MidSouth Bancorp in Lafayette, La., is now considered by the Federal Reserve to be in a “troubled condition.”
The $1.9 billion-asset company disclosed the development in a Tuesday filing with the Securities and Exchange Commission. As a result, the company must notify the Fed before adding or replacing directors, employing or changing responsibilities of any senior executive.
MidSouth is also barred from making any severance or indemnification payments.
The Office of the Comptroller of the Currency had already deemed the bank a “troubled institution” in 2017. MidSouth sold common stock in June to improve its capital ratios.
MidSouth Bancorp, the holding company for MidSouth Bank, has been underperforming for several quarters, mostly due to its lagging energy portfolio.
The company fired Rusty Cloutier, its founder and CEO, and his son, who was president and CEO of the bank. At the time, MidSouth’s board said the changes were meant to improve performance.
James McLemore, who succeeded the elder Cloutier as CEO, has been cutting costs to improve efficiency. In July, the company announced plans to sell two branches and close seven others.
MidSouth said in Tuesday’s filing that it will close another six branches in March. The branches — four in Louisiana and two in Texas — have been suffering from low traffic. The move will reduce the size of MidSouth’s branch network by 13%.
The company said it will likely record a $1.2 million pretax charge in the fourth quarter tied to the closures. MidSouth also warned that it will record another $220,000 in charges associated with other cost reductions.