##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 FORM 10Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended June 30, 2006
 OR
 o
    
    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(State of other jurisdiction of incorporation or organization)
    
    (I.R.S. Employer Identification No.)
 102 Versailles Boulevard, Lafayette, Louisiana 70501
 (337) 237-8343
 þ o
  o o þ
 o þ




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##### 



INDEX TO FORM 10-Q REPORT
  
 PagePART 1 - FINANCIAL INFORMATIONItem 1. Interim Financial Statements (Unaudited)Consolidated Statements of Condition as of June 30, 2006 and
December 31, 2005
    
    
    3Consolidated Statements of Earnings for the Three
and Six Months Ended June 30, 2006 and 2005
    
    
    4Consolidated Statements of Comprehensive Income for
the Three and Six Months Ended June 30, 2006 and 2005
    
    
    5Consolidated Statement of Stockholders Equity for the
Six Months Ended June 30, 2006
    
    
    6Statements of Cash Flows for the Six Months Ended
June 30, 2006 and 2005
    
    
    7Notes to Unaudited Consolidated Financial Statements
    
    
    8Item 2. Managements Discussion and Analysis of
Financial Condition and Results of Operations
    
    
    11Item 3. Quantitative and Qualitative Disclosures about Market Risk
    
    
    24Item 4. Controls and Procedures
    
    
    24PART II  OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    24Item 1.A. Risk Factors
    
    
    25Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    25Item 3. Defaults upon Senior Securities
    
    
    25Item 4. Submission of Matters to a Vote of Security Holders
    
    
    25Item 5. Other Information
    
    
    25Item 6. Exhibits and Reports on Form 8-K
    
    
    26Signatures
    
    
    27Computation of earnings per shareCertification Pursuant to Rules 13(a)-14(a)Certification Pursuant to Rules 13(a)-14(a)Certification Pursuant to Section 906Certification Pursuant to Section 906
  2




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##### Table of Contents



MIDSOUTH BANCORP, INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF CONDITION
 June 30,
    
    
    December 31,2006
    
    
    2005(unaudited)
    
    
    (audited)ASSETSCash and due from banks
    
    $
    24,411,519
    
    
    $
    25,973,101Interest bearing deposits in banks
    
    
    58,305
    
    
    
    323,901Federal funds sold
    
    
    9,600,000
    
    
    
    26,140,000Total cash and cash equivalents
    
    
    34,069,824
    
    
    
    52,437,002Securities available-for-sale, at fair value (cost of
$192,780,258
at June 30, 2006 and $140,993,091 at December 31, 2005)
    
    
    188,344,583
    
    
    
    139,428,403Securities held-to-maturity (estimated fair value of
$17,784,402
at June 30, 2006 and $20,151,389 at December 31, 2005)
    
    
    17,518,755
    
    
    
    19,611,230Loans, net of allowance for loan losses of $4,887,254
at June 30, 2006 and $4,354,530 at December 31, 2005
    
    
    484,588,434
    
    
    
    438,439,219Other investments
    
    
    2,351,527
    
    
    
    2,011,403Bank premises and equipment, net
    
    
    28,572,430
    
    
    
    23,606,039Accrued interest receivable
    
    
    5,251,136
    
    
    
    4,919,294Goodwill
    
    
    9,271,432
    
    
    
    9,271,432Intangibles
    
    
    820,652
    
    
    
    985,264Cash surrender value of life insurance
    
    
    3,990,628
    
    
    
    3,794,510Other assets
    
    
    5,068,491
    
    
    
    4,310,625Total assets
    
    $
    779,847,892
    
    
    $
    698,814,421LIABILITIES AND STOCKHOLDERS EQUITYDeposits:Non-interest bearing
    
    $
    186,291,862
    
    
    $
    177,946,159Interest bearing
    
    
    517,812,410
    
    
    
    446,991,941Total deposits
    
    
    704,104,272
    
    
    
    624,938,100Securities sold under repurchase
agreements and federal funds purchased
    
    
    2,796,538
    
    
    
    1,731,797Accrued interest payable
    
    
    1,005,647
    
    
    
    936,584Junior subordinated debenture
    
    
    15,465,000
    
    
    
    15,465,000Other liabilities
    
    
    1,658,966
    
    
    
    2,557,372Total liabilities
    
    
    725,030,423
    
    
    
    645,628,853Commitments and contingencies
    
    
    
    
    
    
    Stockholders Equity:Common stock, $.10 par value- 10,000,000 shares
authorized,
5,070,310 and 5,006,471 issued and 4,998,216 and
4,951,719
outstanding at June 30, 2006 and December 31, 2005,
respectively
    
    
    507,031
    
    
    
    500,647Surplus
    
    
    42,716,910
    
    
    
    41,910,122Unearned ESOP shares
    
    
    (307,858
    )
    
    
    (47,194
    )Accumulated other comprehensive income
    
    
    (2,927,546
    )
    
    
    (1,032,694
    )Treasury stock - 72,094 at June 30, 2006 and 54,752
shares at
December 31, 2005, at cost
    
    
    (1,713,948
    )
    
    
    (1,229,213
    )Retained earnings
    
    
    16,542,880
    
    
    
    13,083,900Total stockholders equity
    
    
    54,817,469
    
    
    
    53,185,568Total liabilities and stockholders equity
    
    $
    779,847,892
    
    
    $
    698,814,421
  3




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##### Table of Contents



MIDSOUTH BANCORP, INC. AND SUBSIDIARIES
 
  Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2006
    
    
    2005
    
    
    2006
    
    
    2005INTEREST INCOME:Loans, including fees
    
    $
    10,318,152
    
    
    $
    7,822,002
    
    
    $
    19,282,516
    
    
    $
    14,989,363SecuritiesTaxable
    
    
    1,220,104
    
    
    
    798,944
    
    
    
    2,137,445
    
    
    
    1,546,971Nontaxable
    
    
    843,063
    
    
    
    651,690
    
    
    
    1,566,777
    
    
    
    1,308,171Federal funds sold
    
    
    294,694
    
    
    
    41,383
    
    
    
    700,586
    
    
    
    92,783Other interest income
    
    
    15,118
    
    
    
    18,507
    
    
    
    39,120
    
    
    
    32,887TOTAL
    
    
    12,691,131
    
    
    
    9,332,526
    
    
    
    23,726,444
    
    
    
    17,970,175INTEREST EXPENSE:Deposits
    
    
    4,031,515
    
    
    
    2,137,430
    
    
    
    7,335,428
    
    
    
    4,014,668Securities sold under repurchase
agreements,
federal funds purchased and advances
    
    
    28,883
    
    
    
    40,880
    
    
    
    48,915
    
    
    
    101,531Long term debt
    
    
    335,452
    
    
    
    297,224
    
    
    
    649,601
    
    
    
    571,717TOTAL
    
    
    4,395,850
    
    
    
    2,475,534
    
    
    
    8,033,944
    
    
    
    4,687,916NET INTEREST INCOME
    
    
    8,295,281
    
    
    
    6,856,992
    
    
    
    15,692,500
    
    
    
    13,282,259PROVISION FOR LOAN LOSSES
    
    
    300,000
    
    
    
    65,737
    
    
    
    620,000
    
    
    
    379,737NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES
    
    
    7,995,281
    
    
    
    6,791,255
    
    
    
    15,072,500
    
    
    
    12,902,522OTHER OPERATING INCOME:Service charges on deposits
    
    
    2,173,817
    
    
    
    2,198,366
    
    
    
    4,100,415
    
    
    
    4,326,080Gains on securities, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    385Credit life insurance
    
    
    45,536
    
    
    
    40,417
    
    
    
    88,874
    
    
    
    80,966Other charges and fees
    
    
    852,301
    
    
    
    931,558
    
    
    
    1,724,964
    
    
    
    2,185,452TOTAL OTHER INCOME
    
    
    3,071,654
    
    
    
    3,170,341
    
    
    
    5,914,253
    
    
    
    6,592,883OTHER EXPENSES:Salaries and employee benefits
    
    
    3,936,764
    
    
    
    3,304,873
    
    
    
    7,722,515
    
    
    
    6,507,625Occupancy expense
    
    
    1,623,753
    
    
    
    1,329,118
    
    
    
    3,110,208
    
    
    
    2,584,610Other
    
    
    2,508,582
    
    
    
    2,552,806
    
    
    
    4,732,522
    
    
    
    5,047,845TOTAL OTHER EXPENSES
    
    
    8,069,099
    
    
    
    7,186,797
    
    
    
    15,565,245
    
    
    
    14,140,080INCOME BEFORE INCOME TAXES
    
    
    2,997,836
    
    
    
    2,774,799
    
    
    
    5,421,508
    
    
    
    5,355,325PROVISION FOR INCOME TAXES
    
    
    762,082
    
    
    
    734,546
    
    
    
    1,367,234
    
    
    
    1,391,649NET EARNINGS
    
    $
    2,235,754
    
    
    $
    2,040,253
    
    
    $
    4,054,274
    
    
    $
    3,963,676EARNINGS PER SHAREBasic
    
    $
    0.45
    
    
    $
    0.42
    
    
    $
    0.82
    
    
    $
    0.81Diluted
    
    $
    0.44
    
    
    $
    0.40
    
    
    $
    0.80
    
    
    $
    0.78
  4




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##### Table of Contents



MidSouth Bancorp, Inc.  Consolidated Statements of Comprehensive Income  For the three and six months ended June 30, 2006 and 2005
 Three Months
    
    
    Three Months
    
    
    Six Months
    
    
    Six MonthsEnded
    
    
    Ended
    
    
    Ended
    
    
    EndedJune 30, 2006
    
    
    June 30, 2005
    
    
    June 30, 2006
    
    
    June 30, 2005Net Income
    
    $
    2,235,754
    
    
    $
    2,040,253
    
    
    $
    4,054,274
    
    
    $
    3,963,676Other comprehensive income (loss):Unrealized gain(loss) on securities available-for-sale, net:Unrealized holding gains (losses) arising during the year
net of income tax (benefit) of ($701,764), $328,810, ($976,136),
and ($219,626) respectively
    
    
    (1,362,247
    )
    
    
    638,279
    
    
    
    (1,894,852
    )
    
    
    (426,333
    )Less reclassification adjustment for gains included in net income
net of income tax of -0-, -0-, -0-, and $131, respectively
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (254
    )Total other comprehensive income (loss)
    
    
    (1,362,247
    )
    
    
    638,279
    
    
    
    (1,894,852
    )
    
    
    (426,587
    )Total comprehensive income
    
    $
    873,507
    
    
    $
    2,678,532
    
    
    $
    2,159,422
    
    
    $
    3,537,089
 5




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##### Table of Contents



MIDSOUTH BANCORP, INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENT OF STOCKHOLDERS EQUITY
FOR THE SIX MONTHS ENDED JUNE 30, 2006
 UNREALIZEDGAINS (LOSSES)COMMON STOCK
    
    
    
    
    
    
    ESOP
    
    
    ON SECURITIES
    
    
    TREASURY
    
    
    RETAINEDSHARES
    
    
    AMOUNT
    
    
    SURPLUS
    
    
    OBLIGATION
    
    
    AFS, NET
    
    
    STOCK
    
    
    EARNINGS
    
    
    TOTALBalance  January 1, 2006
    
    
    5,006,471
    
    
    $
    500,647
    
    
    $
    41,910,122
    
    
    
    ($47,194
    )
    
    
    ($1,032,694
    )
    
    
    ($1,229,213
    )
    
    $
    13,083,900
    
    
    $
    53,185,568Dividends on
common stock, $.06 per share
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (595,294
    )
    
    
    (595,294
    )Exercise of stock options
    
    
    63,839
    
    
    
    6,384
    
    
    
    277,016
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    283,400Tax benefit resulting from
exercise of stock options
    
    
    
    
    
    
    
    
    
    
    491,439
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    491,439Purchase of treasury stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (484,735
    )
    
    
    
    
    
    
    (484,735
    )Net earnings
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,054,274
    
    
    
    4,054,274Increase in ESOP obligation,
net of repayments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (260,664
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (260,664
    )Excess of market value over
book value of ESOP shares
released, net adjustment
    
    
    
    
    
    
    
    
    
    
    25,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    25,000Stock Option expense
    
    
    
    
    
    
    
    
    
    
    13,333
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    13,333Net change in unrealized
gains( losses) on securities
available-for-sale, net of taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,894,852
    )
    
    
    
    
    
    
    
    
    
    
    (1,894,852
    )Balance  June 30, 2006
    
    
    5,070,310
    
    
    $
    507,031
    
    
    $
    42,716,910
    
    
    
    ($307,858
    )
    
    
    ($2,927,546
    )
    
    
    ($1,713,948
    )
    
    $
    16,542,880
    
    
    $
    54,817,469
 6




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##### Table of Contents



MIDSOUTH BANCORP, INC. AND SUBSIDIARIES
 
 
 June 30,
    
    
    June 30,2006
    
    
    2005Cash flows from operating activities:Net earnings
    
    $
    4,054,274
    
    
    $
    3,963,676Adjustments to reconcile net income
to net cash provided by operating activities:Depreciation and amortization
    
    
    1,331,188
    
    
    
    1,089,562Provision for loan losses
    
    
    620,000
    
    
    
    379,737Deferred income taxes (benefit)
    
    
    (2,640
    )
    
    
    137,868Amortization of premiums on securities, net
    
    
    365,067
    
    
    
    489,389Gain on sale of securities, net
    
    
    
    
    
    
    385Change in accrued interest receivable
    
    
    (331,842
    )
    
    
    (299,624
    )Change in accrued interest payable
    
    
    69,063
    
    
    
    39,824Other, net
    
    
    (104,852
    )
    
    
    784,711Net cash provided by operating activities
    
    
    6,000,258
    
    
    
    6,585,528Cash flows from investing activities, net of effect of acquisitions:Proceeds from sales of securities available-for-sale
    
    
    
    
    
    
    9,099,585Proceeds from maturities and calls of securities held-to-maturity
    
    
    2,099,650
    
    
    
    920,000Proceeds from maturities and calls of securities available-for-sale
    
    
    13,802,944
    
    
    
    18,284,749Purchases of securities available-for-sale
    
    
    (65,962,354
    )
    
    
    (17,780,705
    )Purchases of other investments
    
    
    (340,350
    )
    
    
    Loan originations, net of repayments
    
    
    (47,120,831
    )
    
    
    (23,915,940
    )Purchases of premises and equipment
    
    
    (6,132,967
    )
    
    
    (2,743,467
    )Proceeds from sales of other real estate owned
    
    
    147,450
    
    
    
    455,726Net cash used in investing activities
    
    
    (103,506,458
    )
    
    
    (15,680,052
    )Cash flows from financing activities, net of effect of acquisitions:Change in deposits
    
    
    79,166,172
    
    
    
    28,339,605Change in repurchase agreements
    
    
    1,064,741
    
    
    
    (1,558,279
    )Change in federal funds purchased
    
    
    
    
    
    
    (8,500,000
    )Proceeds from FHLB advances
    
    
    
    
    
    
    5,000,000Repayment of FHLB advances
    
    
    
    
    
    
    (5,000,000
    )Purchase of treasury stock
    
    
    (484,735
    )
    
    
    (280,822
    )Payment of dividends on common stock
    
    
    (890,556
    )
    
    
    (801,225
    )Proceeds from exercise of stock options
    
    
    283,400
    
    
    
    110,252Net cash provided by financing activities
    
    
    79,139,022
    
    
    
    17,309,531Net (decrease) increase in cash and cash equivalents
    
    
    (18,367,178
    )
    
    
    8,215,007Cash and cash equivalents, beginning of quarter
    
    
    52,437,002
    
    
    
    17,396,850Cash and cash equivalents, end of quarter
    
    $
    34,069,824
    
    
    $
    25,611,857
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MIDSOUTH BANCORP, INC. AND SUBSIDIARIES
 
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENT
 1.
    
    Basis of PresentationThe 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 the Company and its subsidiaries as of June 30, 2006 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 2005 Annual Report and Form 10K.The results of operations for the six month period ended June 30, 2006 are not necessarily
indicative of the results to be expected for the entire year.Use of Estimates The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the consolidated financial statements and the reported
amounts of revenues and expenses during the reported period. Actual results could differ from those
estimates.Stock Compensation In December 2004, the FASB revised SFAS No. 123 (SFAS No. 123 (R)). SFAS
123 (R), Share-Based Payment, requires all share-based payments to employees, including grants of
employee stock options, to be recognized in the financial statements based on their fair values.
SFAS No. 123 (R) is effective for periods beginning after December 15, 2005. The Company adopted
the provisions of SFAS No. 123 (R) on January 1, 2006. For the three and six month period ended
June 30, 2006, the required compensation expense totaled $13,333. Prior period pro forma
disclosure if provided in the table below:
 8




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##### Table of Contents



Three Months
    
    
    Six MonthsEnded
    
    
    EndedJune 30, 2005
    
    
    June 30, 2005Net earnings available to common stockholders
(in thousands):As reported
    
    $
    2,040
    
    
    $
    3,964Deduct total stock based compensation determined under fair value method
    
    
    (15
    )
    
    
    (30
    )Pro forma
    
    $
    2,025
    
    
    $
    3,934Basic earnings per share:As reported
    
    $
    0.42
    
    
    $
    0.81Pro forma
    
    $
    0.41
    
    
    $
    0.80Diluted earnings per share:As reported
    
    $
    0.40
    
    
    $
    0.78Pro forma
    
    $
    0.40
    
    
    $
    0.77
 Recent Accounting Pronouncements
 155 Accounting
for Certain Hybrid Financial Instruments  an amendment of SFAS No. 133 and 140
 9




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2.
    
    Allowance for Loan LossesA summary of the activity in the allowance for loan losses is as follows (in thousands)
 Six Months EndedJune 30,(in thousands)
    
    2006
    
    
    2005Balance at beginning of period
    
    $
    4,355
    
    
    $
    3,851Provision for loan losses
    
    
    620
    
    
    
    380Recoveries
    
    
    222
    
    
    
    119Loans charged off
    
    
    (310
    )
    
    
    (310
    )Balance at end of period
    
    $
    4,887
    
    
    $
    4,040
 3.
    
    Declaration of DividendsOn May 17, 2006, the Company declared a $.06 per share quarterly cash dividend for holders of
record on June 12, 2006.
 10




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##### Table of Contents



Part 1. Item 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL POSITION AND RESULTS OF OPERATIONS
  Forward Looking Statements
  
 
 
 
 
 
 
 
 
 11




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
 
 
 Critical Accounting Policies
  Results of Operations
     12




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Earnings Analysis
 13




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Net Interest Income
      14




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15




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Table 1  Consolidated Average Balances, Interest and Rates
Taxable-equivalent basis (2)
(in thousands)
 Three Months Ended
    
    
    Three Months EndedJune 30, 2006
    
    
    June 30, 2005Average
    
    
    
    
    
    
    Average
    
    
    Average
    
    
    
    
    
    
    AverageVolume
    
    
    Interest
    
    
    Yield/Rate
    
    
    Volume
    
    
    Interest
    
    
    Yield/RateASSETSInterest Bearing Deposits
    
    $
    338
    
    
    $
    4
    
    
    
    4.89
    %
    
    $
    82
    
    
    $
    1
    
    
    
    2.51
    %Investment Securities (1)Taxable
    
    
    107,640
    
    
    
    1,216
    
    
    
    4.52
    %
    
    
    81,732
    
    
    
    798
    
    
    
    3.92
    %Tax Exempt (2)
    
    
    92,611
    
    
    
    1,190
    
    
    
    5.14
    %
    
    
    74,785
    
    
    
    916
    
    
    
    4.90
    %Equity Securities
    
    
    2,343
    
    
    
    15
    
    
    
    2.58
    %
    
    
    2,592
    
    
    
    19
    
    
    
    2.86
    %Total Investments
    
    
    202,594
    
    
    
    2,421
    
    
    
    4.78
    %
    
    
    159,109
    
    
    
    1,733
    
    
    
    4.36
    %Federal Funds Sold and Securities
Purchased Under Agreements to Resell
    
    
    23,983
    
    
    
    295
    
    
    
    4.93
    %
    
    
    5,733
    
    
    
    41
    
    
    
    2.90
    %Loans (3)Commercial and Real Estate
    
    
    370,362
    
    
    
    8,344
    
    
    
    9.04
    %
    
    
    313,102
    
    
    
    6,009
    
    
    
    7.70
    %Installment
    
    
    95,592
    
    
    
    1,974
    
    
    
    8.28
    %
    
    
    88,479
    
    
    
    1,813
    
    
    
    8.22
    %Total Loans
    
    
    465,954
    
    
    
    10,318
    
    
    
    8.88
    %
    
    
    401,581
    
    
    
    7,822
    
    
    
    7.81
    %Total Earning Assets
    
    
    692,869
    
    
    
    13,038
    
    
    
    7.55
    %
    
    
    566,505
    
    
    
    9,597
    
    
    
    6.80
    %Allowance for Loan Losses
    
    
    (4,600
    )
    
    
    
    
    
    
    
    
    
    
    (4,042
    )Nonearning Assets
    
    
    73,025
    
    
    
    
    
    
    
    
    
    
    
    60,632Total Assets
    
    $
    761,294
    
    
    
    
    
    
    
    
    
    
    $
    623,095LIABILITIES AND STOCKHOLDERS EQUITYNOW, Money Market, and Savings
    
    $
    388,789
    
    
    $
    3,004
    
    
    
    3.10
    %
    
    $
    302,249
    
    
    $
    1,464
    
    
    
    1.94
    %Time Deposits
    
    
    120,943
    
    
    
    1,028
    
    
    
    3.41
    %
    
    
    112,785
    
    
    
    673
    
    
    
    2.39
    %Total Interest Bearing Deposits
    
    
    509,732
    
    
    
    4,032
    
    
    
    3.17
    %
    
    
    415,034
    
    
    
    2,137
    
    
    
    2.07
    %Federal Funds Purchased, Securities Sold
Under Agreements to Repurchase
    
    
    2,724
    
    
    
    29
    
    
    
    4.25
    %
    
    
    5,040
    
    
    
    34
    
    
    
    2.73
    %Junior Subordinated Debentures
    
    
    15,465
    
    
    
    335
    
    
    
    8.70
    %
    
    
    15,465
    
    
    
    297
    
    
    
    7.71
    %Federal Home Loan Bank Advances
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    915
    
    
    
    7
    
    
    
    2.87
    %Total Interest Bearing Liabilities
    
    
    527,921
    
    
    
    4,396
    
    
    
    3.34
    %
    
    
    436,454
    
    
    
    2,475
    
    
    
    2.28
    %Demand Deposits
    
    
    175,163
    
    
    
    
    
    
    
    
    
    
    
    132,313Other Liabilities
    
    
    3,802
    
    
    
    
    
    
    
    
    
    
    
    4,014Stockholders Equity
    
    
    54,408
    
    
    
    
    
    
    
    
    
    
    
    50,314Total Liabilites and Stockholders Equity
    
    $
    761,294
    
    
    
    
    
    
    
    
    
    
    $
    623,095NET TAXABLE-EQUIVALENT
INTEREST INCOME AND SPREAD
    
    
    
    
    
    $
    8,642
    
    
    
    4.21
    %
    
    
    
    
    
    $
    7,122
    
    
    
    4.52
    %NET TAXABLE-EQUIVALENT YIELD ON EARNING ASSETS
    
    
    
    
    
    
    
    
    
    
    5.00
    %
    
    
    
    
    
    
    
    
    
    
    5.04
    %
 
 (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 $346,605 for 2006 and $264,925 for 2005 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 $1,109,115 for 2006 and $900,242 for 2005. Nonaccrual
loans are included in average balances and income on such loans is recognized on a cash basis. 16




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##### Table of Contents



Table 2  Changes in Taxable-Equivalent Net Interest Income  (in thousands)
 Three Months EndedJune 30, 2006 compared to June 30, 2005Total
    
    
    ChangeIncrease
    
    
    Attributable to(Decrease)
    
    
    Volume
    
    
    RatesTaxable-equivalent interest earned on:Interest Bearing Deposits
    
    $
    3
    
    
    $
    3
    
    
    $
    0Investment SecuritiesTaxable
    
    
    418
    
    
    
    329
    
    
    
    89Tax Exempt
    
    
    274
    
    
    
    227
    
    
    
    47Equity Securities
    
    
    (4
    )
    
    
    (2
    )
    
    
    (2
    )Federal Funds Sold and Securities
Purchased Under Agreement to Resell
    
    
    254
    
    
    
    208
    
    
    
    46Loans, including fees
    
    
    2,496
    
    
    
    1,347
    
    
    
    1,149TOTAL
    
    
    3,441
    
    
    
    2,112
    
    
    
    1,329Interest Paid On:Interest Bearing Deposits
    
    
    1,895
    
    
    
    568
    
    
    
    1,327Federal Funds Purchased and Securities
Sold Under Agreement to Repurchase
    
    
    (5
    )
    
    
    (20
    )
    
    
    15Federal Home Loan Bank Advances
    
    
    (7
    )
    
    
    (7
    )
    
    
    Junior Subordinated Debentures
    
    
    38
    
    
    
    
    
    
    
    38TOTAL
    
    
    1,921
    
    
    
    541
    
    
    
    1,380Taxable-equivalent net interest income
    
    $
    1,520
    
    
    $
    1,571
    
    
    
    ($51
    )
 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.
 17




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##### Table of Contents



Table 3  Consolidated Average Balances, Interest and Rates
Taxable-equivalent basis (2)
(in thousands)
 Six Months Ended
    
    
    Six Months EndedJune 30, 2006
    
    
    June 30, 2005Average
    
    
    
    
    
    
    Average
    
    
    Average
    
    
    
    
    
    
    AverageVolume
    
    
    Interest
    
    
    Yield/Rate
    
    
    Volume
    
    
    Interest
    
    
    Yield/RateASSETSInterest Bearing Deposits
    
    $
    342
    
    
    $
    9
    
    
    
    5.34
    %
    
    $
    53
    
    
    $
    1
    
    
    
    3.27
    %Investment Securities (1)Taxable
    
    
    96,528
    
    
    
    2,128
    
    
    
    4.41
    %
    
    
    80,937
    
    
    
    1,546
    
    
    
    3.85
    %Tax Exempt (2)
    
    
    87,151
    
    
    
    2,209
    
    
    
    5.07
    %
    
    
    75,165
    
    
    
    1,840
    
    
    
    4.90
    %Equity Securities
    
    
    2,185
    
    
    
    39
    
    
    
    3.58
    %
    
    
    2,603
    
    
    
    33
    
    
    
    2.55
    %Total Investments
    
    
    185,864
    
    
    
    4,376
    
    
    
    4.71
    %
    
    
    158,705
    
    
    
    3,419
    
    
    
    4.31
    %Federal Funds Sold and Securities
Purchased Under Agreements to Resell
    
    
    30,629
    
    
    
    701
    
    
    
    4.61
    %
    
    
    7,235
    
    
    
    93
    
    
    
    2.59
    %Loans (3)Commercial and Real Estate
    
    
    359,801
    
    
    
    15,333
    
    
    
    8.59
    %
    
    
    310,605
    
    
    
    11,539
    
    
    
    7.49
    %Installment
    
    
    95,043
    
    
    
    3,950
    
    
    
    8.38
    %
    
    
    85,267
    
    
    
    3,450
    
    
    
    8.16
    %Total Loans
    
    
    454,844
    
    
    
    19,283
    
    
    
    8.55
    %
    
    
    395,872
    
    
    
    14,989
    
    
    
    7.64
    %Total Earning Assets
    
    
    671,679
    
    
    
    24,369
    
    
    
    7.32
    %
    
    
    561,865
    
    
    
    18,502
    
    
    
    6.64
    %Allowance for Loan Losses
    
    
    (4,480
    )
    
    
    
    
    
    
    
    
    
    
    (3,931
    )Nonearning Assets
    
    
    72,149
    
    
    
    
    
    
    
    
    
    
    
    61,527Total Assets
    
    $
    739,348
    
    
    
    
    
    
    
    
    
    
    $
    619,461LIABILITIES AND STOCKHOLDERS EQUITYNOW, Money Market, and Savings
    
    $
    368,388
    
    
    $
    5,339
    
    
    
    2.92
    %
    
    $
    295,266
    
    
    $
    2,692
    
    
    
    1.84
    %Certificates of Deposits
    
    
    120,970
    
    
    
    1,996
    
    
    
    3.33
    %
    
    
    117,311
    
    
    
    1,323
    
    
    
    2.27
    %Total Interest Bearing Deposits
    
    
    489,358
    
    
    
    7,335
    
    
    
    3.02
    %
    
    
    412,577
    
    
    
    4,015
    
    
    
    1.96
    %Federal Funds Purchased, Securities Sold
Under Agreements to Repurchase
    
    
    2,383
    
    
    
    49
    
    
    
    4.14
    %
    
    
    6,106
    
    
    
    76
    
    
    
    2.51
    %Junior Subordinated Debentures
    
    
    15,465
    
    
    
    650
    
    
    
    8.47
    %
    
    
    15,465
    
    
    
    571
    
    
    
    7.45
    %Federal Home Loan Bank Advances
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,869
    
    
    
    26
    
    
    
    2.76
    %Total Interest Bearing Liabilities
    
    
    507,206
    
    
    
    8,034
    
    
    
    3.19
    %
    
    
    436,017
    
    
    
    4,688
    
    
    
    2.17
    %Demand Deposits
    
    
    174,392
    
    
    
    
    
    
    
    
    
    
    
    129,498Other Liabilities
    
    
    3,691
    
    
    
    
    
    
    
    
    
    
    
    4,077Stockholders Equity
    
    
    54,059
    
    
    
    
    
    
    
    
    
    
    
    49,869Total Liabilites and Stockholders Equity
    
    $
    739,348
    
    
    
    
    
    
    
    
    
    
    $
    619,461NET TAXABLE-EQUIVALENT
INTEREST INCOME AND SPREAD
    
    
    
    
    
    $
    16,335
    
    
    
    4.12
    %
    
    
    
    
    
    $
    13,814
    
    
    
    4.47
    %NET TAXABLE-EQUIVALENT YIELD ON EARNING ASSETS
    
    
    
    
    
    
    
    
    
    
    4.90
    %
    
    
    
    
    
    
    
    
    
    
    4.96
    %
 
 (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 $642,068 for 2006 and $531,574 for 2005 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 $1,770,425 for 2006 and $1,518,180 for 2005.
Nonaccrual loans are included in average balances and income on such loans is recognized on a
cash basis. 18




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##### Table of Contents



Table 4  Changes in Taxable-Equivalent Net Interest Income
(in thousands)
 Six Months EndedJune 30, 2006 compared to June 30, 2005Total
    
    
    ChangeIncrease
    
    
    Attributable to(Decrease)
    
    
    Volume
    
    
    RatesTaxable-equivalent interest earned on:Interest Bearing Deposits
    
    $
    8
    
    
    $
    8
    
    
    $
    0Investment SecuritiesTaxable
    
    
    582
    
    
    
    512
    
    
    
    70Tax Exempt
    
    
    369
    
    
    
    302
    
    
    
    67Equity Securities
    
    
    6
    
    
    
    (3
    )
    
    
    9Federal Funds Sold and Securities
Purchased Under Agreement to Resell
    
    
    608
    
    
    
    491
    
    
    
    117Loans, including fees
    
    
    4,294
    
    
    
    2,380
    
    
    
    1,914TOTAL
    
    
    5,867
    
    
    
    3,690
    
    
    
    2,177Interest Paid On:Interest Bearing Deposits
    
    
    3,320
    
    
    
    851
    
    
    
    2,469Federal Funds Purchased and Securities
Sold Under Agreement to Repurchase
    
    
    (27
    )
    
    
    (61
    )
    
    
    34Federal Home Loan Bank Advances
    
    
    (26
    )
    
    
    (26
    )
    
    
    Notes PayableJunior Subordinated Debentures
    
    
    79
    
    
    
    
    
    
    
    79TOTAL
    
    
    3,346
    
    
    
    764
    
    
    
    2,582Taxable-equivalent net interest income
    
    $
    2,521
    
    
    $
    2,926
    
    
    
    ($405
    )
 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.
 19




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##### Table of Contents



Non-interest Income
Excluding Securities Transactions
   Securities Transactions
  Non-interest Expense
  Analysis of Statement of Condition
  20




---



##### Table of Contents



Liquidity
   21




---



##### Table of Contents



Capital
  Asset Quality
 Credit Risk Management
  Nonperforming Assets and Loans Past Due 90 Days and Over
  Period Ended
    
    
    %
    
    
    Year EndedJun. 30,
    
    
    Chg
    
    
    Dec. 31,2006
    
    
    2005
    
    
    
    
    
    
    2005Nonaccrual loans
    
    $
    543
    
    
    $
    1,892
    
    
    
    -71.3
    %
    
    $
    660Loans past due 90
Days and over
    
    
    2,104
    
    
    
    128
    
    
    
    1543.8
    %
    
    
    2,511Total nonperforming loans
    
    
    2,647
    
    
    
    2,020
    
    
    
    31.0
    %
    
    
    3,171Other real estate owned
    
    
    32
    
    
    
    98
    
    
    
    -67.3
    %
    
    
    98Other foreclosed assets
    
    
    25
    
    
    
    156
    
    
    
    -84.0
    %
    
    
    176Total nonperforming assets
    
    $
    2,704
    
    
    $
    2,274
    
    
    
    18.9
    %
    
    $
    3,445Nonperforming assets to
total assets
    
    
    0.35
    %
    
    
    0.36
    %
    
    
    -3.7
    %
    
    
    0.49
    %
 22




---



##### Table of Contents



Period Ended
    
    
    %
    
    
    Year EndedJun. 30,
    
    
    Chg
    
    
    Dec. 31,2006
    
    
    2005
    
    
    
    
    
    
    2005Nonperforming assets to
total loans + OREO + other
foreclosed assets
    
    
    0.55
    %
    
    
    0.55
    %
    
    
    -0.3
    %
    
    
    0.78
    %ALL to nonperforming assets
    
    
    180.73
    %
    
    
    177.62
    %
    
    
    1.8
    %
    
    
    126.42
    %ALL to nonperforming loans
    
    
    184.62
    %
    
    
    199.95
    %
    
    
    -7.7
    %
    
    
    137.34
    %ALL to total loans
    
    
    1.00
    %
    
    
    0.99
    %
    
    
    1.4
    %
    
    
    0.98
    %Year-to-date charge-offs
    
    $
    310
    
    
    $
    310
    
    
    
    0.0
    %
    
    $
    702Year-to-date recoveries
    
    
    223
    
    
    
    119
    
    
    
    87.4
    %
    
    
    226Year-to-date net charge-offs
    
    $
    87
    
    
    $
    191
    
    
    
    -54.5
    %
    
    $
    476Net YTD charge-offs to
total loans
    
    
    0.02
    %
    
    
    0.05
    %
    
    
    -57.1
    %
    
    
    0.11
    %
   Impact of Inflation and Changing Prices
  23




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##### Table of Contents



Part I. Item 3. Qualitative and Quantitative Disclosures About Market Risk
   
 Part I. Item 4. Controls and Procedures
   
 Part II. Other Information
 
 Item 1. Legal Proceedings
  24




---



##### Table of Contents



Item 1.A. Risk Factors 
 
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
  Total Number of
    
    Maximum NumberShares Purchased as
    
    of Shares That MayTotal Number
    
    Average Price Paid
    
    Part of a Publicly
    
    Yet be Purchasedof Shares Purchased
    
    per Share
    
    Announced Plan1
    
    Under the Plan1April 2006
    
    
    5,000
    
    
    $
    29.10
    
    
    
    5,000
    
    
    
    172,817May 2006
    
    
    591
    
    
    $
    29.36
    
    
    
    591
    
    
    
    172,226June 2006
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    172,226
 
 1
    -
    Under a share repurchase program approved by the Companys Board of Directors on November
13, 2002, the Company 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
  
 Item 4. Submission of Matters to a Vote of Security Holders
  
 Item 5. Other Information
  25




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##### Table of Contents



Item 6. Exhibits and Reports on Form 8-K
 (a) Exhibits
 Exhibit Number
    
    Document Description3.1
    
    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 share31.1
    
    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 200232.2
    
    Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
 (b) Reports Filed on Form 8-K
  26




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##### Table of Contents



Signatures
  MidSouth Bancorp, Inc.(Registrant)Date: August 14, 2006/s/ C. R. CloutierC.
R. Cloutier, President /CEO/s/ J. E. Corrigan, Jr.J.
E. Corrigan, Jr., Executive Vice President/CFO/s/ Teri S. StellyTeri
S. Stelly, SVP/Controller
 27




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##### Table of Contents



Exhibit Number
    
    Document Description3.1
    
    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 share31.1
    
    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 200232.2
    
    Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
 (b) Reports Filed on Form 8-K