Change in accrued interest receivable (281,845) (207,904)
Change in accrued interest payable 45,942 (93,093)
Other, net (270,191) 231,365
_____________ ____________
NET CASH PROVIDED BY OPERATING ACTIVITIES 4,648,689 4,268,568
_____________ ____________
CASH FLOWS FROM INVESTING ACTIVITIES:
Net increase in interest-bearing deposits in banks 4,346 (76,742)
Proceeds from sales of securities available-for-sale 5,427,085
Proceeds from maturities and calls of securities
available-for-sale 14,532,891 20,618,435
Purchases of securities available-for-sale (31,391,606) (35,208,449)
Loan originations, net of repayments (17,817,065) (15,034,283)
Purchases of premises and equipment (775,778) (543,881)
Proceeds from sales of premises and equipment 2,000 39,610
Proceeds from sales of other real estate owned 160,000 43,800
______________ ____________
NET CASH USED IN INVESTING ACTIVITIES (35,285,212) (24,734,425)
______________ ____________
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in deposits 56,791,901 14,724,768
Net (decrease) increase in securities
sold under repurchase
agreements and federal funds purchased (5,908,833) 2,087,484
Repayments of notes payable (7,500,000) (147,030)
Purchase/transfer of treasury stock (335,726) (91,257)
Payment of dividends (702,399) (435,046)
Issuance of common stock 104,599
Tax benefit resulting from exercise of stock options 28,397
Excess of market value over book value of ESOP
shares released 20,000
______________ ____________
NET CASH PROVIDED BY FINANCING ACTIVITIES 42,497,939 16,138,919
______________ ____________
NET INCREASE (DECREASE) IN CASH & CASH EQUIVALENTS 11,861,416 (4,326,938)
CASH & CASH EQUIVALENTS AT BEGINNING OF PERIOD 13,833,857 27,466,035
______________ ____________
CASH & CASH EQUIVALENTS AT END OF PERIOD $25,695,273 $23,139,097
============== ============
See notes to unaudited consolidated financial statements.
6
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. ("MidSouth") and its subsidiaries as
of June 30, 2004 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 MidSouth's 2003 annual report and Form 10KSB.
The results of operations for the three and six month periods
ended June 30, 2004 are not necessarily indicative of the
results to be expected for the entire year.
MidSouth applies Accounting Practices Board (APB) Opinion
No. 25 and related interpretations in accounting for its stock
options. Accordingly, no compensation cost has been recognized.
MidSouth has adopted the disclosure-only option under SFAS
No. 123. Had compensation costs for MidSouth's stock options
been determined based on the fair value at the grant date,
consistent with the method under SFAS No. 123, MidSouth's net
income and earnings per share would have been as indicated
below:
Three Months Ended Six Months Ended
June 30, June 30,
2004 2003 2004 2003
______ ______ ______ _____
(in thousands)
Net earnings available to
common stockholders
As reported $1,745 $1,624 $3,406 $2,934
Deduct total stock based
compensation determined
under fair value method (20) (14) (33) (28)
______ ______ ______ ______
Pro forma $1,725 $1,610 $3,373 $2,906
====== ====== ====== ======
Basic earnings per share:
As reported $0.55 $0.51 $1.07 $0.92
Pro forma $0.54 $0.51 $1.06 $0.91
Diluted earnings per share:
As reported $0.52 $0.49 $1.02 $0.89
Pro forma $0.52 $0.49 $1.01 $0.88
2. ALLOWANCE FOR LOAN AND LOSSES
An analysis of the activity in the allowance for loan losses
is as follows:
Six Months Ended
June 30,
2004 2003
______ ______
(in thousands)
Balance at beginning of period $2,790 $2,891
Provision for loan losses 420 300
Recoveries 100 108
Loans charged off (336) (348)
______ ______
Balance at end of period $2,974 $2,951
====== ======
7
3. COMPREHENSIVE INCOME
Comprehensive income includes net income and other
comprehensive income (losses) which, in the case of
MidSouth, only includes unrealized gains and losses
on securities available-for-sale. Following is a
summary of MidSouth's comprehensive income for the
three and six months ended June 30, 2004 and 2003.
Three Months Ended Six Months Ended
June 30, June 30,
(in thousands) 2004 2003 2004 2003
_______ _______ _______ _______
Net income $1,745 $1,624 $3,406 $2,934
Other comprehensive income (loss)
Unrealized gains (losses) on
securities available-
for-sale, net:
Unrealized holding gains
(losses) arising during
the period (1,580) 349 (1,230) 268
Less reclassification
adjustment for
losses included in net
income 1 61 1 58
_______ _______ _______ _______
Total other comprehensive
gain (loss) income (1,581) 288 (1,231) 210
_______ _______ _______ _______
Total comprehensive income $164 $1,912 $2,175 $3,144
======= ======= ======= =======
4. PENDING ACQUISITION
On May 27, 2004, MidSouth signed a definitive agreement to
acquire all of the outstanding common stock of Lamar
Bancshares, Inc. in a transaction to be accounted under
the purchase accounting method in accordance with accounting
principles generally accepted by the United States of America.
MidSouth will pay approximately $10,495,000 in cash and
issuance of an estimated 370,000 shares (based on an assumed
market value of MidSouth stock of $34 per share) of its common
stock valued at approximately $12,555,000. MidSouth will also
incur acquisition costs presently estimated at approximately
$255,000. In connection with this acquisition, MidSouth
intends to issue $6,000,000 of junior subordinated preferred
stock in order to fund a portion of the acquisition.
Lamar had total assets of approximately $112 million
(unaudited) at March 31, 2004 and income before income
taxes of approximately $1,920,000 (unaudited) for the year
ended December 31, 2003 and $441,000 (unaudited) for the
three months ended March 31, 2004. The closing is contingent
upon certain conditions, including the receipt of necessary
shareholder and regulatory approvals.
8
Item 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
This review should be read in conjunction with MidSouth
Bancorp Inc.'s ("MidSouth") consolidated financial
statements and accompanying notes contained herein, as
well as with MidSouth's 2003 annual consolidated financial
statements, the notes thereto and the related Management's
Discussion and Analysis contained in MidSouth's Annual
Report on Form 10KSB for the year ended December 31,
2003.
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, MidSouth's
performance and financial results based on reasonable
assumptions. A number of factors and uncertainties could
cause actual results to differ 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;
.. 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
MidSouth's control.
9
Recent Developments
On May 27, 2004, MidSouth signed a definitive agreement
with Lamar Bancshares of Beaumont, Texas to merge the
two holding companies. The companies' banks, MidSouth
Bank and Lamar Bank will continue to operate as separate
subsidiaries under MidSouth Bancorp, Inc. Lafayette-
based MidSouth Bank will continue to serve the Louisiana
market, with Lamar Bank directing the Texas expansion.
MidSouth plans to build new Lamar Bank offices in
Conroe and College Station, Texas, and plans to continue
expansion in the north Houston and Woodlands area. The
transaction is expected to close in the third or fourth quarter
of 2004. The closing is contingent upon certain conditions,
including receipt of the necessary shareholder and
regulatory approvals.
Overview
Second quarter 2004 net income was $1,745,367, a 7.5%
increase over the $1,624,141 for the second quarter of 2003
and up 5% over first quarter 2004 net income of
$1,660,948. Basic earnings per share were $.55 for the
quarter ended June 30, 2004, up from the $.51 per share for
the second quarter of 2003, and the $.52 per share in the
first quarter of 2004. Diluted earnings per share were $.52
for the second quarter of 2004 compared to $.49 per share
for the second quarter of 2003 and $.50 per share for the
first quarter of 2004.
Earnings for the six months ended June 30, 2004 were
$3,406,315, which is a $471,622 or 16% increase over the
$2,934,693 in earnings for the six months ended June 30,
2003. Basic earnings per share were $1.07 for the first six
months of 2004 versus $.92 for the first six months of
2003. Diluted earnings per share were $1.02 and $.89,
respectively.
Net income increased $121,226 in the second quarter of
2004 compared to the second quarter of 2003, primarily
due to increased interest income of $437,214 resulting from
a 21% increase in average earning assets. The
improvement in interest income was partially offset by a
$106,813 increase in interest expense, a $90,000 increase
in the provision for loan losses and a $130,748 increase in
non-interest expense. Interest expense increased due to a
$61.2 million or 24% increase in the average volume of
interest-bearing deposits, resulting primarily from the
addition of approximately $29 million in interest-bearing
deposits under a public fund contract added in the third
quarter 2003 and approximately $45 million in interest-
bearing deposits added through a deposit campaign from
March 2004 through May 2004. Non-interest income,
excluding gains on sales of securities, increased $115,196
due to an increase in fees and service charges resulting
from a higher volume of demand deposit accounts. Non-
interest expense increased $130,748 for the second quarter
of 2004 compared to the second quarter of 2003 primarily
in salaries and benefits and occupancy expenses.
Compared to first quarter 2004, second quarter 2004 net
income increased $84,419 or 5%. Net interest income
increased $40,544 and non-interest income increased
$192,389. The increase in non-interest income resulted
from increases in fees and service charges on deposit
accounts of $120,000, $35,000 in safe deposit box rental
income, and $22,000 in ATM and debit card processing fees.
A decrease in the provision for loan losses of
$40,000 also contributed to the increase in earnings,
primarily due to a reduction in the Allowance for Loan
Losses ("ALL") at Financial Services of the South ("FSS"),
MidSouth's finance company subsidiary. The ALL was
lowered at the finance company due to the minimal amount
of loans remaining for liquidation at the subsidiary.
Increased non-interest expenses including $107,000 in
salaries and benefits, $27,000 in expenses on other real
estate, $25,000 in armored car expenses, and $15,000 in
ATM and debit card processing expenses partially offset
the quarterly improvement in net interest and non-interest
income.
10
For the six months ended June 30, 2004 compared to 2003,
net income increased $472,622 or 16%. Net interest
income improved $776,637 or 8% due to increased interest
income on earning assets combined with a decrease in
interest expense on deposits. An increase of $382,937 in
fees and service charges on deposit accounts was partially
offset by a $124,771 decrease in other non-interest income,
categories, primarily income from the sale of credit life
insurance and Visa merchant income. In the third quarter of
2003, MidSouth outsourced its Visa merchant processing to
First Data Corporation. The resulting reduction in Visa
merchant income is offset by a decrease in Visa merchant
processing expenses that resulted from the processing
change and is reflected in the $95,380 decrease in other
non-interest expense in year-to-date comparison. Salaries
and employee benefits increased $211,790 and occupancy
expenses increased $100,044, offsetting the $95,380
decrease in other non-interest expense.
Highlights for the Quarter Ended June 30, 2004
.. Return on average equity was 19.78% for the second
quarter of 2004 compared to 22.15% for the second quarter
of 2003. The leverage capital ratio was 8.65% at June 30,
2004 compared to 8.82% at June 30, 2003.
.. Net income for 2004 is up 7.5% in quarterly comparison
and 16% in year-to-date comparison over 2003 net income.
.. Total loans grew $37.6 million or 16%, from $241.8
million at June 30, 2003 to $279.4 million at June 30, 2004,
primarily in commercial loans.
.. Nonperforming assets, including loans 90 days or more
past due, as a percentage of total assets decreased slightly
from .37% at June 30, 2003 to .36% at June 30, 2004.
Year-to-date net charge-offs to total loans decreased from
..10% to .08% for the same periods, respectively.
.. Total consolidated assets increased $75.1 million or
19%, from $402.2 million at the end of the second quarter
of 2003 to $477.3 million at the end of the second quarter
of 2004. Total deposits increased $73 million or 20%, from
$358.2 million at June 30, 2003 to $431.2 million at June
30, 2004. The increase resulted primarily from
approximately $29 million in deposits associated with a
public fund contract added in July of 2003 and
approximately $50 million in deposits resulting from a
deposit growth campaign that began in March 2004. The
campaign introduced MidSouth's new Platinum Money
Market account for both retail and commercial customers.
Of the $50 million in deposits resulting from the campaign,
approximately $34 million was deposited into the Platinum
Money Market and other savings accounts at an average
rate of 2.05%.
.. MidSouth continues to work on expansion plans for the
Louisiana market announced in the first quarter of 2004,
with the new facility on Moss Street nearing completion
and a closing expected soon on property in Houma.
11
Earnings Analysis
Net Interest Income
The primary source of earnings for MidSouth is net interest
income, which is the difference between interest earned on
loans and investments and interest paid on deposits and
other liabilities. 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 tables provided following management's discussion
and analysis of Financial Condition and Results of Operations
analyze the changes in taxable-equivalent net interest
income for the two quarters and six months ended June 30, 2003
and 2004.
Average earning assets increased 21%, or $74.6 million
from $361.3 million for the three months ended June 30,
2003 to $435.9 million for the three months ended June 30,
2004, primarily due to deposits acquired through a public
fund contract and through a deposit campaign. The mix of
average earning assets shifted in quarterly comparison, as
the influx of deposits outpaced loan production. Loans
represented 66% of average earning assets in the second
quarter of 2003 compared to 62% in the second quarter of
2004. Average loans increased $33.5 million, from $238.8
million in the second quarter of 2003 to $272.3 million in
the second quarter of 2004. The average yield on loans
decreased 75 basis points in quarterly comparison, from
8.24% to 7.49% at June 30, 2004. Loan yields declined
due to lower offering rates and rate adjustments on other
credits with scheduled repricing dates.
Approximately 47% of MidSouth's loan portfolio earns a
variable rate, with 32% adjusting with changes in the prime
rate and another 15% adjusting on a scheduled repricing
date. Approximately 53% of the loan portfolio earns a
fixed rate of interest, the majority of which matures within
three years. The mix of variable and fixed rate loans
provides some protection to changes in market rates of
interest. The impact of the decline in yield over the twelve
months ended June 30, 2004 was offset by the $33.5
million average volume increase in the loan portfolio,
resulting in a $161,919 increase in interest income on loans
in quarterly comparison.
Average investment securities increased $34.2 million,
from $115.2 million at June 30, 2003 to $149.4 million at
June 30, 2004. The investment portfolio represented 35%
of average earning assets as of June 30, 2004, up from 32%
in 2003. The increase resulted primarily from deposits
under a public fund contract acquired in July of 2003 being
placed in investment securities due to a lack of loan
demand at that time. The average taxable-equivalent yield
on investments decreased 15 basis points, from 4.15% in
the second quarter of 2003 to 4.00% in the second quarter
of 2004, primarily due to the low rate environment.
Additionally, federal funds sold volume increased $6.9
million and yields declined 22 basis points, from 1.10% to
..88%. Increased volume offset decreased yields and
resulted in an increase in taxable-equivalent interest income
on securities and federal funds sold of $275,295 in
quarterly comparison.
12
The average volume of interest-bearing deposits increased
$61.2 million and resulted in a $115,314 increase in interest
expense for the quarter ended June 30, 2004 compared to
the quarter ended June 30, 2003. The average rate paid on
interest-bearing deposits decreased 11 basis points, from
1.48% at June 30, 2003 to 1.37% at June 30, 2004.
Average noninterest-bearing deposits to average total
deposits represented 23% of average total deposits at June
30, 2004, down from 26% at June 30, 2003. The decrease
resulted primarily from growth in the Platinum Money
Market product introduced during the deposit campaign in
March 2004. The average yield on interest-bearing
checking and money market accounts increased 23 basis
points, from .81% at June 30, 2003 to 1.04% at June 30,
2004. The increase resulted from introductory rates offered
on the Platinum Money Market accounts that averaged
2.05%.
The net taxable-equivalent yield on average earning assets
decreased 61 basis points, from 5.49% for the quarter
ended June 30, 2003 to 4.88% for the quarter ended June
30, 2004. A review of the changes in volume and yields of
average earning asset and interest-bearing liabilities
between the two six month periods ended June 30, 2003
and 2004 reflected results similar to the quarterly
comparison. The net taxable-equivalent yield on average
earning assets for the six months ended June 30, 2004
decreased 54 basis points, from 5.55% at June 30, 2003 to
5.01% at June 30, 2004.
Non-interest Income
MidSouth's primary source of non-interest income, service
charges on deposit accounts, increased $187,504 or 14%
for the three months ended and $382,937 or 15% for the six
months ended June 30, 2004 as compared to the same
period in 2003. The increase resulted primarily from an
increase in insufficient funds ("NSF") fees due to an
increase in the number of checking accounts. The NSF per
item processing fee did not increase and is on the lower end
of fees charged by competitors in MidSouth's markets.
Other non-interest income from charges and fees decreased
$47,031 in quarterly comparison and $68,205 in year-to-
date comparison, primarily due to decreases of $62,343 for
the quarter and $126,632 for the year in Visa merchant
income. In the third quarter of 2003, MidSouth outsourced
its Visa merchant processing to First Data Corporation.
The resulting reduction in Visa merchant income was
almost entirely offset by decreases of $58,500 for the
quarter and $116,862 for the year in Visa merchant
processing expenses that resulted from the processing
change. Further comparison reflected quarterly and year-
to-date decreases in fee income from third party mortgage
origination fees and third party investment advisory
services that were partially offset by increases in ATM and
debit card income, fee income from letters of credit and
safe deposit box rental fees. Fee income from third party
mortgage originations decreased due to a lower volume of
refinancings. In 2003, the third party investment advisory
service had offered a new investment product that
stimulated sales and increased income for the three and six
months ended June 30, 2003.
Net gain on sales of securities totaled $2,350 for the quarter
and year-to-date June 30, 2004. The gain resulted from the
exercise of a call feature on a municipal security. Net
gains on sales of securities were $92,935 for the quarter
ended June 30, 2003 and $87,632 for year-to-date June
30,2003. The gains resulted primarily from the sale of a $3
million agency bond and $1 million corporate bond that
were scheduled to mature in 2004, offset by a minimal loss
recorded on the sale of a CMO during the first quarter of
2003.
13
Non-interest Expense
Non-interest expense increased $103,748 or 3% and
$216,454 or 2% for the three months and six months ended
June 30, 2004 compared to the three and six months ended
June 30, 2003, respectively. Quarterly increases occurred
primarily in the categories of salaries and employee
benefits ($138,218) and occupancy expenses ($25,796). In
quarterly comparison, decreases primarily in VISA
merchant program, telephone and travel expenses exceeded
increases in ATM and debit card processing and armored
car expenses to net a quarterly decrease in Other expenses
of $33,266.
In year-to-date comparison, decreases primarily in Visa
merchant program, telephone and travel expenses exceeded
increases in ATM and debit card processing expenses,
postage, and the cost of printing and supplies. The year-to-
date decrease in Other expenses of $95,380 partially offset
increases of $211,790 in salaries and benefits and $100,044
in occupancy expenses.
Salaries increased primarily due to an increase in the
number of full-time equivalent ("FTE") employees by 14,
from 219 in June 2003 to 233 in June 2004. Occupancy
expenses increased primarily due to increases in lease
expense, ad valorem taxes and bank auto expenses.
Analysis of Statement of Condition
MidSouth ended the second quarter of 2004 with
consolidated assets of $477.4 million, an increase of $44.7
million or 10% from the $432.7 million reported for
December 31, 2003. Deposits increased $56.8 million or
15%, from $374.4 million at December 31, 2003 to $431.2
million at June 30, 2004. During the months of March,
April and May of 2004, MidSouth held a deposit campaign
that resulted in approximately $50 million in new deposits.
The campaign introduced MidSouth's new Platinum
Money Market account for both retail and commercial
customers, paying an average rate of 2.05%.
Net loans increased $17.5 million from $261.9 million at
December 31, 2003 to $279.4 at June 30, 2004. The
majority of the $17.5 million growth in net loans was
funded during the second quarter of 2004 and was
primarily commercial credits. Securities available-for-sale
increased $14.7 million in the six months ended June 30,
2004, as purchases of $31.4 million in securities available-
for-sale were partially offset by maturities and calls totaling
$14.5 million. A shift occurred in the value of the
securities available-for-sale portfolio at June 30, 2004,
resulting in a net unrealized loss, net of unrealized gains
and tax effect, of $340,522, compared to a net unrealized
gain of $891,374 at December 31, 2003. A spike in rates
that impacted pricing of the portfolio at the quarter-ended
June 30, 2004 and purchases made with cash flows from
the public fund contract and deposit campaign during the
low rate environment contributed to the shift in market
value of the available-for-sale portfolio. These amounts
result from interest rate fluctuations and do not represent
permanent adjustments of value. Moreover, classification
of securities as available-for-sale does not necessarily
indicate that the securities will be sold prior to maturity.
Overnight and short-term borrowings from the Federal
Home Loan Bank ("FHLB") totaling $12.5 million at
December 31, 2003 were paid out during the first quarter of
2004.
14
Liquidity
Liquidity is the availability of funds to meet contractual
obligations as they become due and to fund operations.
The Bank's primary liquidity needs involve its 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 Bank.
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. MidSouth's core deposits are its 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
and principal payments received on loans and mortgage-
backed securities provide additional primary sources of
asset liquidity for the Bank. Cash flows from other
investment securities provide an additional source of
liquidity. MidSouth also has 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. The
parent company issued $7,000,000 in junior subordinated
debentures in February 2001. Interest-bearing balances
remaining from the proceeds from the issuance of the
debentures and dividends from the Bank provide liquidity
for the parent company. As a publicly traded company,
MidSouth also has the ability to issue additional trust
preferred and other securities instruments to provide funds
as needed for operations and future growth of the company.
A $6 million issuance of junior subordinated debentures is
planned for the third quarter of 2004 to partially fund the
Lamar Bancshares, Inc. acquisition.
Capital
MidSouth's leverage ratio was 8.65% at June 30, 2004
compared to 8.85% at December 31, 2003. Tier 1 capital to
risk-weighted assets was 12.85% and total capital to risk-
weighted assets was 13.80% at the end of the second
quarter of 2004. At year-end 2003, Tier 1 capital to risk-
weighted assets was 12.82% and total capital to risk-
weighted assets was 13.78%. In November of 2002,
MidSouth announced a repurchase program in which the
Board of Directors approved the repurchase of up to 5% of
the outstanding shares of MidSouth's common stock. No
shares were repurchased during the first quarter of 2004.
During the second quarter of 2004, MidSouth repurchased
18,309 shares of its common stock at a total cost of
$356,920.
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. At June 30, 2004,
MidSouth had no industry segment concentrations that
aggregated more than 10% of the loan portfolio.
15
Nonperforming Assets
The following table summarizes MidSouth's nonperforming
assets for the quarters ending June 30, 2004 and 2003 and
March 31, 2004 and for the year ended December 31, 2003.
Period Ended % Period Ended
Jun. 30, Chg Mar. 31, Dec. 31,
(in thousands) 2004 2003 2004 2003
______________________________________________
Nonaccrual loans $1,003 $852 17.7% $860 $829
Loans past due 90
days and over 662 477 38.8% 487 503
Total nonperforming loans 1,665 1,329 25.3% 1,347 1,332
Other real estate owned 77 175 -56.0% 247 218
_______________ _________________
Total nonperforming assets $1,742 $1,504 15.8% $1,594 $1,550
=============== =================
Nonperforming assets to
total assets 0.36% 0.37% -3.7% 0.35% 0.36%
Nonperforming assets to
total loans + OREO + other
foreclosed assets 0.62% 0.62% -0.2% 0.60% 0.59%
ALL to nonperforming assets 170.72% 196.21% -13.0% 182.37% 180.00%
ALL to nonperforming loans 178.62% 222.05% -19.6% 215.81% 209.46%
ALL to total loans 1.06% 1.22% -12.8% 1.10% 1.07%
Year-to-date charge-offs $336 $348 -3.4% $171 $904
Year-to-date recoveries 100 108 -7.4% 55 253
________________ _________________
Year-to-date net charge-offs $236 $240 -1.7% $116 $651
================ =================
Net YTD charge-offs to
total loans 0.08% 0.10% -20.0% 0.04% 0.25%
Nonperforming assets, including loans past due 90 days
and over, totaled $1,742,000 as of June 30, 2004, an
increase of $238,000 from the $1,504,000 reported for June
30, 2003, $148,000 from March 31, 2004, and an increase
of $192,000 from the $1,550,000 reported for December
31, 2003. 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. Management believes
the $2,974,175 in the allowance as of June 30, 2004 is
sufficient to cover probable losses in nonperforming assets
and in the loan portfolio. Loans classified for regulatory
purposes but not included in the table above do not
represent material credits about which management has
serious doubts as to the ability of the borrower to comply
with loan repayment terms.
16
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.
Critical Accounting Policies
Certain critical accounting policies affect the more
significant judgments and estimates used in the preparation
of the consolidated financial statements. MidSouth's single
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, its estimates would be updated and
additional provisions for loan losses may be required.
Reference is made to Managements' Discussion and
Analysis or Plan of Operation included in MidSouth's
Annual Report on Form 10KSB for the year ended
December 31, 2003 ("Annual Report") for a more detailed
discussion of its policy with respect to the allowance for
loan losses. Other accounting policies integral to
understanding the financial results reported are described in
detail in Note 1 to the consolidated financial statements
included in the Annual Report.
17
Consolidated Average Balances, Interest and Rates
Taxable-equivalent basis (2)
(in thousands)
Three Months Ended Three Months Ended
June 30, 2004 June 30, 2003
_____________________________________________________________
Average Average Average Average
Volume Interest Yield/Rate Volume Interest Yield/Rate
_____________________________________________________________
ASSETS
Investment Securities <FN1>
Taxable $84,765 $678 3.22% $66,499 $500 3.02%
Tax Exempt <FN2> 64,629 807 5.02% 48,677 692 5.70%
___________________ __________________
Total Investments 149,394 1,485 4.00% 115,176 1,192 4.15%
Federal Funds Sold and Securities
Purchased Under Agreements
to Resell 14,277 32 0.88% 7,329 20 1.10%
Loans <FN3>
Commercial and Real Estate 228,548 3,990 7.02% 202,905 3,832 7.60%
Installment 43,718 1,077 9.91% 35,858 1,073 12.00%
___________________ __________________
Total Loans 272,266 5,067 7.49% 238,763 4,905 8.24%
Total Earning Assets 435,937 6,584 6.07% 361,268 6,117 6.79%
Allowance for Loan Losses (2,839) (2,776)
Nonearning Assets 34,285 34,968
__________ __________
Total Assets $467,383 $393,460
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
NOW, Money Market, and Savings $214,162 $552 1.04% $154,979 $312 0.81%
Certificates of Deposits 107,846 543 2.03% 105,781 650 2.47%
___________________ ___________________
Total Interest Bearing Deposi 322,008 1,095 1.37% 260,760 962 1.48%
Federal Funds Purchased,
Securities Sold Under
Agreements to Repurchase 4,937 14 1.15% 5,277 17 1.26%
Notes Payable 448 1 0.54%
Junior Subordinated Debenture 7,000 184 10.20% 7,000 189 10.20%
___________________ ___________________
Total Interest Bearing Liabilities 333,945 1,293 1.56% 273,485 1,169 1.96%
Demand Deposits 96,727 89,401
Other Liabilities 1,226 1,171
Stockholders' Equity 35,485 29,403
__________ __________
Total Liabilites and Stockholders'
Equity $467,383 $393,460
========== ==========
NET TAXABLE-EQUIVALENT
INTEREST INCOME AND SPREAD $5,291 4.52% $4,948 5.08%
NET TAXABLE-EQUIVALENT YIELD ON
EARNING ASSETS 4.88% 5.49%
<FN1>Securities classified as available-for-sale are included in
average balances and interest income figures reflect interest
earned on such securities.
<FN2>Interest income of $234,000 for 2004 and $205,000 for 2003 is
added to interest earned on tax-exempt obligations to reflect
tax equivalent yields using a 34% tax rate.
<FN3>Interest income includes loan fees of $479,000 for 2004 and
$459,000 for 2003. Nonaccrual loans are included in average
balances and income on such loans is recognized on a cash
basis.
Changes in Taxable-Equivalent Net Interest Income
(in thousands)
Three Months Ended
June 30, 2004 compared to June 30, 2003
_______________________________________
Total Change
Increase Attributable to
(Decrease) Volume Rates
_______________________________________
Taxable-equivalent interest earned on:
Investment Securities
Taxable $178 $146 $32
Tax Exempt 115 181 (66)
Federal Funds Sold and Securities
Purchased Under Agreement
to Resell 12 15 (3)
Loans, including fees 162 461 (299)
_________ ________________
TOTAL 467 803 (336)
_________ ________________
Interest Paid On:
Interest Bearing Deposits 116 170 (54)
Federal Funds Purchased and
Securities Sold Under
Agreement to Resell (3) (1) (2)
Notes Payable (1) (1)
Junior Subordinated Debenture (5) (5)
_________ ________________
TOTAL 107 168 (61)
_________ ________________
Taxable-equivalent net interest $360 $635 ($275)
========= ================
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.
18
Consolidated Average Balances, Interest and Rates
Taxable-equivalent basis (2)
(in thousands)
Six Months Ended Six Months Ended
June 30, 2004 June 30, 2003
___________________________________________________________
Average Average Average Average
Volume Interest Yield/Rate Volume Interest Yield/Rate
ASSETS
___________________________________________________________
<c> <c>
Investment Securities <FN1>
Taxable $82,305 $1,305 3.19% $66,317 $1,141 3.47%
Tax Exempt <FN2> 61,522 1,568 5.13% 46,971 1,359 5.83%
__________________ ___________________
Total Investments 143,827 2,873 4.02% 113,288 2,500 4.45%
Federal Funds Sold and
Securities Purchased
Under Agreements to
Resell 11,821 52 0.88% 5,573 30 1.10%
Loans <FN3>
Commercial and Real
Estate 223,019 7,868 7.09% 198,506 7,489 7.51%
Installment 43,396 2,143 9.93% 36,453 2,150 11.89%
__________________ ___________________
Total Loans 266,415 10,011 7.56% 234,959 9,639 8.27%
Total Earning Assets 422,063 12,936 6.16% 353,820 12,169 6.94%
Allowance for Loan Losses (2,802) (2,738)
Nonearning Assets 34,484 34,979
________ _________
Total Assets $453,745 $386,061
======== =========
LIABILITIES AND STOCKHOLDERS'
EQUITY
NOW, Money Market,
and Savings $202,965 $964 0.96% $148,358 $646 0.88%
Certificates of
Deposits 105,071 1,057 2.02% 107,183 1,389 2.61%
__________________ __________________
Total Interest Bearing
Deposits 308,036 2,021 1.32% 255,541 2,035 1.61%
Federal Funds Purchased,
Securities Sold
Under Agreements to
Repurchase 5,755 32 1.12% 4,705 29 1.27%
Federal Home Loan Bank
Advances 1,978 11 1.09%
Notes Payable 490 1 0.41%
Junior Subordinated
Debentures 7,000 357 10.20% 7,000 369 10.20%
__________________ __________________
Total Interest Bearing
Liabilities 322,769 2,421 1.51% 267,736 2,434 1.83%
Demand Deposits 95,254 88,277
Other Liabilities 1,184 1,175
Stockholders' Equity 34,538 28,873
_________ _________
Total Liabilites and
Stockholders' Equity $453,745 $386,061
========= =========
NET TAXABLE-EQUIVALENT
INTEREST INCOME AND SPREAD $10,515 4.65% $9,735 5.11%
======== ========
NET TAXABLE-EQUIVALENT YIELD ON
EARNING ASSETS 5.01% 5.55%
<FN1> Securities classified as available-for-sale are included in
average balances and interest income figures reflect
interest earned on such securities.
<FN2> Interest income of $457,000 for 2004 and $404,000 for 2003
is added to interest earned on tax-exempt obligations to
reflect tax equivalent yields using a 34% tax rate.
<FN3> Interest income includes loan fees of $931,000 for 2004 and
$874,000 for 2003. Nonaccrual loans are included in average
balances and income on such loans is recognized on a cash
basis.
Changes in Taxable-Equivalent Net Interest Income
(in thousands)
Six Months Ended
June 30, 2004 compared to June 30, 2003
_______________________________________
Total Change
Increase Attributable to
(Decrease) Volume Rates
_______________________________________
Taxable-equivalent interest earned on:
Investment Securities
Taxable $164 $246 ($82)
Tax Exempt 209 343 (134)
Federal Funds Sold and Securities
Purchased Under Agreement 22 26 (4)
Loans, including fees 372 1,044 (672)
_________ ______________
TOTAL 767 1,660 (893)
_________ ______________
Interest Paid On:
Interest Bearing Deposits (14) (103) 89
Federal Funds Purchased and
Securities Sold Under
Agreement to Repurchase 3 5 (2)
Federal Home Loan Bank Advances 11 11
Notes Payable (1) (1)
Junior Subordinated Debenture (12) (12)
_________ _______________
TOTAL (13) (88) 75
_________ _______________
Taxable-equivalent net interest income $780 $1,748 ($968)
========= ===============
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.
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.
19
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 report. Based on such
evaluation, such officers have concluded that, as of the
Evaluation Date, MidSouth's disclosure controls and
procedures are effective.
Since the Evaluation Date, there have not been any
significant changes in MidSouth's internal controls or in
other factors that could significantly affect such controls.
Part II. Other Information
Item 1. Legal Proceedings
Item 2. Changes in Securities, Use of Proceeds and
Issuer Purchases of Equity Securities
2nd Quarter 2004
Treasury Stock Purchases
Shares Average
Purchased Price
______________________
April-04 3,963 $31.59
May-04 5,000 $30.00
June-04 3,625 $34.71
Total Treasury Shares at June 30, 2004: 18,309
Total shares remaining to be purchased: 160,797
Item 3. Defaults Upon Senior Securities
Item 4. Submission of Matters to a Vote of Security Holders
At the annual meeting of shareholders of MidSouth Bancorp, Inc.
held May 18, 2004 at 4:00 p.m., the Class II Directors were elected.
The following provides information as to the votes:
Election of Class II Directors For Withheld
Will G. Charbonnet, Sr. 2,306,062 12,656
Clayton Paul Hilliard 2,306,062 12,656
Stephen C. May 2,312,862 5,856
Item 5. Other Information
None
20
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exihibit Number Document Description
2.1 Definitive Agreement by and between MidSouth
Bancorp, Inc. and Lamar Bancshares, Inc. dated
May 27, 2004 is included as Exhibit 2.1 of this
filing.
3.1 Amended and Restated Articles of Incorporation
of MidSouth Bancorp, Inc. is included as
Exhibit 3.1 to the 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 is 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.
4.1 MidSouth agrees to furnish to the Commission
on request a copy of the instruments defining
the rights of the holder of its long-term debt,
which debt does not exceed 10% of the total
consolidated assets of MidSouth.
10.1 MidSouth National Bank Lease Agreement with
Southwest Bank Building Limited Partnership
is included as Exhibit 10.7 to the MidSouth's
annual report on Form 10-K for the Year Ended
December 31, 1992, and is incorporated herein
by reference.
10.2 First Amendment to Lease between MBL Life
Assurance Corporation, successor in interest
to Southwest Bank Building Limited Partnership
in Commendam, and MidSouth National Bank is
included as Exhibit 10.1 to Report on the
MidSouth's annual report on Form 10-KSB for
the year ended December 31, 1994, and is
incorporated herein by reference.
10.3 Amended and Restated Deferred Compensation
Plan and Trust effective October 9, 2002 is
included as Exhibit 10.3.1 to MidSouth's Annual
Report on Form 10-KSB for the year ended
December 31, 2002 and is incorporated herein
by reference.
10.5 Employment Agreements with C. R. Cloutier and
Karen L. Hail are included as Exhibit 5(c) to
MidSouth's Form 1-A and are incorporated
herein by reference.
10.6 MidSouth Bancorp, Inc.'s 1997 Stock Incentive
Plan is included as Exhibit 4.5 to MidSouth's
definitive Proxy Statement filed April 11, 1997,
and is incorporated herein by reference.
10.7 The MidSouth Bancorp, Inc. Dividend Reinvestment
and Stock Purchase Plan is included as
Exhibit 4.6 to MidSouth Bancorp, Inc.'s
Form S-3D filed on July 25, 1997 and is
incorporated herein by reference.
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 March 31, 2004 was attached as Exhibit 99.1 to the Form 8-K
filed on April 21, 2004.
A press release regarding the signing of a definitive agreement
between MidSouth and Lamar Bancshares, Inc. was attached as
Exhibit 99.1 to the Form 8-K filed on May 28, 2004.
21
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: August 12, 2004
___________________________
C. R. Cloutier, President /CEO
___________________________
Karen L. Hail, Senior Executive
Vice President/CFO
__________________________
Teri S. Stelly, Senior Vice
President & Controller
22