March 8, 2011 12:33:00 PM
Cadence Bank began its new life as a private concern this week. Its sale to investment firm Community Bancorp is officially inked, its stock pulled from the market, and its board reshuffled and stacked with Texas-based CBC officers.
Cadence took some body blows during the housing meltdown and recession that proved fatal. The bank was over-exposed to mortgages and commercial loans that borrowers couldn''t pay back. Cadence''s board accepted government bailout money; when management still couldn''t right the ship, the bank teetered on the verge of government takeover.
Cadence found a suitor in Jackson-based Trustmark, but bolted from that buyout offer when Community Bancorp, which had put forth a dueling offer, sweetened its deal.
The best outcome, of course, would have been a publicly traded Cadence surviving the recession. That didn''t happen, and the deal with Community Bancorp looks like the best alternative.
CBC, which has raised $1 billion to buy community banks, has infused $144 million in Cadence, its first purchase. Along with the capital comes a push to renew and expand lending to local homeowners and businesses. And, Cadence is hiring. The bank said in a statement that more than a dozen people have joined the bank as a result of the merger, many of them in the Golden Triangle. A year ago, the limping bank was laying off workers.
Trustmark is a strong bank, but we''d be singing a different tune if the Trustmark deal were in place right now. Trustmark would most certainly be closing Cadence branches outright, where they overlapped with Trustmark''s locations. That pain would have been felt in Columbus more than most places, where the banks have operations within a block of each other downtown.
Still, every Cadence job isn''t safe, including the top one. One inevitable casualty of the buyout was Cadence Chairman Lewis Mallory Jr., who ran a profitable bank for years until he made decisions to grow too big too fast, and to paraphrase a Warren Buffett axiom, got caught with his swim trunks down when the tide went out. Mallory may have had his hand on the wheel when the ship hit the rocks, but in the end, was able to steer the sinking operation toward Community Bancorp.
Remaining on board is Mark Abernathy, who''ll continue to run the Starkville-based bank as president. We expect the painful memories of Cadence''s past life will inform his decisions as he guides the bank forward.
A new face has joined Cadence to take charge of its credit operation, Teresa Hemphill -- ironically, formerly of Trustmark''s Jackson headquarters. Hemphill, who is widely respected in Mississippi financial circles, will bring a youthful energy to Cadence that belies her nearly 30 years of banking experience. We welcome her to Starkville and wish her luck here.
Considering Cadence''s stock was once trading at more than $20 a share, many local investors lost millions. Now, there''s no stock at all. Also gone forever are the dividends that these stockholders spent locally, year after year, for decades.
The passing of the independent, publicly traded Cadence is sad indeed. But at least we can say that Cadence''s workers remain employed, and its new owners have put down a significant stake toward making the bank successful and poised for growth in the future.
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