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The Cadence Bank train wreck




I wanted to thank you for the article on Lewis Mallory and Cadence Bank. I think they are well written and give a good background into problems that lead to the bank failure. Mr. Mallory said he loved the bank, started as an intern and worked his way to the top, so how could he let this good institution go to the dogs. 


My father gave me some good advice when I was young: Never forget who you are, where you come from or those people that helped you get there. Mallory and the board forgot all of those things. They did not wish to serve the best interest of the stockholders but wanted to improve their own lot. They went off into markets that were foreign to the bank''s area of expertise. A friend laughed when they bought an insurance agency and said nobody on the board knows anything about operating an insurance agency. They brought the former owner on the agency on the board to oversee that operation only to have him buy back the agency while still on the board. This may not be a conflict of interest but it sure doesn''t smell good. 


In the past six months we have handled three local estates where the bank refinanced and took first and second mortgages on house, raising the mortgage far beyond the fair market value. So why would a bank give a 20- or 30-year mortgage to a couple in their 70s? Greed! They were selling these mortgages to national banks that are now stuck with a toxic asset (I should say the taxpayers are stuck with the debt) but in one of the three -- the bank was stuck with the house that is worth about 40 percent of the mortgage value. How many more are out there? 


In your article you mentioned a businessman that was buying up shares in hopes of getting on the board. Why? A board member stated that they were only getting about 30 percent of the information they needed while another was quick to say that they were only getting about 30 percent of the information they needed while another was quick to say there was no hidden agendas. The board members were successful businessmen. Did they run their businesses with less than 100 percent of the information needed to make an informed decision? 


When things started going south and the bank started losing money why didn''t alarm bells start to ring on the board? The board is blaming Mallory and Mallory is blaming the economy and the shareholders and employees are the losers. 


This was train wreck; Mallory was at the throttle and the board was shoveling coal in the boiler as the train approached Dead Man''s Curve. 


Sherman Meadows 





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