October 7, 2010 12:05:00 PM
It''s hard to argue with jobs.
Cadence''s about-face on Wednesday, agreeing to be scooped up by a private investment firm one week after it had already agreed to be bought by Trustmark, is a positive outcome for the Starkville and Columbus communities. The Trustmark buyout would certainly have led to layoffs. Trustmark and Cadence operate large buildings practically across the street from each other in Columbus, and Trustmark would certainly have trimmed support staff at Cadence''s Starkville headquarters.
The deal is also better for taxpayers, though certainly not perfect. In banker''s terms, we''re still taking a haircut. The U.S. Treasury had a $44 million stake in Cadence, whose executives and board decided to buy into the Troubled Asset Relief Program. Community Bancorp is paying back $38 million. Trustmark was only offering $30 million. (The government would have gotten nothing if it was forced to shut down Cadence altogether, which it was poised to do just before the Trustmark deal was announced.)
The Cadence name remains in the community. Trustmark would have certainly rebranded its new branches.
And shareholders come out ahead. The Trustmark deal would have been worth about $2 a share to stockholders; the new deal is worth $2.50 a share. (Cadence shareholders get cash, not Trustmark stock, for their shares.)
Jobs. Name. Price. These were considerations Cadence CEO Lewis Mallory, in a Wednesday conference call, outlined as reasons for taking the Community Bancorp deal.
Of course, some of those jobs belong to Mallory and his executives -- the same group whose management missteps, along with the crippling recession, brought the bank to its knees. Most of its owners -- Cadence shareholders -- suffered huge losses, in some cases, millions. Count all the U.S. taxpayers among those who lost their shirts.
Despite Community Bancorp CEO Paul Murphy''s assurances that Cadence''s executive team will remain intact, we expect there will be some housecleaning at the new, privately owned Cadence. We imagine that cleaning will start at the top.
After all, the new owners have an investment to protect. We all see what happened to the previous owners'' investment.