Lafayette-based MidSouth Bancorp Inc. posted an $11.3 million fourth-quarter loss on Tuesday after taking $9.3 million in write-downs and after-tax charges.
The parent company of MidSouth Bank ended 2017 with a $16.4 million loss for the year, compared with $6.6 million in net earnings during 2016.
For the fourth quarter, MidSouth would have recorded a loss of 15 cents per diluted share if not for the write-downs and charges. That compares to net earnings of $1.4 million, or 12 cents a share, for the fourth quarter of 2016.
MidSouth's stock dipped 20 cents to $14.65, or 1.4 percent, in trading Tuesday.
The write-downs and after tax charges include $3.9 million from the transfer of loans held for sale; $3.6 million for net deferred tax assets as a result of the recent federal Tax Cuts and Jobs Act; $1.2 million for regulatory remediation costs; $512,000 for assets held for sale; and $111,000 for severance and retention accruals. The bank had an after tax gain of $484,000 for the sale of branches.
Jim McLemore, president and chief executive officer of MidSouth Bank, said the write-downs were part of a decisive action to accelerate the bank’s turnaround and build a foundation for long-term growth.
“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,” he said in a statement.
McLemore took over as head of the bank in May, after being tapped as interim CEO in late April when MidSouth Bancorp fired its high profile founder, C.R. "Rusty" Cloutier. Cloutier's son, Troy, was fired as president and CEO of MidSouth Bank. McLemore had been with the bank for eight years, serving as chief financial officer.
Shortly after McLemore took over, federal bank regulators found MidSouth was in “troubled condition” because of sustained low oil prices. Energy loans accounted for more than 20 percent of the bank’s total loan portfolio.
Since then, MidSouth has taken aggressive steps, such as closing nine underperforming branches, slashing dividends and improving credit quality. At the end of 2017, energy loans made up 15.2 percent of the bank’s portfolio. MidSouth plans to close eight more branches during this quarter.
“2017 represented a challenging but strategically important year for MidSouth," McLemore said. "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 percent 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.”