STARKVILLE — Shareholders of Cadence Financial Corp., parent of Cadence Bank, agreed to a buyout yesterday that takes the banking company private and pays them $2.50 in cash per Cadence common share.
The shareholder vote in Starkville marked a key step in the troubled regional bank’s plans to be acquired by Houston banking investment group Community Bancorp, LLC. The bank and the investment group say they plan to complete the merger by the end of the first quarter.
“We are pleased that the acquisition by CBC was approved by 89 percent of Cadence’s voting shareholders,” Lewis F. Mallory Jr., Cadence chairman and CEO, said in a press statement.
The Texas banking investment group has raised $900 million and is making Cadence and its $1.9 billion in assets its first acquisition. The group is keeping the Cadence name and the regional bank’s 360 employees.
Community Bancorp says it plans to make Cadence and its Starkville home the hub of a wider regional banking operation. The deal also brings a promise of about $100 million in new capital, Cadence officials said in announcing the deal in October.
“We believe the capital injection by CBC provides a solid value for our shareholders, employees and customers, as well as local communities we serve,” Mallory said in the press release yesterday.
In addition to Mississippi, Cadence has banking and other financial services operations in Tennessee, Alabama, Florida and Georgia.
Of Cadence’s 11.9 million shares, bank executives and directors who make up the “insider” investors own 10.59 percent.
A lawsuit Cadence settled just ahead of yesterday’s shareholder vote charged that terms of the merger were tilted too far to the advantage of Cadence executives and board members. Cadence, other than disclosing the multipliers used by financial advisers in setting a price for the bank, has declined to detail the settlement’s terms. Bank officials say they must await final approval of the settlement.
The deal with Community Bancorp came after Cadence scrapped an earlier “definitive” acquisition agreement reached with Jackson’s Trustmark Bank. The Trustmark offer was valued at about $23.8 million, or $2 per Cadence common share, for $20.62 per share of Trustmark shares.
Cadence reported a third quarter net loss of $7.5 million, or $0.63 per diluted share. For the third quarter of 2009, it reported a net loss of lost of $13.1 million, or $1.10 per diluted share. It ended the second quarter of this year with a net loss of $1.6 million.
Cadence has been under an expired consent order from the Office of the Comptroller of the Currency to significantly increase its capital reserves. Those reserves dropped from $107.8 million in the third quarter of 2009 to $87 million in the third quarter this year.
Non-current loans and leases to $76.3 million in the third quarter, compared to $59 million in the same quarter last year.
Cadence executives blame much of their lending trouble on a late entry into the residential estate market in Alabama and Tennessee.