The firing of Rusty Cloutier marked a rare instance of a bank board exercising its full powers and an anticlimactic end to a colorful career.

MidSouth Bancorp in Lafayette, La., disclosed Thursday that Cloutier, its founding CEO, and his son had been ousted. For the elder Cloutier, the dismissal ended more than 30 years at a company he built from a tiny bank to one with nearly $2 billion in assets.

Cloutier is one of a handful of CEOs denied a chance to leave on their own terms, though other recent departures — notably Wells Fargo’s John Stumpf and Banc of California’s Steven Sugarman — came after headline-gripping scandals.

Unlike Stumpf or Sugarman, Cloutier’s record contained no such blemishes. In addition to leading MidSouth, he has been a well-respected spokesman for community banking, previously chairing the Independent Community Bankers of America and serving on the Federal Reserve Bank of Atlanta’s nominating committee.

Cloutier started MidSouth in a simple building known in Lafayette as “the hut.” There were no drive-through lanes, no teller windows and no contractor to cut the grass. Cloutier said he mowed it himself for several years. During the post-crisis era he articulated, in his inimitable voice, community bankers' resentment of their larger brethren's blunders and of the regulatory burden subsequently imposed on the industry, in press interviews and in his book "Big Bad Banks."

His removal Thursday was a bold move for the MidSouth board and for Jake Delhomme, the former professional football player who just became chairman last fall.

Industry observers said Cloutier’s ouster indicates the board’s desire for a strategic — and perhaps cultural — shift at MidSouth, which had long relied on lending to the energy sector to boost its bottom line. At March 31, energy loans made up nearly a fifth of MidSouth’s total loans.

That focus began dogging MidSouth two years ago when oil prices plummeted.

Cloutier declined to discuss his ouster, though he said he still supports the company he helped create in the 1980s. Jim McLemore, tapped to succeed Cloutier, did not return calls seeking comment.

MidSouth’s management did talk to Kevin Fitzsimmons, an analyst at Hovde Group, giving him an impression that the board wants “to focus on accountability and embracing a proactive stance toward boosting performance.”

With the change, MidSouth seems prepared to accelerate efforts to purge problem assets and control costs, Fitzsimmons said. Another objective could be to operate with a “larger capital cushion,” he added in a Thursday note to clients.

While energy had clearly been MidSouth’s biggest headache in recent years, Cloutier largely seemed to take a wait-and-see approach to the exposure, which edged down to 18.2% of total loans at March 31 from 20.2% a year earlier.

Loan deterioration has clearly been an issue for the company’s financial results. Annual profit fell 64% last year compared to 2014, to $6.6 million. MidSouth’s first-quarter profit, reported on Thursday, fell 13% from a year earlier to $1.7 million.

Classified assets rose by nearly 11% from Dec. 31 to $148.4 million, reflecting two energy-related downgrades. At March 31, nearly a fifth of MidSouth’s energy loans were past due.

Other energy lenders have been much more aggressively addressing exposure to oil firms.

The $4 billion-asset Green Bancorp in Houston, for example, said a year ago that it would exit energy lending, creating a group to liquidate its $277 million portfolio. At March 31, Green had downsized its energy loans to $76.3 million, or just 2.5% of total loans.

Iberiabank, which is also based in Lafayette, La., has reduced its energy book to just 3.7% of total loans, shedding 31% of its energy-related exposure over the last two years.

Cloutier’s dismissal represented a swift reversal for MidSouth’s board.

Its decision for fire Cloutier comes just six months after the CEO signed a four-year employment agreement that would have kept him on the job through October 2020. Under terms of that agreement, MidSouth is obligated to pay Cloutier the salary he would have received over those years, or roughly $1 million.

Rusty Cloutier’s ouster indicates the board’s desire for a strategic – and perhaps cultural – shift at MidSouth, which had long relied on lending to the energy sector

Industry observers were also split as to whether the firing means the board is open to selling the company. It had been widely believed that MidSouth would not sell as long as Cloutier was CEO; those views were reinforced last year when he set the stage for his son, Troy, to become his successor.

Again, the decision on whether to sell ultimately rests with the board.

A sale or capital raise are possibilities, Matt Olney, an analyst at Stephens Inc., wrote in a note to his clients.

Fitzsimmons hedged his comments more.

“Our sense is that the bank is not actively being shopped … at the moment,” Fitzsimmons said. “However, we believe that any forthcoming demonstrated improved performance over time would seemingly lead to increased, and more favorable, optionality for the company. This optionality could at some point involve a potential sale, although likely from a much higher price point than today.”

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