Cadence Financial Corporation Reports First Quarter Results

STARKVILLE, Miss.--(Business Wire)--
Cadence Financial Corporation (NASDAQ: CADE), a bank holding company whose
principal subsidiary is Cadence Bank, N.A., today reported its results for the
first quarter ended March 31, 2009. The Company previously issued preliminary
results for the first quarter pending a review of goodwill as required by FASB
Statement 142 "Goodwill and Other Intangible Assets." The review was performed
by an independent third-party and they concluded that the full value of goodwill
should be written off and accounted for as an impairment loss in the first
quarter of 2009.

Cadence reported a net loss applicable to common shareholders of $84.5 million,
or $7.09 per diluted share, for the first quarter of 2009, compared with net
income of $2.8 million, or $0.23 per diluted share, in the first quarter of
2008. The 2009 results include a $66.8 million non-cash charge related to the
write-down of goodwill (an intangible asset) as required by FASB Statement 142.
The goodwill impairment charge is an accounting adjustment that does not affect
current operations, cash flows, liquidity, tangible book capital, regulatory
capital, regulatory capital ratios or future operations. "Our goodwill charge
was driven primarily by the continued deterioration of the general economy, the
related decline in the market value of Cadence`s stock price, and current
transaction values being paid for comparable banks in the market," stated Lewis
F. Mallory, Jr., chairman and chief executive officer of Cadence Financial
Corporation. "After completing our goodwill assessment, we wrote-off the full
value of goodwill on our balance sheet."

"Cadence`s first quarter write-down of goodwill has no effect on our financial
condition or our regulatory capital position. The non-cash charge for goodwill
does not affect our current financial health and Cadence remains a
well-capitalized bank, the highest regulatory rating for banks. In addition, the
goodwill charge has no effect on the insurance coverage for deposit accounts or
our ability to serve our customers. We continue to be insured to the maximum
amount provided by the Federal Deposit Insurance Corporation."

"Cadence`s first quarter loss was disappointing and reflects the impact of the
economy on real estate based loans and the value of goodwill associated with
previous acquisitions," continued Mr. Mallory. "Due to the continued weakness in
the economy, the Board of Directors has suspended the cash dividend in order to
preserve our capital during these uncertain times. This was a difficult decision
for our board; however, we believe this is the right business decision for our
Company. We will continue to evaluate our cash dividend program and are
committed to resuming dividend payments as soon as our earnings growth will
support them."

First Quarter Results

Net interest income declined 14.9% to $12.4 million in the first quarter of 2009
compared with $14.5 million in the first quarter of 2008. The decline in net
interest income was due to a lower net interest margin that declined 50 basis
points, partially offset by a 1.3% increase in average earning assets since the
first quarter of 2008. Net interest margin was 2.73% for the first quarter of
2009 compared with 3.23% for the first quarter of 2008.

Cadence`s provision for loan losses was $32.8 million in the first quarter of
2009 compared with $3.0 million in the first quarter of 2008. The increase was
due to a higher level of charge-offs and a significant increase in the allowance
for loan losses. Charge-offs totaled $14.4 million in the first quarter of 2009
and included two real estate development loans totaling approximately $11
million to one borrower. The first quarter provision included an $18.3 million
addition to our allowance for loan losses to increase our reserves.

Net interest loss after provision for loan losses was $20.4 million in the first
quarter of 2009 compared with net interest income after provision for loan
losses of $11.5 million in the first quarter of 2008.

At the end of the first quarter, the allowance for loan losses was $39.1
million, or 3.0% of total loans, compared with $15.0 million, or 1.1% of total
loans, in the first quarter of 2008. The allowance totaled 88.5% of
non-performing loans at the end of the first quarter of 2009. Gross loans
totaled $1.29 billion at March 31, 2009, compared with $1.36 billion at March
31, 2008.

"We increased our allowance for loan losses to strengthen our coverage of
non-performing loans," stated Mr. Mallory. "Approximately 75% of Cadence`s loans
are real estate based and this market remains under intense pressure from the
economy. The majority of the increase in non-performing loans was due to
real-estate loans in the residential construction and development sectors.

"We continue to focus on reducing our exposure to construction loans that carry
a higher risk in this economy. We have implemented measures to reduce our
construction loan portfolio and we believe these measures will help reduce our
exposure in this sector until the economy improves and begins to absorb excess
inventory," concluded Mr. Mallory.

Non-interest income was down 3.3% to $5.8 million in the first quarter of 2009
compared with $6.0 million in the first quarter of 2008. The decrease in
non-interest income in the latest quarter was due to lower service charge fees,
trust department income, mortgage loan fee income, insurance and commission
income and a lower gain on the sale of securities compared with the 2008 period.

Non-interest expenses increased to $81.5 million in the first quarter of 2009
and included a $66.8 million write-down in goodwill. The goodwill charge was
equal to $5.61 per diluted share for the first quarter of 2009. In addition,
2009 non-interest expenses increased due to higher costs related to FDIC
insurance costs and expenses related to other real estate owned (OREO). FDIC
insurance costs increased from $64,000 in the first quarter of 2008 to $915,000
in the first quarter of 2009. OREO related costs increased to $562,000 in the
first quarter of 2009 compared to $157,000 in the same quarter of the prior
year. Salary expense was down 0.8% to $7.9 million and premises expenses were
down 0.9% to $2.0 million compared with the first quarter of 2008. The decreases
in salary and premises costs are attributable to Cadence`s continued focus on
cost controls.

Cadence`s pre-tax loss for the first quarter of 2009 was $96.1 million compared
with pre-tax income of $3.7 million in the first quarter of 2008.

Net loss for the first quarter of 2009 was $84.2 million. Net loss applicable to
common shareholders was $84.5 million, or $7.09 per diluted share. This compares
with net income of $2.8 million, or $0.23 per diluted share, in the first
quarter of 2008.

Cadence sold $44 million in senior preferred shares to the U.S. Treasury in
mid-January 2009. The preferred shares pay a cumulative annual dividend rate of
5% for the first five years. Cadence`s first quarter 2009 loss applicable to
common shareholders includes $322,000 related to the preferred dividend and
accretion of the discount recorded in relation to the preferred stock.

About Cadence Financial Corporation

Cadence Financial Corporation is a $2.1 billion bank holding company providing
full financial services, including banking, trust services, mortgage services,
insurance and investment products in Mississippi, Tennessee, Alabama, Florida
and Georgia. Cadence`s stock is listed on the NASDAQ Global Select Market under
the symbol CADE.

Forward-Looking Statements

This press release contains statements that are forward-looking as defined
within the Private Securities Litigation Reform Act 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 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 for the year ended
December 31, 2008, 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.

CADENCE FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF CONDITION
MARCH 31,

($ in thousands, except share data)

2009 2008
ASSETS:

Cash and Due $ 26,212 $ 43,869
From Banks
Interest 48,160 10,216
Bearing
Deposits Due
From Banks
Total Cash 74,372 54,085
and Due From
Banks

Securities:
Securities 582,023 419,054
Available-for
-Sale
Securities 18,556 20,557
Held-to
-Maturity
Total 600,579 439,611
Securities

Federal Funds
Sold and
Securities 22,730 2,356
Purchased
Under
Agreements To
Resell

Other Earning 19,259 18,493
Assets

Loans 1,293,019 1,363,800
Less: (39,058 ) (15,022 )
Allowance for
Loan Losses
Net Loans 1,253,961 1,348,778

Premises and 32,934 35,301
Equipment,
Net
Interest 9,228 11,323
Receivable
Other Real 19,208 13,746
Estate Owned
Goodwill and 1,821 69,462
Other
Intangibles
Other Assets 40,834 16,695
Total Assets $ 2,074,926 $ 2,009,850

LIABILITIES
AND
SHAREHOLDERS'
EQUITY:

Noninterest $ 173,797 $ 181,776
-Bearing
Deposits
Interest 1,428,235 1,214,763
-Bearing
Deposits
Total 1,602,032 1,396,539
Deposits
Interest 2,254 3,335
Payable
Federal Funds 88,806 109,037
Purchased and
Securities
Sold Under
Agreements to
Repurchase
Federal Home 190,048 260,714
Loan Bank
Borrowings
Subordinated 30,928 30,928
Debentures
Other 14,785 12,140
Liabilities
Total 1,928,853 1,812,693
Liabilities

SHAREHOLDERS'
EQUITY:

Preferred 41,791 -
Stock - $10
Par Value,
Authorized
10,000,000
shares,
Issued -
44,000 Shares
at March 31,
2009
Common Stock 11,915 11,904
- $1 Par
Value,
Authorized
50,000,000
shares,
Issued -
11,914,814
Shares at
March 31,
2009 and
11,904,132
Shares at
March 31,
2008
Surplus and 90,696 183,552
Undivided
Profits
Accumulated 1,671 1,701
Other
Comprehensive
Income
Total 146,073 197,157
Shareholders'
Equity
Total $ 2,074,926 $ 2,009,850
Liabilities
and
Shareholders'
Equity

CADENCE FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF INCOME

($ in thousands, except share and per share data)

FOR THE THREE MONTHS
ENDED MARCH 31
2009 2008
INTEREST INCOME:

Interest and Fees on Loans $ 16,566 $ 23,045
Interest and Dividends on Investment
Securities 5,058 5,440
Other Interest Income 82 124
Total Interest Income 21,706 28,609

INTEREST EXPENSE:

Interest on Deposits 7,159 10,665
Interest on Borrowed Funds 2,194 3,425
Total Interest Expense 9,353 14,090
Net Interest Income 12,353 14,519
Provision for Loan Losses 32,761 3,000
Net Interest Income After Provision for Loan (20,408 ) 11,519
Losses

OTHER INCOME:

Service Charges on Deposit Accounts 2,005 2,137
Trust Department Income 466 564
Insurance Commission and Fee Income 1,306 1,379
Mortgage Loan Fee Income 210 360
Other Non-Interest Income 1,757 1,360
Gains (Losses) on Securities - Net 63 203
Total Other Income 5,807 6,003

OTHER EXPENSE:

Salaries and Employee Benefits 7,900 7,967
Net Premises and Fixed Asset Expense 1,979 1,996
Impairment Loss on Goodwill 66,846 -
Other Operating Expense 4,818 3,868
Total Other Expense 81,543 13,831

Income (Loss) Before Income Taxes (96,144 ) 3,691
Applicable Income Tax Expense (Benefit) (11,983 ) 930
Net Income (Loss) (84,161 ) 2,761

Preferred Stock Dividend and Accretion of 322 -
Discount

Net Income (Loss) Applicable to Common
Shareholders $ (84,483 ) $ 2,761

Net Income (Loss) Per Share - Basic and Diluted $ (7.06 ) $ 0.23

Net Income (Loss) Applicable to Common $ (7.09 ) $ 0.23
Shareholders Per Share - Basic and Diluted

Average Weighted Common Shares:
Basic 11,914,814 11,903,110
Diluted 11,916,814 11,918,343

CADENCE FINANCIAL CORPORATION
FINANCIAL HIGHLIGHTS

($ in thousands, except per share data)

FOR THE THREE MONTHS ENDED MARCH 31: 2009 2008

Net Income (Loss) Applicable to Common Shareholders $ (84,483 ) $ 2,761
Basic and Diluted Net Income (Loss) Per Common Share (7.09 ) 0.23
Cash Dividends Per Common Share 0.05 0.25

ANNUALIZED RETURNS
Return on Average Assets -16.7 % 0.6 %
Return on Average Equity -203.8 % 5.6 %

SELECTED BALANCES AT MARCH 31: 2009 2008

Total Assets $ 2,074,926 $ 2,009,850
Deposits and Securities Sold Under Agreements to Repurchase 1,640,838 1,441,176
Loans 1,293,019 1,363,800
Total Securities 600,579 439,611
Shareholders' Equity 146,073 197,157
Closing Market Price Per Common Share 4.42 16.23
Book Value Per Common Share 8.75 16.56
Tangible Equity 144,252 127,695
Tangible Book Value Per Common Share 8.60 10.73

CADENCE FINANCIAL CORPORATION

($ in thousands)

3/31/09 12/31/08 3/31/08
LOAN BALANCES BY TYPE:
Commercial and Industrial $ 205,262 $ 219,236 $ 232,951
Personal 31,542 30,921 34,121
Real Estate:
Construction 156,525 179,381 275,049
Commercial Real Estate 657,774 670,595 597,140
Real Estate Secured by Residential Properties 128,796 130,060 129,729
Mortgage 28,387 29,702 33,835
Total Real Estate 971,482 1,009,738 1,035,753
Other 84,733 68,434 60,975
Total $ 1,293,019 $ 1,328,329 $ 1,363,800

ASSET QUALITY DATA:
Nonaccrual Loans $ 38,359 $ 28,173 $ 10,554
Loans 90+ Days Past Due 5,791 3,469 3,114
Total Non-Performing Loans 44,150 31,642 13,668
Other Real Estate Owned 19,208 18,691 13,746
Total Non-Performing Assets $ 63,358 $ 50,333 $ 27,414

Non-Performing Loans to Total Loans 3.4 % 2.4 % 1.0 %
Non-Performing Assets to Total Loans and OREO 4.8 % 3.7 % 2.0 %
Allowance for Loan Losses to Non-Performing Loans 88.5 % 65.5 % 109.9 %
Allowance for Loan Losses to Total Loans 3.0 % 1.6 % 1.1 %
Classified Assets to Capital 94.5 % * 54.5 % 29.3 %
Classified Loans to Capital 81.2 % * 44.4 % 21.8 %
Classified Loans to Total Loans 9.2 % 6.2 % 3.2 %
Loans 30+ Days Past Due to Total Loans 3.2 % 2.8 % 1.7 %
(loans not included in non-performing loans)
YTD Net Charge-offs to Average Loans YTD 1.1 % 1.7 % 0.2 %

NET CHARGE-OFFS FOR QUARTER $ 14,434 $ 8,012 $ 2,904

INTANGIBLE ASSET AMORTIZATION FOR QUARTER $ 182 $ 187 $ 277

*Includes the effect of write-off of goodwill in the first quarter 2009. Without the goodwill impairment charge, the ratio of classified assets to capital was 64.8% and classified loans to capital was 55.7%.

CADENCE FINANCIAL CORPORATION
LOANS AND DEPOSITS BY STATE/REGION

AS OF MARCH 31, 2009:

MISSISSIPPI TUSCALOOSA BIRMINGHAM MEMPHIS MIDDLE TN FLORIDA GEORGIA TOTAL

LOANS 28 % 10 % 6 % 25 % 17 % 11 % 3 % 100 %

DEPOSITS 62 % 9 % 2 % 12 % 5 % 8 % 2 % 100 %

AS OF MARCH 31, 2008:

MISSISSIPPI TUSCALOOSA BIRMINGHAM MEMPHIS MIDDLE TN FLORIDA GEORGIA TOTAL

LOANS 30 % 9 % 6 % 28 % 13 % 11 % 3 % 100 %

DEPOSITS 62 % 11 % 1 % 12 % 5 % 6 % 3 % 100 %

REAL ESTATE LOAN BALANCES BY STATE/REGION - LINKED QUARTERS ($ in thousands)

3/31/09 12/31/08
Balance % of Total Balance % of Total
Mississippi $ 221,187 23 % $ 227,729 23 %
Tuscaloosa 100,351 10 % 101,377 10 %
Birmingham 71,561 7 % 71,320 7 %
Memphis 206,343 21 % 216,133 22 %
Middle Tennessee 181,744 19 % 194,998 19 %
Florida 127,387 13 % 133,775 13 %
Georgia 29,297 3 % 30,748 3 %
Administration 33,612 4 % 33,658 3 %
Total $ 971,482 100 % $ 1,009,738 100 %

CADENCE FINANCIAL CORPORATION
ANALYSIS OF NET INTEREST EARNINGS

($ in thousands)

Average Balance
Quarter Ended Quarter Ended Quarter Ended Twelve Months Ended
3/31/09 3/31/08 12/31/08 12/31/08
EARNING ASSETS:
Net loans $ 1,313,743 $ 1,347,147 $ 1,345,063 $ 1,350,870
Federal funds sold and other interest-bearing assets 51,155 18,316 13,133 21,581
Securities:
Taxable 362,826 333,090 330,069 326,097
Tax-exempt 104,967 110,766 106,731 110,691
Totals 1,832,691 1,809,319 1,794,996 1,809,239

INTEREST-BEARING LIABILITIES:
Interest-bearing deposits 1,340,621 1,237,965 1,238,225 1,238,156
Borrowed funds, federal funds purchased and securities sold under agreements to repurchase and other interest-bearing liabilities 317,254 366,808 359,782 370,358
Totals 1,657,875 1,604,773 1,598,007 1,608,514

Net amounts $ 174,816 $ 204,546 $ 196,989 $ 200,725

Interest For
Quarter Ended Quarter Ended Quarter Ended Twelve Months Ended
3/31/09 3/31/08 12/31/08 12/31/08
EARNING ASSETS:
Net loans $ 16,566 $ 23,045 $ 18,438 $ 81,533
Federal funds sold and other interest-bearing assets 82 124 65 492
Securities:
Taxable 4,038 4,290 4,055 16,296
Tax-exempt 1,020 1,150 1,061 4,536
Totals 21,706 28,609 23,619 102,857

INTEREST-BEARING LIABILITIES:
Interest-bearing deposits 7,159 10,665 7,591 35,682
Borrowed funds, federal funds purchased and securities sold under agreements to repurchase and other interest-bearing liabilities 2,194 3,425 2,601 11,648
Totals 9,353 14,090 10,192 47,330

Net amounts $ 12,353 $ 14,519 $ 13,427 $ 55,527

CADENCE FINANCIAL CORPORATION
ANALYSIS OF NET INTEREST EARNINGS

($ in thousands)

Yields Earned
And Rates Paid (%)
Quarter Ended Quarter Ended Quarter Ended Twelve Months Ended
3/31/09 3/31/08 12/31/08 12/31/08
EARNING
ASSETS:
Net loans 5.13 6.88 5.45 6.04
Federal funds 0.65 2.72 1.97 2.28
sold and
other
interest
-bearing
assets
Securities:
Taxable 4.51 5.18 4.89 5.00
Tax-exempt 3.94 4.18 3.95 4.10
Totals 4.80 6.36 5.23 5.69

INTEREST
-BEARING
LIABILITIES:
Interest 2.17 3.46 2.44 2.88
-bearing
deposits
Borrowed 2.80 3.76 2.88 3.15
funds,
federal funds
purchased and
securities
sold under
agreements to
repurchase
and other
interest
-bearing
liabilities
Totals 2.29 3.53 2.54 2.94

Net margin 2.73 3.23 2.98 3.07

Note: Yields
on a tax
equivalent
basis would
be:
Tax-exempt 6.08 6.43 6.08 6.31
securities
Total earning 4.92 6.50 5.42 5.82
assets
Net margin 2.86 3.37 3.10 3.20

Tax $ 549 $ 619 $ 571 $ 2,443
equivalent
income (in
thousands)

Cadence Financial Corporation
Richard T. Haston, 662-324-4258

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