By Ted Carter
Mississippi homebuyers could have another mortgage option this spring.
The $1.7 billion Cadence Bank departed the mortgage market as the home lending crisis worsened. But with its planned acquisition by Houston banking investment group Community Bancorp, Cadence is mulling a revival of its mortgage business.
“Yes, we hope to return to that,” said Donna Rupp, Cadence spokeswoman. “It’s under consideration.”
The more immediate business ahead for the Starkville regional bank and its board of directors is a Dec. 9 meeting of shareholders who will decide whether to take the Community Bancorp deal. Shareholders stand to make $2.50 a share – but that’s the end of the upside. After that, Cadence goes private and shareholders are out of the picture.
One shareholder, RSD Capital, an investment management firm registered in Delaware since 1998, is suing with a claim the deal’s terms are all sugar and spice and all things nice for Cadence executives and the board at the expense of shareholders.
The suit, filed in the New York Supreme Court by attorney Richard Brualdi, points an accusatory finger at Cadence’s board, charging that the directors concealed details in a proxy statement to public shareholders in order to complete “a transaction which protects and advances the interests of Cadence’s management team who are using this opportunity to benefit themselves.”
Of Cadence’s11.9 million shares, bank executives and directors who make up the “insider” investors own 10.59 percent.
Brualdi hasn’t returned several MBJ phone calls seeking to clarify some of the elements of the suit. So we’ll have to go on scratching our heads and wondering about the claim that top Cadence executives get big, big bonuses once the bank is free of TARP debt and a federal regulatory consent order to raise capital reserves.
The merger deal does give Cadence Chairman & CEO Lewis Mallory Jr., and three other key executives payments of three times their annual salaries and a year’s worth of health insurance premiums – but Community Bancorp would have to fire them in the first year after the merger. And keeping the executive team intact and the rank-and-file on the payroll is a big reason Cadence says it made the deal in the first place.