The early March closing of an acquisition by Houston banking investment company Community Bancorp, LLC, will mark the end of Cadence Financial Corp. chairman and CEO Lewis Mallory Jr.’s 47 years with the Starkville-based regional bank.
Mark Abernathy, Cadence’s president, is expected to be elected CEO and Paul B. Murphy Jr., Community Bancorp president, chairman, Cadence said in a filing with the Securities and Exchange Commission. Abernathy joined Cadence 16 years ago and four years later became president and COO.
The acquisition had no part in Mallory’s retirement plans, said spokesman Jon Boydstun. He said Mallory and Cadence’s board of directors agreed three years that the longtime CEO would retire sometime in 2011.
The acquisition cleared its last regulatory hurdle last week with Federal Reserve approval. Cadence, which has been on NASDAQ trading as CADE, will go private with completion of the merger transaction. The takeover is expected to close the first week in March.
Mallory, 67, has served as CEO of the $1.6-billion Cadence since 1978. During his tenure, the bank grew from about $100 million in assets to more than $2 billion and expanded from its home market in Northeast Mississippi to markets in Tennessee, Alabama, Georgia and Florida. Today, Cadence is the leading bank in its home market in the Golden Triangle in East Mississippi.
Mallory joined National Bank of Commerce, the predecessor of Cadence Bank, in 1965 after graduation from Mississippi State University. He became president in 1974 and chairman in 1993, a position he has combined with his CEO duties. Mallory will remain as chairman emeritus and will help with Cadence’s transition to Community Bancorp ownership.
Mallory, in a prepared statement, said Cadence employees, its senior management and its board members “have become a big part of my life” and noted he is proud of the bank’s contribution to “our communities and the customers we serve.”
Boydstun, the Cadence spokesman, said the lucrative severance provisions contained in the acquisition agreement for Cadence’s top management will not apply to Mallory’s retirement. Those provisions only apply in the event of firing of the senior management, he said.
“There is no golden parachute” other than standard retirement benefits, Boydstun said.
Mallory’s son, Marcus Mallory, will remain as Cadence’s Mississippi state executive.
Mallory and Cadence encountered a great deal of fiscal turbulence, much of which bank executives blamed ion a late entry into the commercial real estate markets of Greater Memphis, the Nashville suburbs and Alabama.
Those troubles led the Office of the Comptroller of the Currency to put Cadence under a consent order that mandated a significantly increase Tier 1 leverage and risk-based capital. Those reserves dropped from $107.8 million in the third quarter of 2009 to $87 million in the third quarter this year.
The acquisition by Community Bancorp and the $100-million capital injection it has pledge dint he deal will resolve the risk-based capital issue, Cadence executives say.
Under terms of the acquisition agreement, Cadence shareholders will receive $2.50 in cash per Cadence common share. Cadence will be the surviving corporation in the merger transaction, with its identity, charter and personnel in tact, and become a wholly owned subsidiary of Community Bancorp.
The new owners say they have pledges of about $1 billion in capital they intend to use to begin acquiring community banks. Starkville is to be the hub of the new banking company as it expands, Community Bancorp says.
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