Lewis Mallory Jr., chairman and CEO of Cadence Bank, plans to retire from the company after the sale of the bank to a private equity firm is completed, the company said in a release.
Mallory, who has served as CEO since 1978, will be replaced by Mark Abernathy, Cadence”s president, the bank said. Paul B. Murphy Jr., president of Houston-Texas-based Community Bancorp, will be elected chairman of the board. The buyout was approved by federal regulators earlier this week and is expected to close in the first week of March.
“I am honored to have served as Cadence”s Chairman and CEO for the past 17 years,” Mallory said in a statement. “Since I joined the bank in 1965, my fellow employees, our senior management team and the board of directors have become a big part of my life. We have worked hard together to serve our communities and have grown to be the leading bank in our home market in the Golden Triangle in east Mississippi. I am proud of our bank”s contribution to our communities and the customers we serve.
“I am also pleased that Mark Abernathy will be named CEO of Cadence upon my retirement. He joined Cadence 16 years ago, and he succeeded me as President and Chief Operating Officer of the bank after four years on the job. He has grown in that role over the years and has been a key member of our team.”
Mallory also lauded the “fresh, new leadership headed by Mark and Paul,” and said that an expected $100 million infusion of cash into the bank by CBC will help the bank “continue its strong support of its customers and communities.”
The bank will continue to operate under the Cadence name after the buyout is completed.
Cadence had agreed to a buyout by Trustmark Bank, but backed out of the deal after receiving a higher offer from CBC. Shareholders of Cadence voted in December to receive $2.50 per share from CBC in the buyout deal.
Community Bancorp also offered to purchase the $44 million of Cadence preferred stock issued to the U.S. Department of the Treasury under the Troubled Asset Relief Program, or TARP, for $38 million in cash.
Trustmark had agreed to exchange $23.6 million in stock for Cadence stock, or about $2 per share, in a tax-free deal. Trustmark also offered to pay back $30 million in TARP money to the Treasury.
Executive compensation
A proxy in October outlined Change of Control provisions for top executives, who are compensated if they are “terminated by Cadence without cause … within one year following the merger or if his responsibilities and compensation are materially diminished as a result of the merger.”
Executives covered under the agreement are Mallory, Abernathy and executive vice president and chief financial officer Richard T. Haston.
According to the filing, “Mallory and Abernathy will be entitled to a lump sum payment equal to 2.99 times the executive”s base salary and Mr. Haston will be entitled to a lump sum payment equal to 2 times his base salary.”
The executives would also receive “an amount equal to his monthly medical insurance premium times 12.”
Vice president John Davis would receive “a payment in the amount of one time his base salary and an amount equal to his monthly medical insurance premium times 12.”
Adding in salary and benefits for the executives, who are also Cadence shareholders, the severance amounts totaled to $908,000 for Mallory; $828,000 for Abernathy, $405,000 for Haston, and $153,000 for Davis.
As a result of the sale, officers and board members would also receive “equity awards” for “options not exercised as a result of the merger.” The amounts include $135,878 for Mallory; $43,623 for Abernathy; $5,200 for Haston; $2,800 for Davis; and $1,487 for board member Clifton S. Hunt.
Cadence, a $1.9 billion bank, has branches in Mississippi, Tennessee, Alabama, Florida and Georgia. Cadence”s stock is listed on the Nasdaq under the symbol CADE.
Houston-based Community Bancorp has raised equity capital commitments in excess of $900 million for the purpose of buying U.S. banks “with a particular focus on community banks that are well positioned to benefit from the equity capital and industry expertise CBC can provide,” a release said.
CBC”s management has deep roots in banking. Murphy was previously CEO of Amegy Bank of Texas, an $11 billion bank headquartered in Houston. He is a director of the Mississippi State University Foundation, Federal Reserve Bank of Dallas, Houston branch, and Hines Real Estate Investment Trust.
CBC”s chairman, William B. Harrison Jr., is the former chairman and chief executive officer of JPMorgan Chase, where he retired as chairman in 2006. Previously he was chief executive officer of Chase Manhattan Corp., and presided over the mergers with J.P. Morgan in 2000 and Bank One in 2004.
“I look forward to joining forces with Cadence and Mark Abernathy,” Murchy said in Thursday”s release. “Lewis Mallory is a man of great character and integrity and I have tremendous respect for him. Lewis has been the driving energy in building Cadence and the employees and customers have a lot to look forward to as we build on his legacy.”
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