Starkville-based bank had lower losses than same quarter in 2009
In a late arriving earnings report, Cadence Financial of Starkville last Wednesday reported a third quarter net loss of $7.5 million, or $0.63 per diluted share.
The new round of losses come just ahead of a Dec. 9 shareholder meeting at which shareholders will vote whether to take the $1.7-billion Cadence Bank private in an acquisition by Community Bancorp, a Houston, Texas, banking investment group that has agreed to pay $2.50 in cash per common share in the transaction. The transaction is expected to close by the first quarter of 2011.
In making its deal with Community Bancorp, Cadence scraped a definitive agreement it had for an acquisition by Jackson’s Trustmark National Bank. More recently, Cadence’s deal with Community Bancorp has been challenged in a lawsuit filed in New York on behalf of investment firm RSD Capital.
Cadence’s deal first with Trustmark and one less than two weeks later with Community Bancorp followed expiration of a consent order deadline set by federal regulators for Cadence to significantly increase its reserve capital.
Cadence reported a net loss of lost of $13.1 million, or $1.10 per diluted share, for the third quarter of 2009. It ended the second quarter of this year with a net loss of $1.6 million.
The multi-state regional bank attributed the decline in its third quarter loss from the same quarter of 2009 to a lower provision for loan losses, lower charge-offs and reduced operating expenses. The provision for loan losses dropped to $8.5 million in the third quarter of 2010 compared with $20.7 million in Q3 2009. It cited lower charge-offs and a lower level of non-performing and classified loans for the need to allocate fewer dollars to possible loan losses.
“Asset quality appears to have stabilized over the past three quarters,” Cadence said in its report.
Like other banks in Mississippi and elsewhere, Cadence has largely put the brakes on real estate lending. It has cut total real estate loans by $188.3 million, or 21.6 percent, since the third quarter of 2009, Cadence says
Subsequently, its net interest income declined to $9.8 million in the third quarter from $11.6 million in the third quarter of 2009, Cadence says.
Total non-interest income declined to $3.5 million in the third quarter compared with $5.2 million in the same quarter last year. Cadence attributed the decline in non-interest income primarily to higher security gains in 2009 and a 2009 gain of $502,000 arising from the sale of its insurance subsidiary.
Cadence had $69 million in non-current loans and leases second quarter’s close. The third quarter earnings report did not include totals for late loans and leases.
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