National Matters Matter to Community Banks, Cloutier Advises

Lafayette, La., and Washington are over 1,000 miles apart, but Rusty Cloutier keeps the nation's capital top of mind.

The founder and chief executive of MidSouth Bancorp (MSL) lived up to his reputation for colorful, homespun commentary during his talk at American Banker's M&A Symposium — "One problem with starting a banking company is you can't blame your predecessor for anything," he joked. But he was serious when he urged bankers — especially those active in M&A — to pay strict attention to regulators and Congress.

Bank buyers and sellers have to make sure their counterparts have a good rapport with their supervisors, he said. "The No. 1 question if you are looking at bank M&A you should ask is: 'What's their relationship with their regulators?' If they don't have a good relationship with their regulators, they are not going to be in the M&A business very long."

He underscored the point when channeling recent remarks by Comptroller of the Currency Thomas Curry — who oversees national banks like MidSouth — that operational risk had recently replaced credit risk as a top concern.

"My new boss Tom Curry over at the OCC — see, I recognize him as being one of my bosses — said he is more concerned about operations than he is about loan losses, particularly at small banks. That was a big statement. If you didn't hear it, and you're not paying attention to him, you should."

He also said institutions should pay special attention to congressional action this year on whether to renew the Bush tax cuts, raise the debt ceiling or make budget cuts that could hurt small bankers and their markets. They will affect whether banks decide to be buyers or sellers, he said. "The changes in the law are what's coming. We've got a crisis in this country, and it's not over yet."