Fears that the ongoing energy-industry downturn could result in failed loans dropped Lafayette-based MidSouth Bancorp Inc.’s first-quarter earnings to $1.3 million, or 12 cents per share.
A year earlier, the company reported a profit of $3.5 million, or 57 cents per share. MidSouth’s revenue slipped to $24.2 million from $26.8 million a year ago.
The 2015 results were affected by MidSouth setting aside $6 million to cover potential losses in the company’s energy-related loan portfolio. For the same period in 2014, MidSouth had a loan-loss provision of $550,000.
Concern about the continuing downturn in energy-related businesses prompted the increase, although there have been no confirmed losses to date in energy-related loans, according to MidSouth. Roughly $4 million of the total resulted from credit downgrades on “five relationships,” although MidSouth did not list the companies affected.
MidSouth President and Chief Executive Officer C.R. Cloutier said it’s better to be proactive with downgrading credits and increasing loan-loss reserves.
MidSouth based the decisions on 30 years of experience lending to oilfield service companies and the uncertainty about how long the energy industry’s downturn will last, Cloutier said.
MidSouth fell short of Wall Street’s expectations on revenue and profit.
Stock analysts surveyed by Thomson Reuters had forecast a profit of 34 cents per share on revenue of $24.8 million.