Street View: Cadence Bank deal for distressed Industry Bancshares effectively a branch purchase

Regional lender Cadence Bank CADE.N late Friday agreed to acquire privately held Industry Bancshares, a distressed Texas-based bank with $4.4 billion in assets for as much as $60 million

Rapid rise in rates from 2022 punched a hole in the value of Industry's large bond portfolio, resulting in several consent orders from U.S. banking regulators

BRANCH PURCHASE

Morgan Stanley ("overweight," PT: $33) says CADE is essentially acquiring Industry's 27 branches and deposit customer relationships

Says key questions include CADE's plans for managing rate risk on retained bond portfolio

KBW ("outperform," PT: $38) says deal is unique and effectively resembles a branch purchase given Industry's negative equity position

Says deal further evidences CADE's strong regulatory standing

Raymond James ("strong buy") says deal represents unique capital deployment opportunity given minimal consideration to be paid and earnings boost through sale of Industry's bond portfolio

Stephens ("overweight," PT: $36) says transaction closing risk is elevated should rates move higher and push final deal value below minimum consideration