It’s all grown up now after last year buying an Alabama regional banking company more than twice its size and continuing its growth spurt with the May 31 Federal Reserve Board of Governors’ approval of the acquisition of Encore Banshares, a $1.6 billion Houston bank.
Acquiring Encore is part of a Southeast strategy initiated by Paul Murphy and his Community Bancorp LLC, a $1 billion banking investment company that bought Cadence just as federal regulators were losing patience with the bank’s failure to raise adequate capital reserves. At the time, Cadence was a small publicly traded regional bank with $1.3 billion in assets and 36 locations in Mississippi, Alabama, Tennessee and Florida.
In short order, Cadence acquired Superior Bancorp, Alabama’s third largest bank with assets of $3 billion, in a FDIC-assisted sale. The acquisition gave the privately held Cadence 74 new banking locations n Alabama and Florida and brought asset level to the $4.1 billion neighborhood.
Cadence moved its headquarters to Birmingham last year to occupy the former headquarters of Superior Bank but kept its operations center in Starkville.
Cadence on March 6 announced its $250 million cash bid to buy Encore, a deal the Houston Business Journal put at 2.4 times Encore’s tangible book value and termed the highest-multiple deal in Texas in several years.
Murphy, CEO of parent Cadence Bancorp and chairman of the new Cadence Bank, said at the time of the Cadence purchase that he intended to establish a regional chain of privately held community banks throughout the Southeast and Texas, a region he sees as having a strong economic future.
With the Encore acquisition, he told the Houston Business Journal: ” We’re going to be a significant part of the Houston banking landscape right away. It’ll be fun.”
The Encore acquisition adds 300 local bankers to Murphy’s team of 70 in Houston, where Cadence has a startup operation that carries the Cadence name. operations center in Starkville employs about 160 people and provides support region-wide, including company accounting and technology operations.
Cadence CEO Sam Tortorici said the operations infrastructure is in place in Starkville to support “an expanded footprint” that the bank intends to have as it establishes itself as a multi-state community banking company. Cadence’s “legacy operating system” will be key in the expanded banking company’s plans to be a major presence in Southeast U.S. banking, Tortorici said in a previous interview.
The Cadence transformation has not gone unnoticed by independent bank rating agencies. A little more than a year ago, Coral Gables, Fla.-based Bauer Financial designated Cadence as “Troubled,” giving it a one-star rating. In ratings issued June 6 for the first quarter of 2012, Bauer gave Cadence a four-star rating, designating the regional banking company as “Excellent” and placing it on the agency’s “Recommended Report.”
Ted Carter/MBJ Staff
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