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Major deadline ahead for Cadence

September 17, 2010

Cadence Bank faces a deadline soon to raise capital and prevent a possible sale or merger of the financial institution, according to a May consent order with a federal regulatory agency.
The Office of the Comptroller of the Currency is the primary federal agency overseeing the bank.
On May 19, bank and OCC officials signed the order spelling out specific steps Cadence officials were to take over the following months.
One of these was a requirement for the bank to hold total capital of at least 12 percent of risk-weighted assets and Tier 1 capital of at least nine percent of adjusted of adjusted total assets by 120 days of the date of the order.
In a statement early Friday evening, Lewis Mallory, chairman of the Cadence board of directors and CEO, said, “Cadence continues to pursue its capital raising efforts. Contacts with capital markets and constructive discussions with regulators are continuing on an ongoing basis.”
“Presently, Cadence maintains capital levels above the well-capitalized standards published by banking regulatory agency. Liquidity levels at Cadence significantly exceed peer bank liquidity,” Mallory said in the statement.
“We remain focused on serving our customers as we have for over a 120 years and returning Cadence Bank to profitability.”
However, the OCC order says that if Cadence officials fail to “achieve and maintain the minimum capital ratios” required, “then in the sole discretion of the Director (for Special Supervision), the Bank shall, upon direction of the Director, within (30) days develop and shall submit to the Director for his review and prior written determination of no supervisory objection a Disposition Plan that shall detail the (Cadence) Board’s proposal to sell or merge the Bank.”
If the plan outlines a sale or merger, the plan must – at a minimum – address the steps taken and the “associated timeline to ensure that a definitive agreement for the sale or merger is executed not later than ninety (90) days after the receipt of the Director’s written determination of no supervisory objection to the Disposition Plan,” the order reads.
After the director has informed the bank in writing he does not take supervisory objection to the plan, the board “shall immediately adopt and implement, and shall thereafter ensure” compliance with the disposition plan, the order reads.
If officials did not take other steps, including submitting a capital plan or implementing or adhering to a capital plan to which the director has taken no supervisory objection, the disposition plan would also be triggered.
Coinciding with the consent order, Cadence officials took steps to issue up to $80 million in common stock.
At the time, company officials indicated they were offering the stock issue for general corporate purposes, to include funding the bank’s regulatory capital needs.
Bank officials indicated at the time of the consent order that they had filed an S-1 Registration Statement.
Attempts to reach OCC officials and obtain additional information on the matter were unsuccessful by press time Friday.
Cadence’s stock closed up 23 cents at $1.69 a share at the end of trading Friday.

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