REPORT: Cadence faces possible takeover

By NEMS Daily Journal

STARKVILLE – Cadence Bank is facing an important deadline that could result in stronger regulatory action, including a takeover by the Federal Deposit Insurance Corp.
The Mississippi Business Journal reports that Starkville-based Cadence must meet capital requirements as set by a consent order issued by the Office of the Comptroller of the Currency on May 19. The deadline is Sunday.
Cadence Financial Corp., the holding company of Cadence Bank, then filed with the Securities and Exchange Commission to raise $80 million in common stocks.
Cadence said it would use the proceeds for “general corporate purposes,” including the OCC’s capital requirements. The stock sale awaits approval from the SEC.
The company’s profits fell last year as its troubled loans, mostly tied to real estate, rose. Cadence posted a loss of $112.2 million last year, compared to a $3.36 million loss in 2008.
For the second quarter of this year, Cadence recorded a $1.6 million loss and a Tier 1 leverage ratio of 5.25 percent.
Last year, the company received $44 million from the government’s Troubled Asset Relief Program.
The OCC’s May order was for Cadence to achieve a Tier 1 ratio of 9 percent within four months, and that deadline is Sunday.
Tier 1 ratio is a bank’s core capital, including equity and disclosed reserves, divided by its total risk-weighted assets.
Last year, Cadence also was ordered by the OCC in April to raise its capital level by Sept. 30, 2009, but the company withdrew its stock offering, saying it had sufficient liquidity.
If Cadence is unable to raise its capital levels this time, it may be forced to find a buyer or a merger partner.