Cadence Financial Corporation Reports First Quarter Results

Cadence Financial Corporation (NASDAQ: CADE), a bank holding company whose principal subsidiary is Cadence Bank, N.A., today reported a net loss of $1.2 million, for the first quarter of 2010, compared with a net loss of $84.2 million for the first quarter of 2009. Net loss applicable to common shareholders was $1.9 million, or $0.16 per diluted share, in the first quarter of 2010. This compares with a net loss applicable to common shareholders of $84.5 million, or $7.09 per diluted share, in the first quarter of 2009. The 2009 results included a $66.5 million non-cash charge related to the write-down of goodwill (an intangible asset) as required by FASB ASC 350, “Intangibles-Goodwill and Other.”

“Cadence has significantly improved its credit quality since last year which was highlighted by our lowest provision for loan losses in over two years,” stated Lewis F. Mallory, Jr., chairman and chief executive officer of Cadence Financial Corporation. “Our loan loss provision benefitted from a significant drop in charge-offs, the lowest level since the second quarter of 2008, and a lower level of non-performing, classified, and watch-list loans compared with the fourth quarter of 2009.

“Our primary strategy in restoring our earnings has been to reduce our exposure to higher risk real estate loans over the past year, including loans for 1-4 family speculative residential construction, land development and lots to builders. These higher risk real estate loan categories were down approximately $15.1 million in the last three months and down $102.5 million since the fourth quarter of 2008. In addition, our allowance for loan losses as a percentage of total loans increased to 4.0% at March 31, 2010, from 3.0% at March 31, 2009, and we believe it represents a solid reserve for problem credits remaining in our system,” continued Mr. Mallory.

First Quarter Results

Net interest income was $10.2 million in the first quarter of 2010 compared with $12.3 million in the first quarter of 2009. The decline in net interest income was due to an 8.7% decrease in average earning assets and a 23 basis point decrease in net interest margin compared with the first quarter of 2009. The reduction in net interest margin was due in part to building liquidity, interest reversals due to loans moved to non-accrual status and the increase in non-accrual loans.