Trustmark National Bank is buying Starkville-based Cadence Bank in a $53.8 million deal that will give it a powerful presence in the Golden Triangle, but leaves uncertainty for many employed in Cadence”s Starkville and Columbus operations.
The two banks announced the agreement in statements released Wednesday.
Trustmark chairman and CEO Richard G. Hickson said the deal includes $23.6 million in stock for Cadence Bank and an offer to buy $30 million for Cadence preferred shares held by the U.S. Treasury. Last year, Cadence received the money from the government”s Troubled Asset Relief Program, or TARP.
In the deal, the federal government forgave $14 million of TARP funds owed by Cadence.
Trustmark will pay Cadence shareholders 0.097 shares of Trustmark for every share they hold.
Hickson said in a statement that the merger “provides an excellent opportunity for Trustmark to enhance its franchise within the attractive Golden Triangle area, as well as Memphis. In addition, it provides entry into the Birmingham, Nashville, Sarasota and Tuscaloosa markets.”
The deal makes Trustmark, which has no presence in Starkville, the No. 1 bank in that market. Trustmark also wins strong presences in West Point and Columbus through the deal.
Trustmark”s new dominance and relative strength also means more lending power for businesses and corporations looking to locate or expand in the Golden Triangle.
The deal also brings Trustmark into Alabama and Georgia, and strengthens its Tennessee presence.
Hickson said Trustmark had done its due diligence in the deal, looking closely at Cadence”s troubled portfolio.
Cadence”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.
Cadence has 38 offices in Mississippi, Tennessee, Alabama, Florida and Georgia. It has $1.1 billion in loans and $1.5 billion in deposits. Its assets total about $1.9 billion.
At the end of June, Trustmark had total assets of about $9.2 billion. Loans totaled $5.9 billion and deposits totaled $7.1 billion.
Lewis F. Mallory Jr., Cadence”s chairman and CEO, said the combination of the two banks “will enable us to better serve our customers through increased convenience as well as the addition of broader financial services.”
The deal, which must get regulatory and shareholder approval, is expected to close in the first quarter of next year.
Cadence Bank had been given until Sept. 19 to raise its capital to meet a consent order issued by the Office of the Comptroller in May.
The OCC said Cadence had to meet a Tier 1 capital a measure of a bank”s solvency of 9 percent. For the second quarter of this year, Cadence posted a $1.6 million loss at a Tier 1 ratio of 5.25 percent.
Cadence officials had been in a “quiet period” that prevented them from talking about their efforts.
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