July 23, 2010 3:58:00 PM
Savings through cutting costs and an improving loan portfolio helped Starkville-based Cadence Financial Corp. report a healthier second quarter compared to last year, but the bank holding company still posted a net loss for the period.
In financial reports released Thursday, Cadence bank reported a net loss of $1.6 million for the second quarter of 2010, compared with a net loss of $14 million for the second quarter of 2009.
"Reduced net interest income and sizeable expenses related to repossessed real estate were major contributors to the 2010 second quarter loss," the company said in the report.
Net loss applicable to common shareholders was $2.3 million, or 19 cents per diluted share, for the second quarter ended June 30, compared with a net loss applicable to common shareholders of $14.7 million, or $1.23 per diluted share, for the second quarter of 2009.
"Cadence reported a significant decrease in its provision for loan losses from the second quarter of last year," Cadence said in the report. "The provision for loan losses dropped to $3.2 million in the second quarter of 2010 compared with $23.0 million in the second quarter of 2009 due to lower charge-offs and a lower level of non-performing and classified loans."
On the cost cutting side, Cadence said that its salary and benefit expenses stand that their lowest level since early 2004, due to layoffs and consolidation of staff earlier this year.
"Salary and benefit expenses declined 21.3 percent to $5.5 million in the second quarter of 2010 compared with $7 million in the second quarter of 2009," the company said. "The staff reductions were part of Cadence''s strategy to improve its efficiency and profitability across its five-state franchise."
Net interest income was $10 million in the second quarter of 2010, compared with $10.7 million in the second quarter of 2009, the company said.
Thursday''s filing was the first from Cadence since late May, when it filed to offer up to $80 million in common stock in an effort to shore up capital to meet a new consent order placed on the bank by federal officials.
By agreeing to the federal consent order, the $1.9 billion bank had 120 days to raise total capital to at least 12 percent of risk-weighted assets, and have Tier 1 capital at least equal to 9 percent of adjusted total assets, or it could face further action.
Bank officials said they believed the stock offering will enable it to meet its new obligation.
Cadence operates branches in Mississippi, Tennessee, Alabama, Florida and Georgia. The company''s shares, listed on the Nasdaq stock exchange, closed Friday at $1.60. The shares have a 52-week high of $4.80.