September 29, 2010 10:50:00 AM
Many of us can still remember when all the banks in town were either locally owned or closely held -- National Bank of Commerce, First Columbus National Bank, Merchants and Farmers among them.
The locally owned bank, as we used to know it, has all but disappeared. That point was driven home once more Wednesday when Cadence, formerly known as NBC, was swallowed up by Jackson-based Trustmark National Bank.
Cadence, a Century-old Starkville-based bank, was a publicly traded company, but has been guided by Lewis Mallory in past decades. Mallory, who by all accounts is an upstanding person and pillar of the Starkville community, was a victim of the economy, bad timing and a few bad decisions.
Maybe Cadence got a little too big for its britches. The bank expanded not just in Mississippi and Alabama, but into Florida, Georgia and Tennessee, finding a niche as a commercial and residential lender. Unfortunately, the housing crunch, and the economic downturn, took its toll, and what was once a small-town bank had problems too big to handle. Cadence''s board decided to take government money through the Troubled Asset Relief Program -- making Uncle Sam a major shareholder.
Cadence''s fall was in slow motion. Despite valiant efforts to cut costs, few expected the bank would be able to raise the money it needed by a Sept. 19 deadline, set by the government, to stay afloat and independent.
Trustmark -- and the government -- stepped in. Cadence shareholders were left with less than a 10th of a share of Trustmark stock for every share of Cadence they held.
What''s lost? Millions of dollars in shareholder value. And, some of our neighbors are sure to lose their jobs as Trustmark consolidates its operations here.
The winner, of course, is Trustmark. For the bank, Cadence is a good "get," especially in the Golden Triangle. Trustmark, which had no penetration in Starkville, is all of a sudden the No. 1 bank there. It moves into West Point and Columbus in a major way, and expands into markets in Alabama and Georgia.
The Golden Triangle also gets a new, solid lender for corporations moving into the area and for businesses looking to expand.
So goes the banking business. The fall of Cadence is an example of how banks, especially small ones, can become victims of the markets they serve. Unfortunately, we predict Cadence won''t be the last casualty among Mississippi banks during this recession.