BANCORPSOUTH FEDERAL DEPOSIT INSURANCE CORPORATION
WASHINGTON, D.C. 20549
_____________________________________
FORM 8-K
_____________________________________
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): November 30, 2023
_____________________________________
CADENCE BANK
(Exact name of registrant as specified in its charter)
_____________________________________
Mississippi | 11813 | 64-0117230 |
(State or other jurisdiction | (IRS Employer | |
of incorporation) | (FDIC Certificate No.) | Identification No.) |
One Mississippi Plaza | 38804 | |
201 South Spring Street | ||
Tupelo, Mississippi | ||
Tupelo | ||
(Address of principal executive offices) | (Zip Code) | |
(662) 680-2000 |
Registrant's telephone number, including area code
_________________________________________
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (seeGeneral Instruction A.2. below):
- Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
- Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
- Pre-commencementcommunications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
- Pre-commencementcommunications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
Common Stock, $2.50 par value per share | CADE | New York Stock Exchange |
Series A Preferred Stock, $0.01 par value per share | CADE-PrA | New York Stock Exchange |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for | |
complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. | ☐ |
Item 2.01. Completion of Acquisition or Disposition of Assets.
On November 30, 2023, Cadence Bank (the "Company") completed its previously announced sale of all of the issued and outstanding shares of capital stock of Cadence Insurance, Inc., a former wholly owned subsidiary of the Company that conducted the Company's insurance agency business ("Cadence Insurance"), to Arthur J. Gallagher Risk Management Services, LLC ("Gallagher") (the "Sale Transaction"), pursuant to that certain stock purchase agreement, dated as of October 24, 2023, by and among the Company, Cadence Insurance, Gallagher and Arthur J. Gallagher & Co. (solely for purposes of Section 12.16 thereof) (the "Stock Purchase Agreement"). Under the terms of the Stock Purchase Agreement, the purchase price payable to the Company in the Sale Transaction was $904.0 million, subject to customary purchase price adjustments. This purchase price is subject to further adjustment based upon a final closing statement for the Sale Transaction.
The foregoing description of the Sale Transaction and the Stock Purchase Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Stock Purchase Agreement, which is attached as Exhibit 2.1 hereto and incorporated herein by reference.
Item 7.01. Regulation FD Disclosure.
On November 30, 2023, the Company issued a press release announcing the closing of the Sale Transaction. A copy of the press release is attached as Exhibit 99.1 to this Current Report on Form 8-K (the "Report") and is incorporated herein by reference.
The information in Item 7.01 of the Report, including Exhibit 99.1, is being furnished pursuant to Item 7.01 Regulation FD Disclosure. In accordance with General Instruction B.2 of Form 8-K, the information in Item 7.01 of the Report, including Exhibit 99.1, shall not be deemed "filed" for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly stated by specific reference in such filing.
Item 9.01. Financial Statements and Exhibits.
- Pro Forma Financial Information.
Unaudited pro forma condensed consolidated financial information of the Company being presented to give effect to the Sale Transaction is attached as Exhibit 99.2 hereto and incorporated by reference herein.
- Exhibits
Exhibit | Description of Exhibit | ||
Number | |||
2.1* | Stock Purchase Agreement, dated as October 24, 2023, by and among Cadence Bank, Cadence Insurance, Inc., | ||
Arthur J. Gallagher Risk Management Services, LLC and Arthur J. Gallagher & Co. (solely for purposes of | |||
Section 12.16 thereof) (incorporated by reference to Exhibit 2.1 to the Company's Current Report on Form 8-K, | |||
filed with the FDIC on October 26, 2023).* |
- Press Release, dated November 30, 2023.
- Cadence Bank Unaudited Pro Forma Condensed Consolidated Financial Information.
- Certain schedules and similar attachments have been omitted in accordance with Item 601(a)(5) of Regulation S-K. The Company hereby undertakes to furnish supplemental copies of any omitted schedules or similar attachments upon request by the FDIC; provided, however, that the Company may request confidential treatment for any schedules or similar attachments so furnished.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Date: December 6, 2023 | CADENCE BANK | |
By: | /s/ Cathy S. Freeman | |
Name: | Cathy S. Freeman | |
Title: | Senior Executive Vice President | |
and Chief Administrative | ||
Officer |
Exhibit 99.1
News Release | For Immediate Release |
Investor Contact: Will Fisackerly 662-680-2475
will.fisackerly@cadencebank.com
Media Contact:
Danielle Kernell 713-392-7709 danielle.kernell@cadencebank.com
Cadence Bank Completes the Sale of Cadence Insurance, Inc.
to Arthur J. Gallagher & Co.
The $904 million cash sale supports Cadence Bank's focus on building its core
banking business and continuing its long-term strategic initiatives.
HOUSTON and TUPELO, Miss.,November 30, 2023- CadenceBank ("Cadence" or the "Company")
(NYSE: CADE) announced it hasclosed the previously disclosed sale of its insurance operations,
Cadence Insurance, Inc. ("Cadence Insurance"), to Arthur J. Gallagher & Co. ("Gallagher") (NYSE:
AJG) for $904 million in cash, subject to customary purchase price adjustments. The transaction will be effective at 11:59 p.m. CT today.
The transaction strategically positions Cadence for long-term growth and success, allowing it toreinvest the capital from the sale intogrowing its core bankingbusiness and fulfilling its short- and long-term strategic initiatives.
"The completion of this transaction is a testament to the significant value of the insurance business,"said Dan Rollins,chairman & CEO of Cadence Bank. "Overthe past 24 years, we have enjoyed a strong
partnership with Cadence Insurance, and we applaud their leadership and the entire team for their many contributions and commitment to serving their clients and communities."
Cadence Insurance is an insurance brokerage business that specializes in commercial and personal
property & casualty, employee benefits, business solutions, and risk management services. Cadence
Insurance manages 30 offices in eight states across the Southeast and has consistently been recognized as
a Best Places to Work byBusiness Insurance, BatonRouge Business ReportandMississippiBusiness
Journal .Its executive leadership, management andemployees joined Gallagher in connection with the sale .
###
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About Cadence Bank
Cadence Bank (NYSE: CADE) is a leading regional banking franchise with approximately $50 billion in
assets and over 350 branch locations across the South and Texas. Cadence provides consumers,
businesses and corporations with a full range of innovative banking and financial solutions. Services and
products include consumer banking, consumer loans, mortgages, home equity lines and loans, credit
cards, commercial and business banking, treasury management, specialized lending, asset-based lending,
commercial real estate, equipment financing, correspondent banking, SBA lending, foreign exchange,
wealth management, investment and trust services, financial planning, and retirement plan management.
Cadence is committed to a culture of respect, diversity, inclusion and belonging in both its workplace and communities. Cadence Bank, Member FDIC. Equal Housing Lender.
About Arthur J. Gallagher & Co.
Arthur J. Gallagher & Co. (NYSE:AJG), a global insurance brokerage, risk management and consulting services firm, is headquartered in Rolling Meadows, Illinois. Gallagher provides these services in
approximately130 countries around the world through its owned operations and a network of correspondent brokers and consultants.
Forward -Looking Statements
Certain statements made in this news release constitute "forward-looking statements" within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and are subject to the safe harbor under the Private Securities Litigation Reform Act of 1995 as well as the "bespeaks
caution" doctrine. These statements are often, but not exclusively, made through the use of words or
phrases like "anticipate," "aspire," "assume," "believe," "budget," "contemplate," "continue," "could,"
"estimate," "expect," "forecast," "foresee," "goal," "hope," "indicate," "intend," "may," "might," "outlook," "plan," "project," "projection," "predict," "prospect," "potential," "roadmap," "seek,"
"should," "target," "will," "would," the negative versions of such words, or comparable words of a future or forward-looking nature. These forward-looking statements may include, without limitation, discussions regarding general economic, interest rate, real estate market, competitive, employment, and credit market
conditions; our assets; cash flows; financial condition; liquidity; prospects; results of operations, as well as the impact of the sale of Cadence Insurance (the "Transaction") on the Company's financial condition and future net income and earnings per share, the amount of net after-tax proceeds expected to be received by the Company from the Transaction, the Company's ability to deploy capital into strategic and
growth initiatives, or any of the Company's comments related to topics in its risk disclosures or results of operations.
Forward-looking statements are based upon management's expectations as well as certain assumptions and estimates made by, and information available to, the Company's management at the time such statements were made. Forward-looking statements are not historical facts, are not guarantees of future
results or performance and are subject to certain known and unknown risks, uncertainties and other
factors that are beyond the Company's control and that may cause actual results to differ materially from
those expressed in, or implied by, such forward-looking statements. These risks, uncertainties and other
factors include, without limitation: general economic, unemployment, credit market and real estate market
conditions, including inflation, and the effect of such conditions on customers, potential customers, assets, investments and liquidity; collateral values, the value of investment securities and asset recovery values; the risks of changes in interest rates and their effects on the level and composition of deposits, loan
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demand, loan repayment velocity, and the values of loan collateral, securities and interest sensitive assets and liabilities; risks arising from market reactions to the banking environment in general, or to conditions or situations at specific banks; risks arising from perceived instability in the banking sector; the impact of
inflation, the failure of assumptions underlying the establishment of reserves for possible credit losses, fair value for loans and other real estate owned; changes in the prices, values and sales volumes of residential and commercial real estate, especially as they relate to the value of collateral supporting the
Company's loans; a deterioration of the credit rating for U.S. long-term sovereign debt, actions that the U .S. government may take to avoid exceeding the debt ceiling, or uncertainties surrounding the debt ceiling and the federal budget; the availability of and access to capital; possible downgrades in our credit
ratings or outlook which could increase the costs or availability of funding from capital markets; the ability to attract new or retain existing deposits or to retain or grow loans; potential delays or other
problems in implementing and executing our growth, expansion and acquisition or divestment strategies (including the sale of Cadence Insurance), including delays in obtaining regulatory or other necessary
approvals or the failure to realize any anticipated benefits or synergies from any acquisitions or growth strategies; significant turbulence or a disruption in the capital or financial markets; the effect of a fall in
stock market prices on our investment banking business and our fee income from our brokerage and wealth management businesses; the ability to grow additional interest and fee income or to control
noninterest expense; the potential impact of the phase-out of the LIBOR or other changes involving
LIBOR; utilization of non-GAAP financial metrics; declaration and payment of dividends; ability to pay
dividends or coupons on our 5.5% Series A Non-Cumulative Perpetual Preferred Stock, par value $0.01 per share, or our subordinated notes; competitive factors and pricing pressures, including their effect on our net interest margin; changes in legal, financial and/or regulatory requirements; recently enacted and potential legislation and regulatory actions and the costs and expenses to comply with new and/or existing
legislation and regulatory actions, and any related rules and regulations; changes in U.S. Government monetary and fiscal policy, including any changes that may result from U.S. elections; FDIC special
assessments or changes to regular assessments; possible adverse rulings, judgments, settlements and other outcomes of pending or future litigation or government actions; the ability to keep pace with
technologicalchanges, including changes regarding maintaining cybersecurity; increased competition in the financial services industry, particularly from regional and national institutions, as well as from fintech companies, risks related to our reliance on third parties to provide key components of our business
infrastructure,including the risks related to disruptions in services provided by disputes with, or financial difficulties of a third-party vendor, the impact of failure in, or breach of, our operational or security
systems or infrastructure, or those of third parties with whom we do business, including as a result of cyber -attacks or an increase in the incidence or severity of fraud, illegal payments, security breaches or other illegal acts impacting us or our customers; natural disasters or acts of war or terrorism; international or political instability (including the impacts related to or resulting from Russia's military action in Ukraine, or the Israel-Hamas war, including the imposition of additional sanctions and export controls, as well as the broader impacts to financial markets and the global macroeconomic and geopolitical
environments);impairment of our goodwill or other intangible assets; adoption of new accounting
standards or changes in existing standards; and other factors described in "Part I, Item 1A. Risk Factors" in this Report or as detailed from time to time in the Company's press and news releases, reports and other filings we file with the FDIC.
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In addition, the Company faces risks related to diversion of management's attention from ongoing
business operations due to the Transaction; related to the failure to achieve the expected impact on the
Company's financial condition; and associated with unexpected costs or liabilities relating to the Transaction.
The Company also faces risks from: possible adverse rulings, judgments, settlements or other outcomes of
pending, ongoing, and future litigation, as well as governmental, administrative and investigatory matters; the impairment of the Company's goodwill or other intangible assets; losses of key employees and personnel; the diversion of management's attention from ongoing business operations and opportunities; and the company's success in executing its business plans and strategies, and managing the risks involved in all of the foregoing.
The foregoing factors should not be construed as exhaustive and should be read in conjunction with those factors that are set forth from time to time in the Company's periodic and current reports filed with the
FDIC, including those factors included in the Company's Annual Report on Form 10-K for the year ended December 31, 2022, particularly those under the heading "Item 1A. Risk Factors," in the Company's
Quarterly Reports on Form 10-Q under the heading "Part II-Item 1A. Risk Factors," and in the Company's Current Reports on Form 8-K.
Although the Company believes that the expectations reflected in these forward-looking statements are
reasonable as of the date of this news release, if one or more events related to these or other risks or
uncertainties materialize, or if the Company's underlying assumptions prove to be incorrect, actual results may prove to be materially different from the results expressed or implied by the forward-looking
statements . Accordingly, undue reliance should not be placed on any forward-looking statements. The forward-looking statements speak only as of the date of this news release, and the Company does not
undertake any obligation to publicly update or review any forward-looking statement, except as required by applicable law. New risks and uncertainties may emerge from time to time and it is not possible for the Company to predict their occurrence or how they will affect the Company. All written or oral
forward -looking statements attributable to the Company are expressly qualified in their entirety by this section.
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Exhibit 99.2
CADENCE BANK
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION
On November 30, 2023, Cadence Bank, a Mississippi corporation, (the "Company" or "Cadence Bank") completed (such event being the "Closing") the previously announced sale of Cadence Insurance, Inc., a wholly owned subsidiary of the Company that conducts the Company's insurance agency business ("Cadence Insurance") via a stock purchase with Arthur J. Gallagher Risk Management Services, LLC ("Gallagher") and Arthur J. Gallagher & Co. Beginning in the fourth quarter of 2023, Cadence Insurance's historical financial results for periods prior to the Closing will be reflected in Cadence Bank's consolidated financial statements as discontinued operations.
The following unaudited pro forma condensed consolidated financial information has been prepared in accordance with Article 11 of Regulation S-X. The following unaudited pro forma condensed consolidated statements of income and unaudited pro forma condensed consolidated statements of comprehensive income (loss) of Cadence Bank for the nine months ended September 30, 2023 and for the years ended December 31, 2022, 2021 and 2020 have been prepared as if the Closing had occurred as of January 1, 2020 and gives effect to the elimination of the historical Cadence Insurance results, as well as other pro forma adjustments due to the Closing. The unaudited pro forma condensed consolidated balance sheet as of September 30, 2023 has been prepared as if the Closing had occurred as of September 30, 2023.
The unaudited pro forma financial information is based on information currently available, including certain assumptions and estimates. This unaudited pro forma financial information is intended for informational purposes only, and does not purport to represent what Cadence Bank's financial position and results of operations would have been had the Closing occurred on the dates indicated, or to project Cadence Bank's financial position or results of operations as of any future date or for any future period. Cadence Bank's actual financial position and results of operations may differ significantly from the pro forma amounts reflected herein due to a variety of factors.
The information in the "Cadence Bank Historical" column in the unaudited pro forma condensed consolidated statements of income, unaudited pro forma condensed consolidated statements of comprehensive income (loss) and the unaudited pro forma condensed consolidated balance sheet were derived from Cadence Bank's historical consolidated financial statements for the periods and as of the date presented and does not reflect any adjustments related to the Closing and related events. The unaudited pro forma condensed consolidated financial information and the accompanying note should be read in conjunction with the audited consolidated financial statements and the accompanying notes and "Management's Discussion and Analysis of Financial Condition and Results of Operations" included in Cadence Bank's Annual Report on Form 10-K for the year ended December 31, 2022 and Cadence Bank's Quarterly Report on Form 10-Q for the nine months ended September 30, 2023.
The information in the "Pro Forma Adjustments" column in the unaudited pro forma condensed consolidated statements of income, unaudited pro forma condensed consolidated statements of comprehensive income (loss) and the unaudited pro forma condensed consolidated balance sheet have been prepared in accordance with the discontinued operations guidance in the Accounting Standards Codification 205 "Financial Statement Presentation" and therefore does not reflect what Cadence Insurance's results of operations would have been on a stand-alone basis and are not necessarily indicative of Cadence Insurance's future results of operations. Also included in the "Pro Forma Adjustments" column are additional pro forma adjustments that are further described in Note 1 - Pro Forma Adjustments to Unaudited Pro Forma Condensed Consolidated Financial Information.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
As of September 30, 2023
Cadence Bank | Pro Forma | Reference | Pro Forma Cadence | ||||||||||||||
Historical | Adjustments | Bank | |||||||||||||||
(In thousands) | |||||||||||||||||
Assets | |||||||||||||||||
Cash and cash equivalents | $ | 1,997,807 | $ | 862,796 | A | $ | 2,860,603 | ||||||||||
Securities available-for-sale | 9,643,231 | 9,643,231 | |||||||||||||||
Loans held for sale | 162,376 | 162,376 | |||||||||||||||
Loans | 32,520,593 | 32,520,593 | |||||||||||||||
Less: allowance for credit losses | (446,859) | (446,859) | |||||||||||||||
Net loans | 32,073,734 | 32,073,734 | |||||||||||||||
Premises and equipment, net | 818,006 | (28,727) | B | 789,279 | |||||||||||||
Goodwill | 1,459,302 | (91,517) | B | 1,367,785 | |||||||||||||
Other intangible assets, net | 114,127 | (9,531) | B | 104,596 | |||||||||||||
Other assets | 2,254,427 | (34,854) | B | 2,219,573 | |||||||||||||
Total Assets | $ | 48,523,010 | $ | 49,221,177 | |||||||||||||
Liabilities and Shareholder's Equity | |||||||||||||||||
Liabilities: | |||||||||||||||||
Noninterest-bearing deposits | $ | 9,657,198 | $ | 75,098 | B | $ | 9,732,296 | ||||||||||
Interest-bearing deposits | 28,687,687 | 28,687,687 | |||||||||||||||
Total deposits | 38,344,885 | 38,419,983 | |||||||||||||||
Borrowings | 4,812,135 | 4,812,135 | |||||||||||||||
Other liabilities | 970,733 | 99,881 | B, C | 1,070,614 | |||||||||||||
Total liabilities | 44,127,753 | 44,302,732 | |||||||||||||||
Shareholders' equity | 4,395,257 | 523,188 | D | 4,918,445 | |||||||||||||
Total Liabilities and Shareholders' Equity | $ | 48,523,010 | $ | 49,221,177 | |||||||||||||
Total shares of Preferred stock outstanding | 6,900 | 6,900 | |||||||||||||||
Total shares of Class A common stock outstanding | 182,611 | 182,611 |
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
For the Nine -Months Ended September 30, 2023
Cadence Bank | Pro Forma | Reference | Pro Forma | ||||||
(In thousands, except per share data) | Historical | Adjustments | Cadence Bank | ||||||
Interest Income | |||||||||
Interest and fees on loans | $ | 1,476,505 | $ | 1,476,505 | |||||
Interest on securities | 218,564 | 218,564 | |||||||
Total interest income | 1,695,069 | 1,695,069 | |||||||
Interest Expense | |||||||||
Interest on deposits | 510,948 | 510,948 | |||||||
Interest on borrowed funds | 167,281 | 167,281 | |||||||
Total interest expense | 678,229 | 678,229 | |||||||
Net interest income | 1,016,840 | 1,016,840 | |||||||
Provision for credit losses | 42,000 | 42,000 | |||||||
Net interest income after provision for credit losses | 974,840 | 974,840 | |||||||
Noninterest Income | 325,358 | (130,944) | E | 194,414 | |||||
Noninterest Expense | 935,424 | (109,170) | F | 826,254 | |||||
Income before income taxes | 364,774 | 343,000 | |||||||
Income tax expense | 81,534 | (5,786) | G | 75,748 | |||||
Net income | 283,240 | 267,252 | |||||||
Preferred stock dividends | 7,116 | 7,116 | |||||||
Income available to common shareholders | $ | 276,124 | $ | 260,136 | |||||
Weighted average common shares outstanding (Basic) | 182,582 | 182,582 | |||||||
Weighted average common shares outstanding (Diluted) | 184,062 | 184,062 | |||||||
Earnings per common share (Basic) | $ | 1.51 | $ | 1.42 | |||||
Earnings per common share (Diluted) | $ | 1.50 | $ | 1.41 | |||||
UNAUDITED PROFORMA CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (LOSS)
For the Nine -Months Ended September 30, 2023
Cadence Bank | Pro Forma | Reference | Pro Forma | |||||||
(In thousands) | Historical | Adjustments | Cadence Bank | |||||||
Net Income | $ | 283,240 | $ | (15,988) | E,F,G | $ | 267,252 | |||
Other comprehensive loss, net of tax: | ||||||||||
Unrealized losses on Available for Sale (AFS) securities: | ||||||||||
Net unrealized losses, net of income taxes of $15,724 | (50,847) | (50,847) | ||||||||
Reclassification adjustment for net losses realized in net income, | ||||||||||
net of income taxes of $12,076 | (39,051) | (39,051) | ||||||||
Net change in unrealized losses on AFS securities, net of tax | (89,898) | (89,898) | ||||||||
Recognized employee benefit plan net periodic benefit cost, net | ||||||||||
of income taxes of $(779) | 2,515 | 2,515 | ||||||||
Other comprehensive loss, net of tax: | (87,383) | (87,383) | ||||||||
Comprehensive income | $ | 195,857 | $ | 179,869 |
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Cadence Bank published this content on 06 December 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 06 December 2023 21:32:43 UTC.
