By PAUL SIMS
The deal to take Starkville-based Cadence Financial Corp. private took a major step forward as shareholders voted overwhelmingly Thursday to approve the transaction.
Pending regulatory approval and closing, Community Bancorp (CBC) will make Cadence Bank its first acquisition, paying $2.50 a share to the banking institutionâs common shareholders.
The agreement also calls for CBC to pay about $38 million for the U.S. Treasuryâs ownership of $44 million in preferred stock in Cadence, which agreed to take part in the Troubled Asset Relief Program in January 2009.
CBC was established to âacquire, stabilize and operate failed or distressed U.S. banks,â officials have said. The Texas-based investment firm, which has recently raised around $1 billion in capital, will infuse Cadence with an estimated $150 to $200 million in capital.
Eighty-nine percent of the shareholders voted in support of the deal, Cadence officials said in a release issued just before 12:20 p.m. Thursday.
âObviously weâre very pleased with the overwhelming support of the shareholders. 89 percent is reflective of strong support of the shareholders for the proposal. Itâs very positive,â said Paul B. Murphy Jr., CBCâs president and CEO, Thursday afternoon.
Murphy added he was âpleased there was a good turnout. One thing ... clear to me is there is a huge, devoted customer base to Cadence Bank; weâre so fortunate to have so many loyal customers.â
Thursdayâs vote comes after the bankâs stock value plummeted over time and several quarters of financial losses.
âI respect fully the fact that there is disappointment over the stock price. I would observe that some banks that have done better and there are a lot of banks that have done worse,â Murphy said.
âThere a lot of banks that are getting zero for their shares because we have been through extraordinary, unprecedented challenging times and I would ask the people who are disappointed to give us a chance to make it up to them by being a great bank, by providing good service, loans at competitive rates and good deposit and being a solid community bank.â
Plus, Murphy said: âI know there are a large number of Cadence shareholders who bank with us and Iâm very appreciative of their business and hopeful that we can continue to do a good job for them in the years ahead.â
No change of control payments
Additionally, Murphy said Mallory told those at Thursdayâs shareholders meeting he declined to take a change of control payment he was contractually entitled to in his employment contract.
âFor him to do this is unprecedented. He worked there for 45 years; he was contractually entitled to take it and in my view, it reflects Lewis is man of highest integrity and great character,â Murphy said. âItâs extraordinary really.â
None of the senior executives with Cadence will take any change of control payments, Murphy said.
Mallory commented on the shareholder vote in the statement Cadence officials released Thursday.
âWe are pleased that the acquisition by CBC was approved by 89 percent of Cadenceâs voting shareholders,â Mallory said. âWe are also excited about the opportunity to join with CBC to continue our operations under the Cadence Bank name. We believe the capital injection by CBC provides a solid value for our shareholder, employees and customers.â
CBC will be âstrong financial partnerâ
Also, Mallory said: âThe acquisition by CBC will allow us to continue serving our communities with our existing employee team while having a strong financial partner to build our operations in the future. At Cadence Bank, we are committed to proactively providing financial solutions to our customers and resources to our communities in a personalized manner through knowledgeable and accountable banking professionals.â
Murphy is a Mississippi State University alumnus who served as CEO and director of Amegy Bank, a Texas-based operation he co-founded in 1990 and helped grow from less than $100 million to more than $11 billion in assets.
Amegy â which operates 85 banking centers in Houston, Dallas and San Antonio âÂ was sold to Zions Bancorporation in 2005.
Most of CBCâs investors are private and public pension funds, endowments and foundations, officials have said.
The CBC agreement was the second of two proposals regarding Cadenceâs future. The first was a proposed merger with Jackson-based Trustmark.
Under the Trustmark deal, Cadence shareholders were to get 0.096993 Trustmark shares in a tax-free exchange.
The transaction was valued at $23.8 million âÂ or $2 per common Cadence share â working from a price of $20.62 for Trustmark shares.
The Jackson-based bank offered to buy the Treasuryâs preferred stock at a price of $30.05 million cash.
In early October, Cadence officials paid $2 million to back out of the Trustmark agreement in favor of the one with CBC.
In making the case for the CBC deal, Mallory spelled out in early October three primary reasons for the move â price, jobs and name.
The price CBC offered was a premium to the previous one and would not be tied to market changes. Next, the transaction would preserve employment and âProspects are quite high ... that those jobs would multiply, not be diminished,â Mallory said at the time.
Lastly, Cadence would retain its name and gain âhuge capital injection ... It will come in significant supply with this transaction,â Mallory said in October.
CBC will acquire Cadence by merging it with Maroon Acquisition Corp., a wholly-owned CBC subsidiary. Cadence will be the surviving entity.
The deal is expected to close in the first quarter of next year.
âThe Federal Reserve regulatory approval is pending and we expect that we will receive that approval in January or February,â Murphy said.
Shares of Cadence stock were up 1 cent to $2.46 per share at the close of trading Thursday.