Cadence Financial Corporation Reports Second Quarter Results.STARKVILLE, Miss. -- Cadence cadence, in music, the ending of a phrase or composition. In singing the voice may be raised or lowered, or the singer may execute elaborate variations within the key. Financial Corporation (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on : CADE), a $2 billion financial holding company whose principal subsidiary is Cadence Bank, N.A., today reported net income of $1.9 million, or $0.16 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share, for the second quarter ended June 30, 2008, compared with net income of $3.6 million, or $0.30 per diluted share, for the second quarter of 2007. The primary cause of the reduction in income was a $2.4 million, or $0.12 per diluted share, increase in the Company's loan loss provision compared with the second quarter of 2007. "Cadence reported a 5.4% increase in loans to $1.4 billion since the second quarter of last year due to growth in selected markets," stated Lewis F. Mallory, Jr., chairman and chief executive officer of Cadence Financial Corporation. "Our loan growth slowed as we entered 2008 due to the softening softening /sof·ten·ing/ (sof´en-ing) malacia. softening a change of consistency, with loss of firmness or hardness. economy and was up only 1.2% in the first six months of this year. We experienced a slight decline in total loans during the second quarter of 2008 and expect loan growth to be slow in the second half of 2008, reflecting the slowing economy and our increased focus on credit quality rather than growing our loan volume. "We are taking a very prudent and aggressive stance in addressing credit quality issues in our loan portfolio to minimize future losses," continued Mr. Mallory. "We increased our allowance for loan losses in the second quarter of 2008 to $15.8 million as net charge-offs remained below our provision expense for the second consecutive quarter this year. Even though some of our loan quality metrics metrics Managed care A popular term for standards by which the quality of a product, service, or outcome of a particular form of Pt management is evaluated. See TQM. have improved in the second quarter of 2008, our current projections indicate that our loan loss provision will continue to increase in the third quarter of 2008." Second Quarter Results Net interest income declined 2.1% to $14.0 million in the second quarter of 2008 compared with $14.3 million in the second quarter of 2007. The decline in net interest income was due to a 22 basis point decrease in net interest margin partially offset by a 5.1% increase in average earning assets Earning Assets Any income-earning asset owned by a company. Notes: These assets are generally interest-bearing accounts, bonds, and securities available for sale. See also: Asset, Asset Valuation, Earnings, Net Interest Margin . "Our net margin was down 22 basis points since the second quarter of last year as a result of loan yields declining at a faster rate than the cost of deposits," continued Mr. Mallory. "We also have slowed the growth of higher yielding real estate development loans due to the soft real estate market and our increased emphasis on credit quality. This reduced overall yields in our loan portfolio. We expect our margin to remain under pressure in the second half of 2008 based on the current interest rate environment and a slowdown For articles with similar titles, see Slow Down (disambiguation). A slowdown is an industrial action in which employees perform their duties but seek to reduce productivity or efficiency in their performance of these duties. in new loan demand." Total interest income declined 15.5% to $25.7 million for the second quarter of 2008 compared with $30.4 million in the second quarter of 2007. Interest and fees on loans declined 17% due to a 178 basis point decrease in average yields partially offset by a $97.8 million increase in average loan balances from the second quarter of 2007. Interest and dividends on investment securities fell 6.6% to $5.1 million compared with the second quarter of 2007 due to a 16 basis point decline in yield and a $14.1 million decrease in the average investment securities portfolio. Cadence's provision for loan losses was $3.3 million in the second quarter of 2008 compared with $900,000 in the second quarter of 2007 and $3.0 million in the first quarter of 2008. At the end of the second quarter of 2008, the allowance for loan losses was $15.8 million, or 1.2% of total loans, compared with $12.1 million, or 0.9% of total loans, in the second quarter of 2007. The allowance increased to 147.9% of non-performing loans A non-performing loan is a loan that is in default or close to being in default. Many loans become non-performing after being in default for 3 months, but this can depend on the contract terms. at the end of the second quarter of 2008, up from 109.9% in the first quarter of 2008 and 145.2% in the second quarter of 2007. Net interest income after provision for loan losses was down 20.1% to $10.7 million in the second quarter of 2008 compared with $13.4 million in the second quarter of 2007. The Company is maintaining its allowance for loan losses at the maximum level permitted by its evaluation of allowance adequacy. Total non-interest income was $5.1 million in the second quarter of 2008 compared with $5.3 million in the second quarter of 2007. The decline in non-interest income in the latest quarter was due to lower service charges on deposits, insurance fees and commissions and lower mortgage loan origination The examples and perspective in this article or section may not represent a worldwide view of the subject. Please [ improve this article] or discuss the issue on the talk page. income resulting from lower transaction volume related to reduced activity in the housing sector of the economy. Trust department income was down due to lower fees related to the decline in the market value of equity investments under management. "We continue to focus on cost controls throughout Cadence," noted Mr. Mallory. "Since last year, we have been very successful in leveraging our infrastructure to hold down expenses. As a result, non-interest expenses decreased 0.5% to $13.6 million compared with $13.7 million in the second quarter of 2007." Income before taxes fell 55.7% to $2.3 million in the second quarter of 2008 compared with $5.1 million in the second quarter of 2007. The tax rate for the second quarter of 2008 was 17.3% compared with 29.5% in the same period last year. The lower tax rate is due to tax-exempt income Tax-exempt income Dividends and interest not subject to federal and, in some cases, state and local income taxes. being a higher percentage of pretax income pretax income Reported income before the deduction of income taxes. Pretax income is sometimes considered a better measure of a firm's performance than aftertax income because taxes in one period may be influenced by activities in earlier periods. in the second quarter of 2008 than in the second quarter of 2007. Net income for the second quarter of 2008 was $1.9 million, or $0.16 per diluted share, compared with net income of $3.6 million, or $0.30 per diluted share, in the second quarter of 2007. Diluted average weighted shares outstanding increased 0.1% to 11.94 million in the second quarter of 2008 compared with 11.92 million in the second quarter of 2007. Book value per share was $15.92 at June 30, 2008, and $15.97 at June 30, 2007. Shareholders' equity Shareholders' Equity A firms' total assets minus its total liabilities. Equivalently, it is share capital plus retained earnings minus treasury shares. Shareholders' equity is the amount by which a company is financed through common and preferred shares. was $189.6 million and $190.0 million at June 30, 2008 and 2007, respectively. Cadence paid a cash dividend of $0.25 per share in the second quarter. "Our dividend payout ratio Dividend Payout Ratio The percentage of earnings paid to shareholders in dividends. Calculated as: is currently greater than our net income and our Board of Directors will evaluate the dividend payout ratio relative to earnings," noted Mr. Mallory. "We are committed to remaining well-capitalized and will make adjustments as needed as needed prn. See prn order. to balance the dividend with earnings to ensure a strong capital base to support future growth." Six Month Results Net interest income rose 1.9% to $28.6 million in the first six months of 2008 compared with $28.0 million in the same period of 2007. Net income for the first six months of 2008 was $4.6 million, or $0.39 per diluted share, compared with $3.7 million, or $0.31 per diluted share, in the same period of 2007. The 2008 six month results include a $4.2 million ($0.22 per diluted share) increase in the loan loss provision to $6.3 million compared with $2.1 million in the prior year's comparable period. The 2007 six month results include a $5.1 million ($0.26 per diluted share) impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. loss on securities recorded in the first quarter of 2007. There was no comparable impairment loss in the 2008 period. Third Quarter and 2008 Expectations Expectations for the third quarter of 2008 are for net income to be in the range of $.06 - $.10 per diluted share. Cadence reported net income of $0.22 per diluted share in the third quarter of 2007. Cadence expects earnings for 2008 to be in the range of $0.54 to $0.60 per diluted share compared with $0.82 per diluted share reported in 2007. The 2008 earnings estimates are based on continued pressure on the margin, slower loan growth and continued softness in selected markets that is expected to result in an increase in the provision for loan losses. Conference Call Cadence Financial Corporation will provide an on-line, real-time 1. real-time - Describes an application which requires a program to respond to stimuli within some small upper limit of response time (typically milli- or microseconds). Process control at a chemical plant is the classic example. webcast and rebroadcast of its second quarter results conference call to be held tomorrow, July 23, 2008. The live broadcast will be available on-line at www.cadencebanking.com under investor information as well as www.investorcalendar.com beginning at 10:00 a.m. (Eastern Time). The on-line replay will follow immediately and continue for 30 days. About Cadence Financial Corporation Cadence Financial Corporation is a $2.0 billion financial holding company providing full financial services The examples and perspective in this article or section may not represent a worldwide view of the subject. Please [ improve this article] or discuss the issue on the talk page. , including banking, trust services, mortgage services, insurance and investment products in Mississippi Mississippi, state, United States Mississippi (mĭs'əsĭp`ē), one of the Deep South states of the United States. It is bordered by Alabama (E), the Gulf of Mexico (S), Arkansas and Louisiana, with most of the border formed by , Tennessee Tennessee, state, United States Tennessee (tĕn`əsē', tĕn'əsē`), state in the south-central United States. , Alabama, Florida and Georgia. Cadence's stock is listed on the NASDAQ Global Select Market under the symbol CADE. Forward-Looking Statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. This press release contains statements that are forward-looking as defined within the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. These forward-looking statements are provided to assist in the understanding of anticipated future financial results. However, such forward-looking statements involve risks and uncertainties (including uncertainties relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc interest rates, management and operation of acquired operations and general market risks) that may cause actual results to differ materially from those in such statements. For a discussion of certain factors that may cause such forward-looking statements to differ materially from the Company's actual results, see the Company's Annual Report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. for the year ended December 31, 2007, and other reports filed with the Securities and Exchange Commission. Cadence Financial Corporation is not responsible for updating the information contained in this press release beyond the published date, or for changes made to this document by wire services or Internet services. [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] |
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