MidSouth Bancorp Inc. (MSL)
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MidSouth, executing a well-defined
business and strategic plan based on return on equity
Mr. Cloutier received his Bachelor of Science Degree in Finance from Nicholls State University in Thibodaux, Louisiana.
He is involved in civic and non-profit organizations. He has served the Lafayette Chamber of Commerce as President, First Vice President and Vice President of Governmental Affairs, Vice President of Economic Development and has aided in the Citizens for Public Education Fund Program. Additionally, he has served as co-chairman of the Regional I-49 Task Force. Mr. Cloutier is a past-member of the Louisiana State Park and Recreation Commission and has been involved with the State of Louisiana's Import and Export Authority. He is a former board member of the Acadiana Regional Development Authority.
Mr. Cloutier is former President of the Community Bankers of Louisiana and currently serves as Chairman of the Independent Community Bankers of America (ICBA). As a member of ICBA, Mr. Cloutier has been very active, having served on numerous committees; served as Chairman of Long-Term Planning and as Chairman of the Federal Home Loan Bank Task Force. Mr. Cloutier recently began his third year as a member of the Board of the Federal Reserve Bank, New Orleans Branch.
Additionally, Mr. Cloutier is
currently serving as Vice-President of the University of Louisiana at Lafayette Foundation
Board of Trustees; he is serving a fourth year as an appointee to the Board of Our
Lady of Lourdes Regional Medical Center in Lafayette. He also serves as advisor to
the Ourso School of Business at Louisiana State University. Additionally he serves
University of Louisiana at Lafayette as Co-Chairman of the University Arts Museum, and
Chairman of the University Athletic Advisory Committee.
MidSouth is a Lafayette-based one-bank holding company having in excess of $380 million in assets. MidSouth offers complete banking services to commercial and retail customers through its wholly-owned subsidiary. MidSouth Bank, N.A. (the Bank). Opened in 1985, the Bank has 18 banking offices and one loan production office throughout the parishes of Lafayette, St. Martin, Jefferson Davis, St. Landry, Iberia, St. Mary, Calcasieu and LaFourche
CEOCFOinterviews: Mr. Cloutier, please give us an overview of MidSouth Bancorp.
Mr. Cloutier: MidSouth was formed in 1985 by Karen Hail, Senior Executive V.P., the board and myself. Texas, Louisiana and Oklahoma had difficult hard times during the 80s but we came out of it, went public and have been growing ever since. We are reaching approximate $400 million in assets and are doing quite well. We have seen the worst of times and the best of times.
CEOCFOinterviews: Is your focus in business or the consumer?
Mr. Cloutier: We are pretty much a mixed bag. Primarily, we are a commercial bank with 60% of our loans being commercial credits. The remaining 40% of our loan portfolio is a mix of real estate and consumer loans. Our nineteen locations are strategically located from Sulphur to Thibodaux, Louisiana. For those that are not familiar with Louisiana, this network covers about two-thirds of south Louisiana, but does not include the area of New Orleans.
CEOCFOinterviews: How is the economy in your area, and how has it been affected by the recent economic conditions?
Mr. Cloutier: The economy has been reasonably stable and we have offsets. Lafayette has been big in the gas and oil industry. We do a lot of business in Lake Charles which is an area with chemical industries. With low gas prices, the chemical industry does very well, with high gas prices it doesnt do as well as Lafayette. I recently had access to figures provided by an economist from Baton Rouge that indicated that Louisiana is growing at about two-and-a-half to three percent a year. That is good stable growth; it isnt back to the wild 90s but we will take that any day of the week.
CEOCFOinterviews: You just released your earnings and they were certainly strong. What accounts for the good things that are happening?
Mr. Cloutier: I think this is attributed to a couple of things. First, I have a very dedicated staff. I think many of our employees work beyond what most would be willing to do. Our expansion has continued, which has been very positive. And then we recently lost another competitor, LBA, which was acquired by Iberia Bank. We are losing competitors, growing and becoming a more significant player and this gives us more opportunities to be out there. It has been a couple of outstanding years but we worked hard to get there.
CEOCFOinterviews: What differentiates MidSouth from the competitors?
Mr. Cloutier: I could give you the clichés about how we are a good community bank and we provide quality service. We work hard on those things just like everybody else, but I think it is the very dedicated work ethic of our staff that makes the difference. This year as Chairman of a national bankers association Im traveling a great deal, but I personally return every phone call the day I receive it. Callers usually receive a return call within 45 minutes to an hour. Its our goal to be extraordinarily responsive and we are very competitive in our pricing, which we consider important. We believe this has led to our success. Our branching network which covers most of south Louisiana has been very effective.
CEOCFOinterviews: Do you
do much advertising?
CEOCFOinterviews: Do most of your customers come in as loan customers and then take advantage of your other services?
Mr. Cloutier: We see it on both ends; some come in for the first time as a loan or mortgage customer. Others come in as deposit customers. It is an even mix. About 90% of our business comes from referrals. Everyone comes into a bank for one reason and that is to be better off financially. If you ran into trustworthy friend and he advised you to go to a certain person who would help you with your finances, Im sure you would listen.
CEOCFOinterviews: Are there any products or services that you would like to add?
Mr. Cloutier: No, I dont think there is at this time. We have a complete array of every product under the sun. I think we would be more interested in tweaking the products and continuing to improve them. We have a very good Internet product and an efficient call center. We are always trying to improve that because we are in a very competitive environment. Our loan approval program has recently been amended to decreases the approval time by about forty-five minutes. We think we can tweak another fifteen minutes from that timeframe. We continue to improve.
CEOCFOinterviews: Do many people take advantage of your internet banking?
Mr. Cloutier: Yes, we are in an area where many work out of the country due to the oil and gas industry. There are also many others that live here and travel quite a bit so we do have many users of the Internet product in our bank.
CEOCFOinterviews: Do you have much community involvement?
Mr. Cloutier: We are very community-oriented. As I tell my wife, I am over-committed. The employees of the bank are very engaged in many projects. For the past five years we have sponsored the Bowl for Kids Sake, for the benefit of Big Brothers, Big Sisters. This past year the employees raised about $18,000. We were recently honored with an award from The Louisiana High School Athletic Association for the Boys State Basketball tournament. Ten of our employees were involved in this. We are high profile with the United Way, the Chambers of Commerce in all of our markets, and the University of Louisiana at Lafayette Foundation. We have a very strong community focus. We own ad space and every Wednesday we have the front page of the local paper; we give it away every Wednesday. Just yesterday we gave the ad space to a leukemia fundraising event.
CEOCFOinterviews: Do you see more branches in the future?
Mr. Cloutier: Absolutely! We are definitely making plans to have a second location in Lake Charles and more branches up and running in Thibodaux and Houma within the next twelve to eighteen months.
CEOCFOinterviews: Are all decisions made at the branch level?
Mr. Cloutier: Most of them are; I hate to say all of them. But I would say 80% of all decisions are made right there on the spot.
CEOCFOinterviews: How do you maintain the close relationship with your customers as you continue to grow?
Mr. Cloutier: Every employee carries a cell phone and we carry them 24/7. The bank pays for the service, and we give out the bank number a lot. It is part of personal service to be available to bank clients when they need their banker! I am a firm believer that every call should be returned everyday even if you need to hunt the down the caller. The second thing I often say a fast no is better than a slow yes. And finally, its important to empower employees to get things done.
CEOCFOinterviews: What do you see are the biggest challenges going forward and how are you ready?
Mr. Cloutier: The biggest challenge is that you have other people wanting to get into the business. On the upper-end you have these big corporations wanting to get in. You have the credit unions that dont pay taxes, which are trying to steal all the retail business. The other thing is regulations. The industry is getting to be way too regulated, especially since Enron.
CEOCFOinterviews: What should potential investors know about MidSouth that might not be readily apparent.
Mr. Cloutier: The bank is a small, thinly-traded bank which has been and is highly profitable for its investors. We picked up some institutional owners that said to us Im not interested in liquidating this, if it can make a fifteen to seventeen percent return on equity. We run this bank based on return on equity. That is the only figure we concentrate on. Other banks concentrate on mortgages, return on assets, and efficiency ratios. Over the last ten years we have been averaging from 15% to 17% return on equity, year end and year out. I think that is something that is not looked at very carefully.
We have great growth opportunities and we continue to look at opportunities to pick up growth. We have a young management team; I am 56, Karen Hail is 49, the Senior Loan Officer is 47. I figure. I have at least another 15 years. We are a very tested group; we went through some of worst times in the 1980s. In Lafayette, Louisiana we were the ninth bank opened; seven failed and only two survived through that great catastrophe. According to many economists, the toughest economic times America has ever seen was probably the 1980s. At one time in 1985, there was 22% unemployment in Lafayette, which means that one out of every four people were unemployed. We are a seasoned, tested management team that knows how to open new locations and turn them profitable. The Senior Loan Officer just returned from Sheshunoff High Performance Affiliations Conference which he attends annually,. He shared with me that some bankers at the conference reported that it takes their bank five years for a new branch to become profitable! Our experience has been such that in some cases we have been profitable within four months of opening a new branch. That isnt the trend everywhere but it has happened in some of the branches. We know how to do it and we execute the business plan very well.
Another thing I should mention about our business plan is that we take seriously our strategic planning which is updated annually. We have a plan and know where were going. We know that we are expanding in Thibodaux and Lake Charles and going into southeast Texas. We have a business plan and we live by it day-in and day-out, and we dont waiver from it. Most great corporations have a very well-defined business and strategic plan and they follow it which is the key to their success.
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