MSL Midsouth Bancorp Inc

Quarterly Highlights

• Net loss of $11.3 million for the fourth quarter which includes approximately $5.2 million of one-time, non-operating charges, plus a charge of approximately $3.6 million for the write-down of net deferred assets due to recent tax reform legislation
• Pre-tax, pre-provision operating income of $7.6 million declined 5% versus 3Q17
• The classified assets to capital ratio for MidSouth Bank declined to 56%, down from 67%
• Core deposits are 88% of $1.3 billion total deposits and funding costs are low at 34 bps. Cost of deposits increased only 1 basis point sequentially
• Tangible common equity to tangible assets declined 38 bps to 9.12% sequentially
• Announced 6 branches closing in 1Q18, resulting in additional operating efficiencies

MidSouth Bancorp, Inc. (“MidSouth”) (NYSE:MSL) today reported a quarterly net loss available to common shareholders of $11.3 million for the fourth quarter of 2017, compared to net earnings available to common shareholders of $1.4 million reported for the fourth quarter of 2016 and $856,000 in net earnings available to common shareholders for the third quarter of 2017. The fourth quarter of 2017 included an after tax charge of $3.9 million resulting from the transfer of loans to held for sale, a $3.6 million charge for the write-down of net deferred tax assets as a result of the Tax Cuts and Jobs Act, an after-tax charge of $1.2 million for regulatory remediation costs, an after-tax charge of $512,000 resulting from the write-down of assets held for sale, an after-tax gain on sale of branches of $484,000 and an after-tax charge of $111,000 for severance and retention accruals. The third quarter of 2017 included a non-recurring after-tax expense of $587,000 related to the branch closures during the quarter, an after-tax charge of $556,000 for regulatory remediation costs and an after-tax gain on sales of securities of $220,000. Excluding these non-operating income and expenses, a loss of $0.15 per diluted share was reported for the fourth quarter of 2017, compared to diluted earnings per common share of $0.10 for the third quarter of 2017 and $0.12 for the fourth quarter of 2016.

Jim McLemore, President and CEO, remarked, "We took decisive action to accelerate the turnaround of MidSouth this quarter to reduce our risk profile and build a foundation for long term growth with the completion of a comprehensive three-year Strategic Plan, our continued focus to reduce problem credits through our investments in talent and changes to our strategies relative to problem asset resolution, the announcement of additional branch closures to enhance our operational efficiencies and our expansion of resources and scope of regulatory and other remediation efforts. This turnaround is supported by our strong capital base, enhanced liquidity, a very high level of core deposits and long-term commitment to reduce our risk profile and improve the efficiency and effective execution of our Strategic Plan through enhanced corporate governance, strengthening management talent, investing in technology to reduce operating costs and significantly reducing problem assets. To accomplish these goals, we expect to invest $10-$12 million in 2018, with a significant drop-off of these costs in 2019 and 2020."

"We are especially pleased to welcome Mike Kramer as an advisor to our Board of Directors, pending final regulatory approval for his joining as a full director. Mike brings meaningful turnaround and corporate governance experience which will be invaluable to us."

Balance Sheet

Consolidated assets remained constant at $1.9 billion for the quarters ended December 31, 2017 and 2016 and September 30, 2017. Our stable core deposit base, which excludes time deposits, totaled $1.3 billion at December 31, 2017 and $1.4 billion at September 30, 2017 and accounted for 87.7% and 87.5% of deposits at December 31, 2017 and September 30, 2017, respectively. Net loans totaled $1.2 billion at December 31, 2017, compared to $1.2 billion at September 30, 2017 and $1.3 billion at December 31, 2016. In an effort to further reduce classified assets, loans totaling $15.7 million were transferred to held for sale during the fourth quarter of 2017, and the sale of these loans is expected to close during the first quarter of 2018. A loss on transfer of loans to held for sale of $6.0 million was recorded during the fourth quarter of 2017 to write the loans down to fair value.

MidSouth’s Tier 1 leverage capital ratio was 12.53% at December 31, 2017, compared to 12.84% at September 30, 2017. Tier 1 risk-based capital and total risk-based capital ratios were 16.51% and 17.77% at December 31, 2017, compared to 17.01% and 18.27% at September 30, 2017, respectively. Tier 1 common equity to total risk-weighted assets at December 31, 2017 was 12.10%, compared to 12.68% at September 30, 2017. Tangible common equity totaled $167.3 million at December 31, 2017, compared to $180.7 million at September 30, 2017. Tangible book value per share at December 31, 2017 was $10.11 versus $10.92 at September 30, 2017.

Asset Quality

Nonperforming assets totaled $57.3 million at December 31, 2017, an increase of $3.4 million compared to $53.9 million reported at September 30, 2017. The increase is primarily attributable to the $20.7 million of loans placed on non-accrual during the quarter and $2.8 million of loans transferred to held for sale that were identified as nonperforming during the fourth quarter of 2017. These decreases were partially offset by the payoffs/paydowns of $12.4 million of non-accrual loans and the charge-off of $7.4 million of non-accrual loans. Allowance coverage for nonperforming loans increased to 53.77% at December 31, 2017, compared to 48.47% at September 30, 2017. The ALLL/total loans ratio was 2.27% at December 31, 2017 and 2.03% at September 30, 2017. Including valuation accounting adjustments on acquired loans, the total valuation accounting adjustment plus ALLL was 2.36% of loans at December 31, 2017. The ratio of annualized net charge-offs to total loans increased to 2.94% for the three months ended December 31, 2017 compared to 1.26% for the three months ended September 30, 2017.

Total nonperforming assets to total loans plus ORE and other assets repossessed was 4.83% at December 31, 2017 compared to 4.35% at September 30, 2017. Loans classified as troubled debt restructurings, accruing (“TDRs, accruing”) totaled $1.4 million at December 31, 2017 compared to $1.6 million at September 30, 2017. Also included in nonperforming assets at December 31, 2017 was $5.1 million of nonperforming loans transferred to held for sale. Total classified assets, including ORE, were $118.2 million at December 31, 2017 compared to $139.7 million at September 30, 2017. Payoffs/paydowns of $25.8 million and charge-offs of $8.1 million of loans rated as classified at September 30, 2017 as well as a $5.2 million charge to write down classified loans to fair value when they were transferred to held for sale contributed to the decrease in classified assets. These decreases were partially offset by downgrades to classified loans of $16.2 million during the quarter. The classified to capital ratio at MidSouth Bank was 56.1% at December 31, 2017 versus 66.8% at September 30, 2017.

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

Mr. McLemore noted, “Reducing our criticized asset levels continues to remain a top priority. We made great progress this quarter by reducing our classified asset ratio to 56%, which is down from a high of 79% earlier this year and reducing our energy exposure by $18.1 million. Our capital strength with a Tangible Common Equity ratio above 9% allows greater flexibility to manage problem assets from a position of strength, but we also remain committed to being as judicious as possible from a capital preservation standpoint."

Fourth Quarter 2017 vs. Third Quarter 2017 Earnings Comparison

MidSouth reported a net loss available to common shareholders of $11.3 million for the three months ended December 31, 2017, compared to net earnings available to common shareholders of $856,000 for the three months ended September 30, 2017. The fourth quarter of 2017 included a $744,000 gain on the sale of branches, and the third quarter of 2017 included $338,000 in gain on sales of securities. Excluding these non-operating revenues, revenues from consolidated operations increased $795,000 in sequential-quarter comparison. Net interest income increased $659,000 and noninterest income increased $136,000 in sequential-quarter comparison.

The fourth quarter of 2017 included non-operating expenses totaling $8.8 million which consisted of $171,000 of severance and retention accruals, a $789,000 write-down on assets held for sale, $1.8 million of remediation costs and a $6.0 million loss on the transfer of loans to held for sale. The third quarter of 2017 included a non-recurring charge of $903,000 related to branch closures and $856,000 of remediation costs. Excluding these non-operating expenses, noninterest expense increased $1.2 million in sequential-quarter comparison and consisted primarily of a $901,000 increase in legal and professional fees and a $316,000 increase in expenses on ORE. The increase in legal and professional fees is primarily due to increased outsourcing expenses to enhance risk management as well as increased legal fees to resolve credit quality issues. The provision for loan losses increased $6.3 million in sequential-quarter comparison. In connection with the Tax Cuts and Jobs Act, a $3.6 million tax-related charge was recorded during the fourth quarter of 2017 associated with the revaluation of our net deferred tax assets. Excluding this adjustment, we recorded an income tax benefit of $4.1 million for the fourth quarter of 2017, compared to income tax expense of $574,000 for the third quarter of 2017.

Dividends on the Series B Preferred Stock issued to the U.S. Treasury as a result of our participation in the Small Business Lending Fund totaled $720,000 for the fourth quarter of 2017 based on a dividend rate of 9%, unchanged from $720,000 for the third quarter of 2017. Dividends on the Series C Preferred Stock issued with the December 28, 2012 acquisition of PSB Financial Corporation totaled $90,000 for the three months ended December 31, 2017 and September 30, 2017.

Fully taxable-equivalent (“FTE”) net interest income increased $655,000 in sequential-quarter comparison, primarily due to an increase in interest income on loans of $697,000 and a decrease of $83,000 in interest expense on securities sold under agreements to repurchase. These changes were partially offset by a $128,000 decrease in FTE interest income on investment securities. Interest income on loans increased in sequential-quarter comparison due to an increase in the average yield on loans of 29 basis points, from 5.48% to 5.77%. Excluding purchase accounting adjustments, the loan yield increased 28 basis points, from 5.39% to 5.67% during the same period. The average yield on investment securities increased 4 basis points, from 2.65% to 2.69%, and the average balance of investment securities decreased $25.5 million. The average yield on total earning assets increased 24 basis points for the same period, from 4.55% to 4.79%, respectively. The FTE net interest margin increased 25 basis points in sequential-quarter comparison, from 4.20% for the third quarter of 2017 to 4.45% for the fourth quarter of 2017. Excluding purchase accounting adjustments, the FTE net interest margin increased 24 basis points, from 4.12% for the third quarter of 2017 to 4.36% for the fourth quarter of 2017.

Fourth Quarter 2017 vs. Fourth Quarter 2016 Earnings Comparison

MidSouth reported a net loss available to common shareholders of $11.3 million for the three months ended December 31, 2017, compared to net earnings available to common shareholders of $1.4 million for the three months ended December 31, 2016. The fourth quarter of 2017 included a $744,000 gain on the sale of branches. Excluding this non-operating revenue, revenues from consolidated operations increased $1.5 million in quarterly comparison, from $23.3 million for the three months ended December 31, 2016 to $24.8 million for the three months ended December 31, 2017. Net interest income increased $1.2 million in quarterly comparison, resulting from a $1.3 million increase in interest income, which was partially offset by a $24,000 increase in interest expense. Operating noninterest income increased $213,000 in quarterly comparison.

Excluding non-operating expenses of $8.8 million for the fourth quarter of 2017, noninterest expenses decreased $454,000 in quarterly comparison and consisted primarily of a $997,000 decrease in salaries and employee benefits costs and a $374,000 decrease in occupancy expense, which were partially offset by a $929,000 increase in legal and professional fees. The provision for loan losses increased $8.0 million in quarterly comparison, from $2.6 million for the three months ended December 31, 2016 to $10.6 million for the three months ended December 31, 2017. Excluding the $3.6 million charge recorded in connection with the Tax Act during the fourth quarter of 2016, we recorded an income tax benefit of $4.1 million for the fourth quarter of 2017, compared to income tax expense of $871,000 for the fourth quarter of 2016.

Dividends on preferred stock totaled $810,000 for the three months ended December 31, 2017 and $812,000 for the three months ended December 31, 2016. Dividends on the Series B Preferred Stock were $720,000 for the fourth quarter of 2017, unchanged from $720,000 for the fourth quarter of 2016. Dividends on the Series C Preferred Stock totaled $90,000 for the three months ended December 31, 2017 and $92,000 for the three months ended December 31, 2016.

FTE net interest income increased $1.2 million in prior year quarterly comparison. Interest income on loans increased $967,000 due to an increase in the average yield on loans of 46 basis points. The average balance of loans decreased $38.7 million in prior year quarterly comparison. Purchase accounting adjustments added 10 basis points to the average yield on loans for the fourth quarter of 2017 and 12 basis points to the average yield on loans for the fourth quarter of 2016. Excluding the impact of the purchase accounting adjustments, average loan yields increased 48 basis points in prior year quarterly comparison, from 5.19% to 5.67%.

Investment securities totaled $390.2 million, or 20.7% of total assets at December 31, 2017, versus $440.1 million, or 22.6% of total assets at December 31, 2016. The investment portfolio had an effective duration of 3.2 years and a net unrealized loss of $3.5 million at December 31, 2017. FTE interest income on investments increased $31,000 in prior year quarterly comparison. The average volume of investment securities decreased $13.0 million in prior year quarterly comparison, and the average tax equivalent yield on investment securities increased 12 basis points, from 2.57% to 2.69%.

The average yield on all earning assets increased 38 basis points in prior year quarterly comparison, from 4.41% for the fourth quarter of 2016 to 4.79% for the fourth quarter of 2017. Excluding the impact of purchase accounting adjustments, the average yield on total earning assets increased 39 basis points, from 4.33% to 4.72% for the three-month periods ended December 31, 2016 and 2017, respectively.

Interest expense increased $24,000 in prior year quarterly comparison. Increases in interest expense included a $168,000 increase in interest expense on deposits and a $30,000 increase in interest expense on FHLB advances, which were partially offset by a $175,000 decrease in interest expense on repurchase agreements. Excluding purchase accounting adjustments on acquired certificates of deposit and FHLB borrowings, the average rate paid on interest-bearing liabilities was 0.52% for the three months ended December 31, 2017 and 0.47% for the three months ended December 31, 2016.

As a result of these changes in volume and yield on earning assets and interest-bearing liabilities, the FTE net interest margin increased 36 basis points, from 4.09% for the fourth quarter of 2016 to 4.45% for the fourth quarter of 2017. Excluding purchase accounting adjustments on loans, deposits and FHLB borrowings, the FTE margin increased 38 basis points, from 3.98% for the fourth quarter of 2016 to 4.36% for the fourth quarter of 2017.

2017 vs 2016 Earnings Comparison

MidSouth reported a net loss available to common shareholders of $16.4 million for the year ended December 31, 2017, compared to net earnings available to common shareholders of $6.6 million for the year ended December 31, 2016. 2017 net earnings included $347,000 of gain on sales of securities and $744,000 of gain on sale of branches. 2016 net earnings included $20,000 of gain on sales of securities. Excluding these non-operating revenues, revenues from consolidated operations increased $3.0 million in year-over-year comparison, from $92.4 million for the year ended December 31, 2016 to $95.3 million for the year ended December 31, 2017. Net interest income increased $2.3 million in year-over-year comparison, resulting from a $2.6 million increase in interest income, which was partially offset by a $336,000 increase in interest expense. Operating noninterest income increased $604,000 in year-over-year comparison and consisted primarily of a $333,000 increase in ATM/debit card income and a $178,000 increase in check cashing income.

Excluding non-operating expenses of $12.9 million for the year ended December 31, 2017, noninterest expenses decreased $910,000 in year-over-year comparison and consisted primarily of decreases of $555,000 in salaries and employee benefits costs, $779,000 in occupancy expense, $326,000 in marketing costs, $556,000 in corporate development, $518,000 in ATM/debit card expense and $251,000 in printing and supplies, which were partially offset by increases of $1.5 million in legal and professional fees and $677,000 in data processing costs. A reclass of certain hosted services subscriptions from corporate development into data processing at the beginning of 2017 caused the fluctuations in those two expense categories. The provision for loan losses increased $19.6 million in year-over-year comparison, from $10.6 million for the year ended December 31, 2016 to $30.2 million for the year ended December 31, 2017, primarily due to the high level of charge-offs and additional impairment charges on nonperforming loans in 2017. Excluding the $3.6 million charge recorded in connection with the Tax Act during the fourth quarter of 2016, a $6.2 million income tax benefit was reported for the year ended December 31, 2017, compared to income tax expense of $3.9 million for the year ended December 31, 2016.

In year-to-date comparison, FTE net interest income increased $2.1 million primarily due to a $1.1 million increase in interest income on loans and an $860,000 increase in FTE interest income from investment securities. The average volume of investment securities increased $13.0 million in year-over-year comparison, and the average yield on investment securities increased 12 basis points for the same period. The average volume of loans decreased $8.2 million in year-over-year comparison, and the average yield on loans increased 12 basis points, from 5.35% to 5.47%. The average yield on earning assets increased 13 basis points in year-over-year comparison, from 4.46% at December 31, 2016 to 4.59% at December 31, 2017. The purchase accounting adjustments added 9 basis points to the average yield on loans for the year ended December 31, 2017 and 13 basis points for the year ended December 31, 2016. Net of purchase accounting adjustments, the average yield on earning assets increased 16 basis points, from 4.37% at December 31, 2016 to 4.53% at December 31, 2017.

Interest expense increased $336,000 in year-over-year comparison. Increases in interest expense included a $445,000 increase in interest expense on deposits and a $126,000 increase in interest expense on junior subordinated debentures. These increases were partially offset by an $258,000 decrease in interest expense on repurchase agreements. The average rate paid on interest-bearing liabilities was 0.48% for the year ended December 31, 2017, compared to 0.43% for the year ended December 31, 2016. Net of purchase accounting adjustments, the average rate paid on interest-bearing liabilities increased 5 basis points, from 0.46% for the year ended December 31, 2016 to 0.51% for the year ended December 31, 2017. The FTE net interest margin increased 11 basis points, from 4.14% for the year ended December 31, 2016 to 4.25% for the year ended December 31, 2017. Net of purchase accounting adjustments, the FTE net interest margin increased 14 basis points, from 4.03% to 4.17% for the years ended December 31, 2016 and 2017, respectively.

"In closing, 2017 represented a challenging but strategically important year for MidSouth," McLemore stated. "The Bank's capital position is strong; we have increased our overall liquidity position and continue to benefit from a strong deposit franchise with 88% of our deposits as core; asset quality and risk management continues to improve; our management team has been further enhanced; and we have strengthened MidSouth's leadership at the board level as well as instituting various initiatives that have resulted in more effective corporate governance. Our future growth prospects are solid with our dominant presence in Lafayette, complimented by a presence in markets such as Baton Rouge, Lake Charles, Dallas and Houston/Beaumont and with the eventual recovery of the other South Louisiana markets. We are looking forward to further improvements in 2018 and beyond. Our goal is to attain peer average levels of profitability at a lower level of risk for 2020."

About MidSouth Bancorp, Inc.

MidSouth Bancorp, Inc. is a bank holding company headquartered in Lafayette, Louisiana, with assets of $1.9 billion as of December 31, 2017. MidSouth Bancorp, Inc. trades on the NYSE under the symbol “MSL.” Through its wholly owned subsidiary, MidSouth Bank, N.A., MidSouth offers a full range of banking services to commercial and retail customers in Louisiana and Texas. MidSouth Bank currently has 48 locations in Louisiana and Texas and is connected to a worldwide ATM network that provides customers with access to more than 55,000 surcharge-free ATMs. Additional corporate information is available at MidSouthBank.com.

Forward-Looking Statements

Certain statements contained herein are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 and subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, which involve risks and uncertainties. These statements include, among others, statements regarding the strength of the Company's balance sheet and its positioning to address problem assets and achieve operating efficiencies and the implementation of the provisions of the formal agreement with the OCC.

Actual results may differ materially from the results anticipated in these forward-looking statements. Factors that might cause such a difference include, among other matters, changes in interest rates and market prices that could affect the net interest margin, asset valuation, and expense levels; changes in local economic and business conditions in the markets we serve, including, without limitation, changes related to the oil and gas industries that could adversely affect customers and their ability to repay borrowings under agreed upon terms, adversely affect the value of the underlying collateral related to their borrowings, and reduce demand for loans; increases in competitive pressure in the banking and financial services industries; increased competition for deposits and loans which could affect compositions, rates and terms; changes in the levels of prepayments received on loans and investment securities that adversely affect the yield and value of the earning assets; our ability to successfully implement and manage our recently announced strategic initiatives; costs and expenses associated with our strategic initiatives and possible changes in the size and components of the expected costs and charges associated with our strategic initiatives; our ability to realize the anticipated benefits and cost savings from our strategic initiatives within the anticipated time frame, if at all; the ability of our strategic initiatives to adequately address the anticipated concerns of the Office of the Comptroller of the Currency (the “OCC”) in its current examination of us and the ability of the Company to comply with the terms of the formal agreement with the OCC; credit losses due to loan concentration, particularly our energy lending and legacy commercial real estate portfolios; a deviation in actual experience from the underlying assumptions used to determine and establish our allowance for loan losses (“ALLL”), which could result in greater than expected loan losses; the adequacy of the level of our ALLL and the amount of loan loss provisions required in future periods including the impact of implementation of the new CECL (current expected credit loss) methodology; future examinations by our regulatory authorities, including the possibility that the regulatory authorities may, among other things, impose conditions on our operations or require us to increase our allowance for loan losses or write-down assets; changes in the availability of funds resulting from reduced liquidity or increased costs; the timing and impact of future acquisitions or divestitures, the success or failure of integrating acquired operations, and the ability to capitalize on growth opportunities upon entering new markets; the ability to acquire, operate, and maintain effective and efficient operating systems; increased asset levels and changes in the composition of assets that would impact capital levels and regulatory capital ratios; loss of critical personnel and the challenge of hiring qualified personnel at reasonable compensation levels; legislative and regulatory changes, including the impact of regulations under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 and other changes in banking, securities and tax laws and regulations and their application by our regulators, changes in the scope and cost of FDIC insurance and other coverage; regulations and restrictions resulting from our participation in government-sponsored programs such as the U.S. Treasury’s Small Business Lending Fund, including potential retroactive changes in such programs; changes in accounting principles, policies, and guidelines applicable to financial holding companies and banking; increases in cybersecurity risk, including potential business disruptions or financial losses; acts of war, terrorism, cyber intrusion, weather, or other catastrophic events beyond our control; and other factors discussed under the heading “Risk Factors” in MidSouth’s Annual Report on Form 10-K for the year ended December 31, 2016 filed with the SEC on March 16, 2017 and in its other filings with the SEC.

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

                      MIDSOUTH BANCORP, INC. and SUBSIDIARIES Condensed Consolidated Financial Information (unaudited) (in thousands except per share data)           Quarter Quarter Quarter Quarter Quarter Ended Ended Ended Ended Ended EARNINGS DATA 12/31/2017 9/30/2017 6/30/2017 3/31/2017 12/31/2016 Total interest income $ 20,955 $ 20,379 $ 19,758 $ 19,531 $ 19,694 Total interest expense   1,483     1,566     1,512     1,465     1,459   Net interest income   19,472     18,813     18,246     18,066     18,235   FTE net interest income   19,658     19,003     18,442     18,279     18,478   Provision for loan losses   10,600     4,300     12,500     2,800     2,600   Non-interest income 6,028 5,486 5,223 5,044 5,071 Non-interest expense   25,944     17,759     19,604     17,230     17,636   (Loss) earnings before income taxes (11,044 ) 2,240 (8,635 ) 3,080 3,070 Income tax (benefit) expense   (540 )   574     (3,221 )   589     871   Net (loss) earnings (10,504 ) 1,666 (5,414 ) 2,491 2,199 Dividends on preferred stock   810     810     811     811     812   Net (loss) earnings available to common shareholders $ (11,314 ) $ 856   $ (6,225 ) $ 1,680   $ 1,387     PER COMMON SHARE DATA Basic (loss) earnings per share $ (0.69 ) $ 0.05 $ (0.51 ) $ 0.15 $ 0.12 Diluted (loss) earnings per share (0.69 ) 0.05 -0.51 0.15 0.12 Diluted (loss) earnings per share, operating (Non-GAAP)(*) (0.15 ) 0.10 -0.38 0.15 0.12 Quarterly dividends per share 0.01 0.01 0.09 0.09 0.09 Book value at end of period 12.87 13.70 13.76 15.37 15.25 Tangible book value at period end (Non-GAAP)(*) 10.11 10.92 10.87 11.28 11.13 Market price at end of period 13.25 12.05 11.75 15.30 13.60 Shares outstanding at period end 16,548,829 16,548,829 16,026,355 11,383,914 11,362,716 Weighted average shares outstanding Basic 16,460,124 16,395,317 12,227,456 11,264,394 11,271,948 Diluted 16,462,550 16,395,740 12,237,299 11,282,491 11,273,302   AVERAGE BALANCE SHEET DATA Total assets $ 1,907,735 $ 1,954,343 $ 1,926,408 $ 1,932,818 $ 1,960,436 Loans and leases 1,238,846 1,254,885 1,254,402 1,274,213 1,277,555 Total deposits 1,513,156 1,546,837 1,551,498 1,569,188 1,591,814 Total common equity 228,385 227,948 187,762 174,785 176,747 Total tangible common equity (Non-GAAP)(*) 182,567 181,851 141,389 128,124 129,821 Total equity 269,373 269,035 228,871 215,895 217,857   SELECTED RATIOS Annualized return on average assets, operating (Non-GAAP)(*) -0.52 % 0.36 % -0.97 % 0.35 % 0.28 % Annualized return on average common equity, operating (Non-GAAP)(*) -4.36 % 3.10 % -10.00 % 3.89 % 3.12 % Annualized return on average tangible common equity, operating (Non-GAAP)(*) -5.45 % 3.88 % -13.28 % 5.31 % 4.25 % Pre-tax, pre-provision annualized return on average assets, operating (Non-GAAP)(*) 1.58 % 1.62 % 1.30 % 1.23 % 1.15 % Efficiency ratio, operating (Non-GAAP)(*) 68.05 % 66.85 % 73.11 % 74.51 % 75.67 % Average loans to average deposits 81.87 % 81.13 % 80.85 % 81.20 % 80.26 % Taxable-equivalent net interest margin 4.45 % 4.20 % 4.18 % 4.18 % 4.09 % Tier 1 leverage capital ratio 12.53 % 12.84 % 12.66 % 10.27 % 10.11 %   CREDIT QUALITY Allowance for loan and lease losses (ALLL) as a % of total loans 2.27 % 2.03 % 1.99 % 1.93 % 1.90 % Nonperforming assets to tangible equity + ALLL 24.35 % 21.83 % 23.50 % 30.34 % 33.88 %

Nonperforming assets to total loans, other real estate owned and other repossessed assets

4.83 % 4.35 % 4.54 % 4.62 % 5.06 % Annualized QTD net charge-offs to total loans 2.94 % 1.26 % 4.01 % 0.83 % 0.46 %   (*) See reconciliation of Non-GAAP financial measures on pages 8-10.                         MIDSOUTH BANCORP, INC. and SUBSIDIARIES Condensed Consolidated Balance Sheets (unaudited) (in thousands)             BALANCE SHEET December 31, September 30, June 30, March 31, December 31, 2017 2017 2017 2017 2016 Assets Cash and cash equivalents $ 152,964   $ 163,123   $ 131,437   $ 78,471   $ 82,228   Securities available-for-sale 309,191 326,222 348,580 357,803 341,873 Securities held-to-maturity   81,052     83,739     87,462     91,242     98,211   Total investment securities   390,243     409,961     436,042     449,045     440,084   Other investments 12,214 12,200 11,666 11,362 11,355 Loans held for sale 15,737 - - - - Total loans 1,183,426 1,235,969 1,240,253 1,272,000 1,284,082 Allowance for loan losses   (26,888 )   (25,053 )   (24,674 )   (24,578 )   (24,372 ) Loans, net   1,156,538     1,210,916     1,215,579     1,247,422     1,259,710   Premises and equipment 59,057 64,969 65,739 68,216 68,954 Goodwill and other intangibles 45,686 45,963 46,239 46,516 46,792 Other assets   48,713     39,934     38,867     33,907     34,217   Total assets $ 1,881,152   $ 1,947,066   $ 1,945,569   $ 1,934,939   $ 1,943,340       Liabilities and Shareholders' Equity Non-interest bearing deposits $ 416,547 $ 428,183 $ 428,419 $ 426,998 $ 414,921 Interest-bearing deposits   1,063,142     1,127,752     1,107,801     1,145,946     1,164,509   Total deposits 1,479,689 1,555,935 1,536,220 1,572,944 1,579,430

Securities sold under agreements to repurchase

67,133 54,875 90,799 89,807 94,461 Short-term FHLB advances 40,000 12,500 - - - Long-term FHLB advances 10,021 25,110 25,211 25,318 25,424 Junior subordinated debentures 22,167 22,167 22,167 22,167 22,167 Other liabilities   8,127     8,836     9,602     8,641     7,482   Total liabilities   1,627,137     1,679,423     1,683,999     1,718,877     1,728,964   Total shareholders' equity   254,015     267,643     261,570     216,062     214,376   Total liabilities and shareholders' equity $ 1,881,152   $ 1,947,066   $ 1,945,569   $ 1,934,939   $ 1,943,340                                         MIDSOUTH BANCORP, INC. and SUBSIDIARIES Condensed Consolidated Income Statements (unaudited) (in thousands except per share data)                 Percent Change EARNINGS STATEMENT Three Months Ended

4Q17 vs.

4Q17 vs.

Twelve Months Ended Percent 12/31/2017 9/30/2017 12/31/2016

3Q17

4Q16

12/31/2017 12/31/2016 Change   Interest income: Loans, including fees $ 17,731 $ 17,064 $ 16,697 3.9 % 6.2 % $ 67,672 $ 66,121 2.3 % Investment securities 2,515 2,639 2,427 -4.7 % 3.6 % 10,678 9,680 10.3 % Accretion of purchase accounting adjustments 295 265 362 11.3 % -18.5 % 1,036 1,463 -29.2 % Other interest income   414     411     208   0.7 % 99.0 %   1,237     766   61.5 % Total interest income   20,955     20,379     19,694   2.8 % 6.4 %   80,623     78,030   3.3 %   Interest expense: Deposits 1,097 1,094 936 0.3 % 17.2 % 4,099 3,689 11.1 % Borrowings 277 350 422 -20.9 % -34.4 % 1,454 1,691 -14.0 % Junior subordinated debentures 198 212 197 -6.6 % 0.5 % 830 704 17.9 % Accretion of purchase accounting adjustments   (89 )   (90 )   (96 ) -1.1 % -7.3 %   (357 )   (394 ) -9.4 % Total interest expense   1,483     1,566     1,459   -5.3 % 1.6 %   6,026     5,690   5.9 %   Net interest income 19,472 18,813 18,235 3.5 % 6.8 % 74,597 72,340 3.1 % Provision for loan losses   10,600     4,300     2,600   146.5 % 307.7 %   30,200     10,600   184.9 % Net interest income after provision for loan losses   8,872     14,513     15,635   -38.9 % -43.3 %   44,397     61,740   -28.1 %   Noninterest income: Service charges on deposit accounts 2,385 2,463 2,479 -3.2 % -3.8 % 9,724 9,883 -1.6 % ATM and debit card income 1,756 1,687 1,682 4.1 % 4.4 % 6,912 6,579 5.1 % Mortgage lending 162 155 164 4.5 % -1.2 % 627 586 7.0 % Gain on securities, net (non-operating)(*) - 338 - -100.0 % - 347 20 1635.0 % Gain on sale of branches (non-operating)(*) 744 - - - - 744 - - Other charges and fees   981     843     746   16.4 % 31.5 %   3,427     3,038   12.8 % Total non-interest income   6,028     5,486     5,071   9.9 % 18.9 %   21,781     20,106   8.3 %   Noninterest expense: Salaries and employee benefits 7,729 7,849 8,726 -1.5 % -11.4 % 32,377 32,932 -1.7 % Occupancy expense 3,357 3,443 3,731 -2.5 % -10.0 % 13,851 14,630 -5.3 % ATM and debit card 633 654 829 -3.2 % -23.6 % 2,721 3,239 -16.0 % Legal and professional fees 1,449 548 520 164.4 % 178.7 % 3,319 1,855 78.9 % FDIC premiums 297 448 387 -33.7 % -23.3 % 1,572 1,601 -1.8 % Marketing 353 302 349 16.9 % 1.1 % 1,197 1,523 -21.4 % Corporate development 258 189 423 36.5 % -39.0 % 1,016 1,572 -35.4 % Data processing 712 640 500 11.3 % 42.4 % 2,640 1,963 34.5 % Printing and supplies 110 81 158 35.8 % -30.4 % 509 760 -33.0 % Expenses on ORE, net 331 15 59 2106.7 % 461.0 % 517 389 32.9 % Amortization of core deposit intangibles 276 277 277 -0.4 % -0.4 % 1,106 1,107 -0.1 % Severance and retention accruals (non-operating)(*) 171 - - - - 1,512 - - One-time charge related to discontinued branch projects (non-operating)(*) - - - - - 465 - - One-time charge related to closure of branches (non-operating)(*) - 903 - -100.0 % - 903 - - Write-down of assets held for sale (non-operating)(*) 789 - - - - 1,359 - - Loss on transfer of loans to held for sale (non-operating)(*) 6,030 - - - - 6,030 - - Regulatory remediation costs (non-operating)(*) 1,772 856 -

107.0

%

-

2,628 - - Other non-interest expense   1,677     1,554     1,677   7.9 % 0.0 %   6,815     6,979   -2.3 % Total non-interest expense   25,944     17,759     17,636   46.1 % 47.1 %   80,537     68,550   17.5 % (Loss) earnings before income taxes (11,044 ) 2,240 3,070 -593.0 % -459.7 % (14,359 ) 13,296 -208.0 % Income tax (benefit) expense   (540 )   574     871   -194.1 % -162.0 %   (2,598 )   3,857   -167.4 % Net (loss) earnings (10,504 ) 1,666 2,199 -730.5 % -577.7 % (11,761 ) 9,439 -224.6 % Dividends on preferred stock   810     810     812   0.0 % -0.2 %   3,242     2,861   13.3 % Net (loss) earnings available to common shareholders $ (11,314 ) $ 856   $ 1,387   -1421.7 % -915.7 % $ (15,003 ) $ 6,578   -328.1 %   (Loss) earnings per common share, diluted $ (0.69 ) $ 0.05   $ 0.12   -1480.0 % -675.0 % $ (1.06 ) $ 0.58   -282.8 %   Operating (loss) earnings per common share, diluted (Non-GAAP)(*) $ (0.15 ) $ 0.10   $ 0.12   -250.0 % -225.0 % $ (0.27 ) $ 0.58   -146.6 %   (*) See reconciliation of Non-GAAP financial measures on page 8-10.   Note: Prior period information presented above has been adjusted to reflect a reclass of certain credit card income from interest income to other non-interest income as well as certain wire fee income from other non-interest income into service charges on deposit accounts.                                 MIDSOUTH BANCORP, INC. and SUBSIDIARIES Composition of Loans and Deposits and Asset Quality Data (unaudited) (in thousands)               COMPOSITION OF LOANS

December 31,

September 30,

Dec 17 vs Sept 17

June 30,

March 31,

December 31,

Dec 17 vs Dec 16

2017 2017

% Change

2017 2017 2016

% Change

Commercial, financial, and agricultural $ 435,207 $ 447,482 -2.7 % $ 451,767 $ 469,815 $ 459,574 -5.3 % Lease financing receivable 732 760 -3.7 % 866 969 1,095 -33.2 % Real estate - construction 90,287 90,088 0.2 % 98,695 100,248 100,959 -10.6 % Real estate - commercial 448,406 473,046 -5.2 % 461,064 464,859 481,155 -6.8 % Real estate - residential 146,751 155,676 -5.7 % 156,394 159,426 157,872 -7.0 % Installment loans to individuals 56,398 63,148 -10.7 % 70,031 75,258 82,660 -31.8 % Other   5,645     5,769   -2.1 %   1,436     1,425     767   636.0 %   Total loans $ 1,183,426   $ 1,235,969   -4.3 % $ 1,240,253   $ 1,272,000   $ 1,284,082   -7.8 %   COMPOSITION OF DEPOSITS December 31, September 30,

Dec 17 vs Sept 17

June 30, March 31, December 31,

Dec 17 vs Dec 16

2017 2017

% Change

2017 2017 2016

% Change

Noninterest bearing $ 416,547 $ 428,183 -2.7 % $ 428,419 $ 426,998 $ 414,921 0.4 % NOW & other 434,646 461,740 -5.9 % 465,505 489,789 472,484 -8.0 % Money market/savings 446,215 473,023 -5.7 % 493,232 505,669 539,815 -17.3 % Time deposits of less than $100,000 116,309 120,685 -3.6 % 75,196 75,579 75,940 53.2 % Time deposits of $100,000 or more   65,972     72,304   -8.8 %   73,868     74,909     76,270   -13.5 %   Total deposits $ 1,479,689   $ 1,555,935   -4.9 % $ 1,536,220   $ 1,572,944   $ 1,579,430   -6.3 %   ASSET QUALITY DATA December 31, September 30, June 30, March 31, December 31, 2017 2017 2017 2017 2016 Nonaccrual loans $ 49,278 $ 51,289 $ 54,810 $ 56,443 $ 62,580 Loans past due 90 days and over   728     402     165     775     268   Total nonperforming loans 50,006 51,691 54,975 57,218 62,848 Nonperforming loans held for sale 5,067 - - - - Other real estate 2,001 1,931 1,387 1,643 2,175 Other repossessed assets   192     234     36     30     16   Total nonperforming assets $ 57,266   $ 53,856   $ 56,398   $ 58,891   $ 65,039     Troubled debt restructurings, accruing $ 1,360   $ 1,557   $ 1,653   $ 1,995   $ 152       Nonperforming assets to total assets 3.04 % 2.77 % 2.90 % 3.04 % 3.35 %

Nonperforming assets to total loans + ORE + other repossessed assets

4.83 % 4.35 % 4.54 % 4.62 % 5.06 % ALLL to nonperforming loans 53.77 % 48.47 % 44.88 % 42.96 % 38.78 % ALLL to total loans 2.27 % 2.03 % 1.99 % 1.93 % 1.90 %   Quarter-to-date charge-offs $ 8,931 $ 4,381 $ 12,659 $ 2,906 $ 1,835 Quarter-to-date recoveries   166     460     255     312     339   Quarter-to-date net charge-offs $ 8,765   $ 3,921   $ 12,404   $ 2,594   $ 1,496   Annualized QTD net charge-offs to total loans 2.94 % 1.26 % 4.01 % 0.83 % 0.46 %                 MIDSOUTH BANCORP, INC. and SUBSIDIARIES Loan Portfolio - Quarterly Roll Forward (unaudited) (in thousands)       Three Months Ended December 31, September 30, December 31, 2017 2017 2016 LOAN ACTIVITY   Loans originated $ 83,434 $ 87,377 $ 91,332 Repayments (134,057 ) (91,856 ) (64,528 ) Increases on renewals 15,304 5,773 5,259 Change in lines of credit 6,736 (6,931 ) (19,990 ) Change in allowance for loan losses (1,835 ) (379 ) (1,104 ) Transfer of loans to held for sale (21,767 ) - - Other   (2,193 )   1,353     (791 ) Net change in loans $ (54,378 ) $ (4,663 ) $ 10,178               MIDSOUTH BANCORP, INC. and SUBSIDIARIES Tangible Common Equity to Tangible Assets and Regulatory Ratios (unaudited) (in thousands)     COMPUTATION OF TANGIBLE COMMON EQUITY TO TANGIBLE ASSETS December 31, December 31, 2017 2016 Total equity $ 254,015 $ 214,376 Less preferred equity   40,988     41,110   Total common equity 213,027 173,266 Less goodwill 42,171 42,171 Less intangibles   3,515     4,621   Tangible common equity $ 167,341   $ 126,474     Total assets $ 1,881,152 $ 1,943,340 Less goodwill 42,171 42,171 Less intangibles   3,515     4,621   Tangible assets $ 1,835,466   $ 1,896,548     Tangible common equity to tangible assets 9.12 % 6.67 %   REGULATORY CAPITAL   Common equity tier 1 capital $ 171,161 $ 131,091 Tier 1 capital 233,648 193,700 Total capital 251,456 212,366   Regulatory capital ratios: Common equity tier 1 capital ratio 12.10 % 8.81 % Tier 1 risk-based capital ratio 16.51 % 13.02 % Total risk-based capital ratio 17.77 % 14.28 % Tier 1 leverage ratio 12.53 % 10.11 %                                                             MIDSOUTH BANCORP, INC. and SUBSIDIARIES Quarterly Yield Analysis (unaudited) (in thousands)                               YIELD ANALYSIS Three Months Ended Three Months Ended Three Months Ended Three Months Ended Three Months Ended December 31, 2017 September 30, 2017 June 30, 2017 March 31, 2017 December 31, 2016   Tax Tax Tax Tax Tax Average Equivalent Yield/ Average Equivalent Yield/ Average Equivalent Yield/ Average Equivalent Yield/ Average Equivalent Yield/ Balance   Interest   Rate Balance   Interest   Rate Balance   Interest   Rate   Balance   Interest   Rate   Balance   Interest   Rate   Taxable securities $ 348,267 $ 2,161 2.48% $ 372,648 $ 2,276 2.44% $ 387,441 $ 2,416 2.49% $ 382,105 $ 2,327 2.44% $ 348,673 $ 1,965 2.25% Tax-exempt securities 53,998 540 4.00% 55,129 553 4.01% 56,622 570 4.03% 60,618 620 4.09% 66,549 705 4.24% Total investment securities 402,265 2,701 2.69% 427,777 2,829 2.65% 444,063 2,986 2.69% 442,723 2,947 2.66% 415,222 2,670 2.57% Federal funds sold 4,441 15 1.32% 4,319 13 1.18% 3,573 9 1.00% 3,571 6 0.67% 3,261 5 0.60%

Time and interest bearing deposits in other banks

94,394 314 1.30% 94,675 305 1.26% 55,331 150 1.07% 41,785 85 0.81% 90,527 125 0.54% Other investments 12,201 85 2.79% 12,098 93 3.07% 11,493 78 2.71% 11,355 84 2.96% 11,342 78 2.75% Loans 1,238,846 18,026 5.77% 1,254,885 17,329 5.48% 1,254,402 16,731 5.35% 1,274,213 16,622 5.29% 1,277,555 17,059 5.31% Total interest earning assets 1,752,147 21,141 4.79% 1,793,754 20,569 4.55% 1,768,862 19,954 4.52% 1,773,647 19,744 4.51% 1,797,907 19,937 4.41% Non-interest earning assets 155,588 160,589 157,546 159,171 162,529 Total assets $ 1,907,735 $ 1,954,343 $ 1,926,408 $ 1,932,818 $ 1,960,436   Interest-bearing liabilities: Deposits $ 1,085,349 $ 1,097 0.40% $ 1,118,593 $ 1,094 0.39% $ 1,125,482 $ 973 0.35% $ 1,155,407 $ 935 0.33% $ 1,179,174 $ 929 0.31% Repurchase agreements 54,799 66 0.48% 75,654 149 0.78% 90,807 236 1.04% 92,571 234 1.03% 94,609 241 1.01% Short-term FHLB advances 18,478 58 1.23% 6,522 19 1.14% - - 0.00% - - 0.00% - - 0.00% Long-term FHLB advances 21,803 64 1.15% 25,155 92 1.43% 25,260 91 1.43% 25,370 88 1.39% 25,474 92 1.41% Junior subordinated debentures 22,167 198 3.50% 22,167 212 3.74% 22,167 212 3.78% 22,167 208 3.75% 22,167 197 3.48% Total interest bearing liabilities 1,202,596 1,483 0.49% 1,248,091 1,566 0.50% 1,263,716 1,512 0.48% 1,295,515 1,465 0.46% 1,321,424 1,459 0.44% Non-interest bearing liabilities 435,766 437,217 433,821 421,408 421,155 Shareholders' equity 269,373 269,035 228,871 215,895 217,857

Total liabilities and shareholders' equity

$ 1,907,735 $ 1,954,343 $ 1,926,408 $ 1,932,818 $ 1,960,436   Net interest income (TE) and spread $ 19,658 4.30% $ 19,003 4.05% $ 18,442 4.04% $ 18,279 4.05% $ 18,478 3.97%   Net interest margin 4.45% 4.20% 4.18% 4.18% 4.09%   Core net interest margin (Non-GAAP)(*) 4.36% 4.12% 4.09% 4.11% 3.98%     (*) See reconciliation of Non-GAAP financial measures on page 8-10.   Note: Prior period information presented above has been adjusted to reflect a reclass of certain credit card income from interest income to non-interest income.                             MIDSOUTH BANCORP, INC. and SUBSIDIARIES Reconciliation of Non-GAAP Financial Measures (unaudited) (in thousands except per share data)             Certain financial information included in the earnings release and the associated Condensed Consolidated Financial Information (unaudited) is determined by methods other than in accordance with GAAP. We are providing disclosure of the reconciliation of these non-GAAP financial measures to the most comparable GAAP financial measures. "Tangible common equity" is defined as total common equity reduced by intangible assets. "Core net interest margin" is defined as reported net interest margin less purchase accounting adjustments. "Annualized return on average assets, operating" is defined as net earnings available to common shareholders adjusted for specified one-time items divided by average assets. "Annualized return on average common equity, operating" is defined as net earnings available to common shareholders adjusted for specified one-time items divided by average common equity. "Annualized return on average tangible common equity, operating" is defined as net earnings available to common shareholders adjusted for specified one-time items divided by average tangible common equity. "Pre-tax, pre-provision annualized return on average assets, operating" is defined as pre-tax, pre-provision earnings adjusted for specified one-time items divided by average assets. "Tangible book value per common share" is defined as tangible common equity divided by total common shares outstanding. "Diluted earnings per share, operating" is defined as net earnings available to common shareholders adjusted for specified one-time items divided by diluted weighted-average shares. The GAAP-based efficiency ratio is measured as noninterest expense as a percentage of net interest income plus noninterest income. The non-GAAP efficiency ratio excludes specified one-time items in addition to securities gains and losses and gains and losses on the sale/valuation of other real estate owned and other assets repossessed.   We use non-GAAP measures because we believe they are useful for evaluating our financial condition and performance over periods of time, as well as in managing and evaluating our business and in discussions about our performance. We also believe these non-GAAP financial measures provide users of our financial information with a meaningful measure for assessing our financial condition as well as comparison to financial results for prior periods. These results should not be viewed as a substitute for results determined in accordance with GAAP, and are not necessarily comparable to non-GAAP performance measures that other companies may use.     Three Months Ended December 31, September 30, June 30, March 31, December 31, 2017 2017 2017 2017 2016 AVERAGE BALANCE SHEET DATA   Total average assets A $ 1,907,735 $ 1,954,343 $ 1,926,408 $ 1,932,818 $ 1,960,436   Total equity $ 269,373 $ 269,035 $ 228,871 $ 215,895 $ 217,857 Less preferred equity   40,988   41,087   41,109   41,110   41,110 Total common equity B $ 228,385 $ 227,948 $ 187,762 $ 174,785 $ 176,747 Less intangible assets   45,818   46,097   46,373   46,661   46,926 Tangible common equity C $ 182,567 $ 181,851 $ 141,389 $ 128,124 $ 129,821                             MIDSOUTH BANCORP, INC. and SUBSIDIARIES Reconciliation of Non-GAAP Financial Measures (unaudited) (continued) (in thousands except per share data)             Three Months Ended December 31, September 30, June 30, March 31, December 31, CORE NET INTEREST MARGIN 2017 2017 2017 2017 2016   Net interest income (FTE) $ 19,658 $ 19,003 $ 18,442 $ 18,279 $ 18,478 Less purchase accounting adjustments   (384 )   (355 )   (380 )   (274 )   (458 ) Core net interest income, net of purchase accounting adjustments D $ 19,274   $ 18,648   $ 18,062   $ 18,005   $ 18,020     Total average earnings assets $ 1,752,147 $ 1,793,754 $ 1,768,862 $ 1,773,647 $ 1,797,907 Add average balance of loan valuation discount   1,242     1,504     1,720     1,964     2,316   Average earnings assets, excluding loan valuation discount E $ 1,753,389   $ 1,795,258   $ 1,770,582   $ 1,775,611   $ 1,800,223     Core net interest margin D/E   4.36 %   4.12 %   4.09 %   4.11 %   3.98 %   Three Months Ended December 31, September 30, June 30, March 31, December 31, RETURN RATIOS 2017 2017 2017 2017 2016   Net (loss) earnings available to common shareholders $ (11,314 ) $ 856 $ (6,225 ) $ 1,680 $ 1,387 Net gain on sales of securities, after-tax - (220 ) (2 ) (4 ) - Gain on sale of branches, after-tax (484 ) - - - - Severance and retention accruals, after-tax 111 - 872 - - One-time charge related to discontinued branch projects, after-tax - - 302 - - One-time charge related to closure of branches, after-tax 587 - - - Write-down of assets held for sale, after-tax 512 - 371 - - Loss on transfer of loans to held for sale, after-tax 3,920 - - - - Regulatory remediation costs 1,152 556 Write-down of net deferred tax asset resulting from the Tax Cuts and Jobs Act   3,595     -     -     -     -   Net (loss) earnings available to common shareholders, operating F $ (2,508 ) $ 1,779   $ (4,682 ) $ 1,676   $ 1,387     (Loss) earnings before income taxes $ (11,044 ) $ 2,240 $ (8,635 ) $ 3,080 $ 3,070 Net gain on sales of securities - (338 ) (3 ) (6 ) - Gain on sale of branches (744 ) - - - - Severance and retention accruals 171 - 1,341 - - One-time charge related to discontinued branch projects - - 465 - - One-time charge related to closure of branches - 903 - - - Write-down of assets held for sale 789 - 570 - - Loss on transfer of loans to held for sale 6,030 - - - - Regulatory remediation costs 1,772 856 Provision for loan losses   10,600     4,300     12,500     2,800     2,600   Pre-tax, pre-provision earnings, operating G $ 7,574   $ 7,961   $ 6,238   $ 5,874   $ 5,670     Annualized return on average assets, operating F/A -0.52 % 0.36 % -0.97 % 0.35 % 0.28 % Annualized return on average common equity, operating F/B -4.36 % 3.10 % -10.00 % 3.89 % 3.12 % Annualized return on average tangible common equity, operating F/C -5.45 % 3.88 % -13.28 % 5.31 % 4.25 % Pre-tax, pre-provision annualized return on average assets, operating G/A 1.58 % 1.62 % 1.30 % 1.23 % 1.15 %                                     MIDSOUTH BANCORP, INC. and SUBSIDIARIES Reconciliation of Non-GAAP Financial Measures (unaudited) (continued) (in thousands except per share data)                 Three Months Ended Twelve Months Ended December 31, September 30, June 30, March 31, December 31, December 31, December 31, PER COMMON SHARE DATA 2017 2017 2017 2017 2016 2017 2016   Diluted (loss) earnings per share $ (0.69 ) $ 0.05 $ (0.51 ) $ 0.15 $ 0.12 $ (1.06 ) $ 0.58 Effect of gain on sales of securities - (0.01 ) - - - (0.01 ) - Effect of gain on sale of branches (0.03 ) - - - - (0.04 ) - Effect of severance and retention accruals 0.01 - 0.08 - - 0.07 - Effect of one-time charge related to discontinued branch projects - - 0.02 - - 0.02 - Effect of one-time charge related to closure of branches - 0.03 - - - 0.04 - Effect of write-down of assets held for sale 0.03 - 0.03 - - 0.06 - Effect of loss on transfer of loans to held for sale 0.24 - - - - 0.28 - Effect of regulatory remediation costs 0.07 0.03 - - - 0.12 - Effect of write-down of net deferred tax asset resulting from the Tax Cuts and Jobs Act   0.22     -     -     -     -     0.25     - Diluted (loss) earnings per share, operating $ (0.15 ) $ 0.10   $ (0.38 ) $ 0.15   $ 0.12   $ (0.27 ) $ 0.58   Book value per common share $ 12.87 $ 13.70 $ 13.76 $ 15.37 $ 15.25 Effect of intangible assets per share   2.76     2.78     2.89     4.09     4.12   Tangible book value per common share $ 10.11   $ 10.92   $ 10.87   $ 11.28   $ 11.13     Three Months Ended December 31, September 30, June 30, March 31, December 31, EFFICIENCY RATIO 2017 2017 2017 2017 2016   Net interest income $ 19,472 $ 18,813 $ 18,246 $ 18,066 $ 18,235   Noninterest income 6,028 5,486 5,223 5,044 5,071 Net gain on sale of securities - (338 ) (3 ) (6 ) - Gain on sale of branches   (744 )   -     -     -     -   Noninterest income (non-GAAP) $ 5,284   $ 5,148   $ 5,220   $ 5,038   $ 5,071     Total revenue H $ 25,500 $ 24,299 $ 23,469 $ 23,110 $ 23,306 Total revenue (non-GAAP) I $ 24,756 $ 23,961 $ 23,466 $ 23,104 $ 23,306   Noninterest expense J $ 25,944 $ 17,759 $ 19,604 $ 17,230 $ 17,636 Severance and retention accruals (171 ) - (1,341 ) - - One-time charge related to discontinued branch projects - - (465 ) - - One-time charge related to closure of branches - (903 ) - - - Write-down of assets held for sale (789 ) - (570 ) - - Loss on transfer of loans to held for sale (6,030 ) - - - - Regulatory remediation costs (1,772 ) (856 ) - - - Net (loss) gain on sale/valuation of other real estate owned   (335 )   19     (72 )   (15 )   -   Noninterest expense (non-GAAP) K $ 16,847   $ 16,019   $ 17,156   $ 17,215   $ 17,636     Efficiency ratio (GAAP) J/H 101.74 % 73.09 % 83.53 % 74.56 % 75.67 %   Efficiency ratio (non-GAAP) K/I 68.05 % 66.85 % 73.11 % 74.51 % 75.67 %  

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MidSouth Bancorp, Inc.Jim McLemore, CFA, 337-237-8343President & CEOorLorraine Miller, CFA, 337-593-3143EVP & CFO