Edgar Filing: CADENCE FINANCIAL CORP

Assumption

Basis for Assumption

12/31/2006

12/31/2007

Pre-retirement mortality and other decrements

As per Securities and Exchange Commission guidance, no pre-retirement decrements will be applied

Post-retirement mortality

Same assumption used to measure pension liabilities under FASB Statement No. 87

Revenue Ruling 2001-62

Revenue Ruling 2001-62

Definitive Proxy Statement

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

SCHEDULE 14A

PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE

SECURITIES EXCHANGE ACT OF 1934

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Filed by a Party other than the Registrant ¨

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¨	Confidential, for Use of the Commission Only (as permitted by Rule 14a – 6(e)(2))

x	Definitive Proxy Statement

¨	Definitive Additional Materials

¨	Soliciting Material Under Rule 14a-12

Cadence Financial Corporation

(Name of Registrant as Specified in its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

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LOGO

April 9, 2008

Dear Fellow Shareholders:

We cordially invite you to attend the 2008 annual meeting of shareholders of Cadence Financial Corporation. The annual meeting will be held beginning at 10:00 a.m., local time, on Tuesday, May 13, 2008, at Cadence Bank, Starkville Banking Center, 301 East Main Street, Starkville, Mississippi. The formal notice of the annual meeting appears on the next page.

The annual meeting has been called for the following purposes: (1) to elect fourteen directors of Cadence Financial Corporation to serve until the 2009 annual meeting of shareholders or their successors are elected and qualified; (2) to ratify the appointment of T. E. Lott & Company, as independent registered public accounting firm of Cadence Financial Corporation; and (3) to transact such other business as may properly come before the annual meeting or any adjournment thereof.

We hope that you will be able to attend the annual meeting. Whether or not you plan to attend, please submit a proxy by mail, telephone or the Internet. You may submit a proxy by mail by completing, signing and dating the enclosed proxy card and returning it promptly in the enclosed envelope. You may also submit a proxy by telephone or via the Internet, should you prefer. Your board of directors recommends a vote “FOR” the election of the persons named in proxy statement as nominees for director and the ratification of T.E. Lott & Company as the company’s independent registered public accounting firm.

We are gratified by your continued interest in Cadence Financial Corporation and are pleased that so many of you have voted your shares in the past. We look forward to seeing you at the annual meeting.

Sincerely yours,

LOGO

Lewis F. Mallory, Jr.

Chairman of the Board and

Chief Executive Officer

CADENCE FINANCIAL CORPORATION

301 East Main Street

Starkville, Mississippi 39759

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

May 13, 2008

Notice is hereby given that the annual meeting of shareholders of Cadence Financial Corporation will be held beginning at 10:00 a.m., local time, on Tuesday, May 13, 2008, at Cadence Bank, Starkville Banking Center, 301 East Main Street, Starkville, Mississippi. The annual meeting has been called for the following purposes:

•

to elect 14 directors of Cadence Financial Corporation to serve until the 2009 annual meeting or until their successors are duly elected and qualified;

•

to ratify the appointment of T.E. Lott & Company, as independent registered public accounting firm of Cadence Financial Corporation; and

•

to transact such other business as may properly come before the annual meeting or any adjournment thereof.

The board of directors has fixed the close of business on Monday, March 24, 2008 as the record date for the determination of the shareholders entitled to notice of, and to vote at, the annual meeting.

Your vote is important. Regardless of whether or not you plan to attend the meeting, please submit a proxy by mail, telephone or the Internet. You may submit a proxy by mail by completing, signing and dating the enclosed proxy card and returning it in the envelope provided as promptly as possible. You may also submit a proxy by telephone or via the Internet by following the instructions attached to the proxy card. You may revoke your proxy at any time before it is voted at the annual meeting by sending in a replacement proxy or by voting in person at the meeting.

By Order of the Board of Directors,

LOGO

Hunter M. Gholson

Secretary

April 9, 2008

CADENCE FINANCIAL CORPORATION

PROXY STATEMENT

ANNUAL MEETING OF SHAREHOLDERS

TO BE HELD TUESDAY, MAY 13, 2008

Introduction

This proxy statement is furnished to the shareholders of Cadence Financial Corporation in connection with the solicitation of proxies on behalf of the Company’s board of directors for use at the 2008 annual meeting of shareholders to be held at 10:00 a.m., local time, on Tuesday, May 13, 2008, at Cadence Bank, Starkville Banking Center, 301 East Main Street, Starkville, Mississippi. The company’s telephone number is (662) 323-1341.

This proxy statement, the accompanying proxy card and the notice of annual meeting are first being distributed to shareholders on or about April 11, 2008.

At the meeting, shareholders will have the opportunity to consider and vote :

•

to elect 14 directors of Cadence Financial Corporation to serve until the 2009 annual meeting;

•

to ratify the appointment of T. E. Lott & Company, as the independent registered public accounting firm of the company; and

•

to transact such other business as may properly come before the annual meeting or any adjournments thereof.

The board of directors has fixed the close of business on Monday, March 24, 2008 as the record date for the annual meeting. Only shareholders of record at the close of business on that date are entitled to notice of, and to vote at, the annual meeting. As of March 24, 2008, there were 11,904,132 shares of the company’s common stock outstanding. The company has no other outstanding class of securities. The deadline for proxies to be received is 11:59 p.m., eastern daylight time, on May 12, 2008.

If you have not already done so, please complete, date and sign the accompanying proxy card and return it promptly in the enclosed, postage-paid envelope. You may also vote by telephone or via the Internet. Please see the instructions attached to the proxy card.

Solicitation and Revocation of Proxies

The company is soliciting your shareholder proxy. The company intends to solicit proxies by mail, but it may also use telephonic and other electronic means of solicitation. As part of its solicitation, the company encourages its directors, officers and employees to solicit shareholder proxies. However, the company does not engage any of its directors, officers or employees specifically to solicit proxies and pays no additional compensation for solicitation. The company’s stock transfer agent, Registrar and Transfer Company, will assist in the solicitation of proxies from brokers and nominees of shareholders.

If a properly signed and dated proxy card is returned with voting instructions in time, the shares represented by the proxy will be voted in accordance with those instructions. If a properly signed and dated proxy card is returned without instructions, the shares represented by that card will be voted “FOR” the election of the nominees for director named herein and for the ratification of T.E. Lott & Company as the company’s independence registered public accounting firm, as recommended by the company’s board of directors. Your proxy also gives the discretionary authority to vote your shares on any other matter that is properly presented at the annual meeting. The board of directors is not aware of any other matter to be presented at the meeting other than those specifically discussed in this proxy.

If you have delivered a proxy for the annual meeting, you may revoke it at any time before it is voted by attending the meeting and voting in person, giving written notice revoking your proxy to the corporate secretary prior to the date of the annual meeting, or by submitting a new proxy before the meeting.

The company will bear the total cost of soliciting proxies from its shareholders. The company estimates Registrar and Transfer Company’s fees for broker and shareholder nominee solicitation will not exceed $25,000, plus out-of-pocket costs and expenses. The company will also reimburse brokerage firms and other persons representing beneficial owners of shares for their reasonable expenses in forwarding solicitation material to such beneficial owners. The company will make a list of all shareholders as of the record date available at the annual meeting.

Quorum

A majority of the votes entitled to be cast at the annual meeting constitutes a quorum. A share, once represented for any purpose at the annual meeting, is deemed present for purposes of determining a quorum for the remainder of the annual meeting. This is true even if the shareholder abstains from voting with respect to any matter brought before the annual meeting.

Each share of the company’s common stock outstanding on March 24, 2008 entitles its holder to one vote on any proposal that may properly come before the annual meeting.

As of February 29, 2008, the directors and executive officers of the company beneficially owned a total of 1,232,881 shares, or approximately 10.4% of the outstanding shares of the company’s common stock. These individuals have indicated that they will vote for each of the individuals nominated for director by the board of directors and listed herein and for the ratification of T.E. Lott & Company as the company’s independent registered public accounting firm.

Brokers and other nominee holders do not have the power to vote shares held by them in the election of directors or any other proposals unless the beneficial owner of the shares directs them to vote on such matters. Broker non-votes will not be counted as votes cast for purposes of determining the total number of votes cast on any proposal or particular item that comes before the annual meeting, and as such will have no effect on any proposal.

PROPOSAL 1: ELECTION OF DIRECTORS

(Item 1 on the Proxy Card)

At the annual meeting, shareholders will elect 14 directors, who will serve until the 2009 annual meeting of shareholders or their successors are elected and qualified. The board of directors has nominated the 14 persons listed on the proxy card, each of whom is currently a director of the company.

Voting

Shareholders may vote “for,” “against” or abstain from voting for each nominee. Directors shall be elected by a plurality of the votes cast by the shares entitled to vote in the election at a meeting at which a quorum is present. If a shareholder returns a properly signed and dated proxy card, but does not indicate a vote or abstention for one or more nominees on the card, the proxy holders will vote all shares represented by proxy “FOR” the nominee or nominees. Otherwise, the signed proxy card will be voted as indicated on the card.

Although the company does not have such an expectation, if one or more of the nominees becomes unwilling or unable to serve as a director prior to the annual meeting, the board of directors will name a replacement candidate or candidates. The proxy holders will vote “FOR” the replacement candidate or candidates. The proxy includes this discretionary authority.

Nominees

The following table provides information about the 14 nominees. Unless otherwise indicated, each nominee has engaged in the principal occupation listed for at least five years.


Name	Age	Director Since	Principal Occupation

Mark A. Abernathy ^(1)(6)(7)	51	1994	President and Chief Operating Officer, Cadence Financial Corporation and Cadence Bank, N. A.

David Byars ⁽²⁾⁽⁷⁾	54	1998	President, Byars Furniture and David Byars Properties

Robert S. Caldwell, Jr. ⁽²⁾⁽⁶⁾	66	1999	President, Caldwell Furniture & Properties and Brownwell Realty

Robert L. Calvert, III ^(1)(3)(4)(5)	68	1999	President, Calvert Spalding Engineers, Inc.

Robert A. Cunningham ^{(1)(2)(4)(5)(6)}	62	1990	Managing Partner, Valley Farm, a farming, timber and gravel business

J. Nutie Dowdle ^(1)(3)(4)(5)	64	1990	Chairman of the Board of Dowdle Enterprises

James C. Galloway, Jr. ⁽¹⁾⁽⁵⁾	55	1997	President, Galloway-Chandler-McKinney Insurance Agency, Inc.

James D. Graham ^(2)(3)(7)	58	2001	President, Grayco, Inc., a commercial real estate company


Name	Age	Director Since	Principal Occupation

Clifton S. Hunt ⁽¹⁾	50	2005	President, Standard Construction Company, Inc.

Dan R. Lee ⁽²⁾⁽³⁾	60	2004	Chairman, President and CEO, Microtek Medical Holdings, Inc. until November 2007 and Ecolab Global Healthcare Senior Vice President Microtek & President Microtek Medical from November 2007 until present

Lewis F. Mallory, Jr. ^(1)(5)(6)(7)	65	1969	Chairman of the Board and Chief Executive Officer, Cadence Financial Corporation and Cadence Bank, N.A.

Allen B. Puckett, III ^(1)(3)(4)(5)	57	1987	President & CEO, Columbus Brick Corporation

Sammy J. Smith ^(6)(7)(8)	68	1977	President, Smith & Byars Men’s Clothing,

H. Stokes Smith ^(2)(3)(7)(8)	71	1999	National Sales Manager, The Westmount Corporation until 2006, Retired, 2006 – present

⁽¹⁾	Member of Executive Committee

⁽²⁾	Member of Audit Committee

⁽³⁾	Member of Compensation Committee

⁽⁴⁾	Member of Nominating and Corporate Governance Committee

⁽⁵⁾	Member of Capital Planning Committee

⁽⁶⁾	Member of Compliance Committee

⁽⁷⁾	Member of Trust Investment Committee

⁽⁸⁾	Mr. Sammy J. Smith and Mr. H. Stokes Smith are brothers

CORPORATE GOVERNANCE

Meetings of the Board and Committees

Board of Directors. In 2007, the company’s board of directors held 11 regular and two special meetings. Each of the company’s directors attended at least 75% of the regular and special meetings of the board of directors and of the committees of the board of directors on which the director served, except for Dan R. Lee, who attended 67% of the board and committee meetings. Mr. Lee was not able to attend the missed meetings due to business commitments that he had to attend. Mr. Lee informed the Chairman in advance of missing a meeting. The company’s directors discharge their responsibilities throughout the year, not only at such board of directors and committee meetings, but through personal meetings and other communications with members of management and others regarding matters of interest and concern to the company.

The company’s directors are encouraged to attend the annual meeting of shareholders if their schedules permit, but the company does not otherwise have a policy regarding such attendance. All directors were present at the annual meeting of the shareholders held in 2007.

Committees. The board of directors has established various standing committees, including the executive committee, the audit committee, the nominating and corporate governance committee, the capital planning committee, the compliance committee, the compensation committee and the trust investment committee. These committees generally meet monthly or quarterly and hold special meetings when a need arises. During 2007, the executive committee met 13 times, the audit committee met five times, the Nominating and Corporate governance committee met one time, the capital planning committee did not meet, the corporate compliance committee met four times, the compensation committee met six times, and the trust investment committee met four times. There currently are no other standing executive or other committees of the board of directors performing similar functions. The board of directors has determined that each of David Byars, Robert S. Caldwell, Jr., Robert L. Calvert, III, Robert A. Cunningham, J. Nutie Dowdle, James D. Graham, Clifton S. Hunt, Dan R. Lee, Allen B. Puckett, III, Sammy J. Smith and H. Stokes Smith satisfies the definition of an “independent” director as established by the NASDAQ listing standards and the rules and regulations of the Securities and Exchange Commission (“SEC”).

Audit Committee. The audit committee acts on behalf of the board of directors in reviewing the financial statements of the company and overseeing the relationship between the company and its independent auditor. In addition to monitoring the scope and results of audit and non-audit services rendered by the independent auditor, the committee reviews the adequacy of internal controls, internal auditing and the results of examinations made by supervisory authorities. A more complete description of the audit committee’s functions is provided in its charter which is available on the company’s website in the “Corporate Governance” section under “Investor Relations” at www.cadencebanking.com. The board of directors has determined that Dan R. Lee qualifies as an “audit committee financial expert” within the meaning of the rules and regulations of the SEC. See “Audit Committee Report” for more of a description of the functions performed by the audit committee.

Compensation Committee. The compensation committee has the responsibility to make recommendations to the board of directors regarding the compensation and benefits of the company’s executive officers and directors and the establishment and administration of the

company’s executive compensation program. A more complete description of the compensation committee’s functions is provided in its charter, a copy of which is available on the company’s website in the “Corporate Governance” section under “Investor Relations” at www.cadencebanking.com. See “Compensation Committee Report” for more of a description of the functions performed by the compensation committee.

Nominating and Corporate Governance Committee. The nominating and corporate governance committee is responsible for the director nomination process (including evaluating and recommending director nominees and board of directors committee appointments), development and recommendation of a set of corporate governance principles applicable to the company, and addressing other corporate governance issues for the board of directors.

The committee believes that the board of directors should be comprised of directors with varied and complementary backgrounds, and that directors should, at a minimum, have expertise that may be useful to the company. Directors should also possess the highest personal and professional ethics and should be willing and able to devote the required amount of time to the company’s business. In accordance with its charter, the committee has established the criteria for board of directors membership, which include knowledge of the banking industry; experience in the management or leadership of a substantial private business enterprise, educational, religious or not-for-profit organization; relationships with customers and potential customers; service on other public company boards; the candidate’s age at the time of election; such other professional experience that the committee determines to qualify an individual for board of directors service; and, for continuing directors, an affirmative commitment every three years of a continued desire to serve on the board. In addition, the committee makes every effort to ensure that the board of directors and its committees include at least the minimum number of required independent directors, as that term is defined by applicable standards of the NASDAQ and rules and regulations of the SEC. In determining whether a director should be retained and stand for re-election, the committee also considers the director’s past attendance at meetings and participation in and contributions to the activities of the board of directors.

The company’s bylaws provide that a director must be a shareholder of the company, and may not be under the age of 21 or over 75 years of age at the time of the shareholders’ meeting at which he or she is elected. The board of directors has established a maximum retirement age of 75 and requires directors to retire from the board in the month they reach age 75. In addition, directors may not serve as attorney for any other financial institution or bank or savings and loan holding company, and may not be a member of the board of directors of any other financial institution or bank or savings and loan holding company if such service is prohibited by laws or regulations applicable to depository institutions.

The committee identifies and reviews candidates for director and conducts the appropriate and necessary inquiries into the backgrounds and qualifications of possible candidates. The committee may identify director candidates from submissions by committee members or company employees or agents working for the committee. It is also the committee’s policy to review any director candidates submitted by shareholders. The committee has also established procedures for consideration of any candidate for director submitted by shareholders, as follows:

•

Timely submission of the name of the director candidate, together with appropriate biographical information and a signed representation by the candidate to timely

provide all information requested by the company as part of its disclosures in regard to the solicitation of proxies for the election of directors, should be submitted to the company’s secretary at the company’s principal executive offices at 301 East Main Street, Starkville, Mississippi 39759.

•

The deadline for submission of the director candidate is no later than 90 days prior to the month and day that the proxy materials regarding the last election of the company’s directors were mailed to shareholders.

•

The biographical information submitted must include the candidate’s full name, age and date of birth, educational background, a list of business experience and positions held for the preceding five years, and home and office addresses and telephone numbers.

•

The name of each such candidate for director must be placed in nomination at the annual meeting by a shareholder present in person, and the candidate must be present in person at such meeting.

A more complete description of the committee’s functions is provided in its charter and procedures, copies of which are available on the company’s website in the “Corporate Governance” section under “Investor Relations” at www.cadencebanking.com. You should also see “Proposals of Shareholders” for a discussion of the provision of the company’s bylaws applicable to shareholder nominations.

Paper Copies of Charters

Any shareholder desiring a paper copy of any of these charters may obtain the copy by making a written request to the company’s secretary at the company’s principal executive offices at 301 East Main Street, Starkville, Mississippi 39759, Attention: Corporate Secretary.

Code of Ethics

We have adopted a Code of Ethics for directors, officers and employees, including the company’s principal executive officer, principal financial officer, principal accounting officer, controller and persons performing similar functions. A copy of this Code of Ethics is filed as an exhibit to the company’s Form 10-K for the year ended December 31, 2005, filed with the SEC on March 14, 2006, and is available on the company’s website in the “Corporate Governance” section under “Investor Relations” at www.cadencebanking.com. Any substantive amendments to this Code of Ethics or any waivers granted for any director and the company’s principal executive officer, principal financial officer, principal accounting officer, controller and persons performing similar functions will be disclosed in a Current Report on Form 8-K filed with the SEC.

Compensation of Directors

During 2007, each non-employee director of the company received a $14,400 retainer and $900 for attendance at each meeting of a committee of the board of directors of which he was a member. The secretary of the board received an additional retainer of $5,000, and each member of

the executive committee received an additional retainer of $12,000. With the exception of Mr. James C. Galloway, Jr., directors who are employees of the company are not compensated for serving on the board of directors or any of its constituent committees. Mr. Galloway, President of Galloway-Chandler-McKinney Insurance Agency, Inc., a wholly owned subsidiary of Cadence Bank, N. A., a wholly owned subsidiary of the company, received the same compensation as outside directors.

The following table sets forth a summary of the compensation the company paid to its directors in 2007:


Name	Fees Earned or Paid in Cash ($)		Stock Awards ($)		Option Awards ($)		Non-Equity Incentive Plan Compensation ($)		Change in Pension Value and Non-Qualified Deferred Compensation Earnings ($)		All Other Compensation ($)		Total ($)
(a)	(b)		(c)		(d)		(e)		(f)		(g)		(h)
David C. Byars	$	21,600	$	—	$	—	$	—	$	—	$	—	$	21,600
Robert S. Caldwell, Jr.	$	30,000	$	—	$	—	$	—	$	—	$	—	$	30,000
Robert L. Calvert, Jr.	$	30,100	$	—	$	—	$	—	$	—	$	—	$	30,100
Robert A. Cunningham	$	39,300	$	—	$	—	$	—	$	—	$	—	$	39,300
J. Nutie Dowdle	$	32,200	$	—	$	—	$	—	$	—	$	—	$	32,200
James C. Galloway, Jr.	$	30,900	$	—	$	—	$	25,099	$	73,286	$	361,080	$	490,365
James D. Graham	$	25,600	$	—	$	—	$	—	$	—	$	—	$	25,600
Clifton S. Hunt	$	26,900	$	—	$	—	$	—	$	—	$	—	$	26,900
Dan R. Lee	$	20,400	$	—	$	—	$	—	$	—	$	—	$	20,400
Allen B. Puckett, III	$	34,300	$	—	$	—	$	—	$	—	$	—	$	34,300
H. Stokes Smith	$	25,500	$	—	$	—	$	—	$	—	$	—	$	25,500
Sammy J. Smith	$	21,600	$	—	$	—	$	—	$	—	$	—	$	21,600

⁽¹⁾

The amounts paid to James C. Galloway, Jr., result from Mr. Galloway serving as President of Galloway-Chandler-McKinney Insurance Agency, Inc., a wholly-owned subsidiary of Cadence Bank, N.A., a wholly-owned subsidiary of the Corporation. The components of column (g), “All Other Compensation,” are as follows:


Base salary	$	58,000
Commission on insurance sales	$	286,439
Company’s contribution to defined contribution plan	$	1,740
Company’s matching contribution to 401-K plan	$	9,833
Premiums on supplemental life insurance	$	5,068

Mr. Galloway’s perquisites were valued at less than $10,000.

Presiding Director

As indicated above, the non-management directors meet in executive session at least annually. The non-management directors selected Allen B. Puckett, III to preside over such meetings during 2007. The “Investor Relations” section of the company’s website contains information on the manner in which Mr. Puckett may be contacted by shareholders.

Stock Ownership of Directors, Officers and Principal Shareholders

The table below shows, as of February 29, 2008, the number of shares of the company’s common stock beneficially owned by each person or entity known by the company to be the

beneficial owner of more than 5% of the outstanding shares of common stock, each director and nominee, all executive officers named in the Summary Compensation Table, and all directors and executive officers as a group. Unless otherwise noted, the named persons have sole voting and investment power with respect to the shares indicated.


Name	Number of Shares Beneficially Owned^(A)	Percentage Ownership^(B)		Options Exercisable Within 60 Days^(C)
Mark A. Abernathy ⁽¹⁾	26,834	*		39,999
David C. Byars ⁽²⁾	27,295	*		—
Robert S. Caldwell, Jr.	56,000	*		—
Robert L. Calvert, Jr. ⁽³⁾	176,414	1.5	%	—
Robert A. Cunningham ⁽⁴⁾	115,229	*		—
J. Nutie Dowdle	216,867	1.8	%	—
James C. Galloway, Jr. ⁽⁵⁾	101,985	*		—
James D. Graham ⁽⁶⁾	65,799	*		—
Clifton S. Hunt ⁽⁷⁾	30,300	*		13,013
Dan R. Lee	3,200	*		—
Lewis F. Mallory, Jr. ⁽⁸⁾	159,959	1.3	%	99,999
Allen B. Puckett, III ⁽⁹⁾	185,557	1.6	%	—
H. Stokes Smith ⁽¹⁰⁾	40,185	*		—
Sammy J. Smith	9,968	*		—
Richard T. Haston ⁽¹¹⁾	10,904	*		25,999
John R. Davis ⁽¹²⁾	6,111	*		13,998
Shane C. Williams ⁽¹³⁾	274	*		—

Directors and Executive Officers as a Group (17 persons)	1,232,881	10.4	%	193,008

*	Less than one percent

^(A)	Includes shares as to which such person, directly or indirectly, through any contract, arrangement, understanding, relationship, or otherwise, has or shares voting power and/or investment power as these terms are defined in Rule 13d-3(a) under the Securities Exchange Act of 1934.

^(B)	Based upon 11,904,132 shares of common stock outstanding.

^(C)	Options to acquire the company’s common stock were granted in 2001, 2002 and 2004. All options shown in this column are vested and exercisable within 60 days.

⁽¹⁾

Includes 733 shares held by the company’s employee stock ownership plan with respect to which Mr. Abernathy has voting power and 7,314 shares held by the company’s Salary Reduction Thrift Plan with respect to which Mr. Abernathy has investment authority. Also includes 4,725 shares held in trust for the benefit of his wife, as to which he disclaims beneficial ownership.

⁽²⁾

Includes 3,582 shares owned by Mr. Byars’ wife, 9,133 shares held through a 401(k) plan, 966 shares held in a business investment account, 778 shares held by a family exempt trust, 1,333 shares held by a marital income trust, 600 shares held in trust for the children of a friend, and 700 shares held for the benefit of his wife, over all of which Mr. Byars exercised investment and voting control. Also includes 4,337 shares held in trust for his mother, over which Mr. Byars serves as trustee and exercises investment and voting control.

⁽³⁾	Includes 52,712 shares held by two companies over which Mr. Calvert has sole investment and voting control and 1,561 shares owned by Mr. Calvert’s wife, as to which he disclaims beneficial ownership.

⁽⁴⁾	Includes 18,577 shares held in a trust with respect to which Mr. Cunningham has shared voting and investment power and 72,730 shares owned by a partnership, as to which Mr. Cunningham has sole voting and investment power.

⁽⁵⁾	Includes 13 shares held by the company’s employee stock ownership plan with respect to which Mr. Galloway has voting power and 317 shares held by the company’s Salary Reduction Thrift Plan with respect to which Mr. Galloway has investment authority.

⁽⁶⁾	Includes 12,800 shares held in an IRA for Mr. Graham’s wife, as to which he disclaims beneficial ownership.

⁽⁷⁾	Includes 8,000 shares owned by a company as to which Mr. Hunt has sole voting and investment power. Also includes 4,100 shares held in an IRA for Mr. Hunt’s wife, as to which he disclaims beneficial ownership.

⁽⁸⁾	Includes 64,871 shares held by the company’s employee stock ownership plan with respect to which Mr. Mallory has voting power and 2,899 shares held by the company’s Salary Reduction Thrift Plan with respect to which Mr. Mallory has investment authority.

⁽⁹⁾	Includes 14,557 shares owned by a corporation, over which Mr. Puckett has sole voting and investment authority. Also includes 8,000 shares owned by Mr. Puckett’s wife, as to which he disclaims beneficial ownership.

⁽¹⁰⁾	Includes 12,490 shares owned by Mr. Smith’s wife, as to which he disclaims beneficial ownership.

⁽¹¹⁾

Includes 245 shares held by the company’s employee stock ownership plan with respect to which Mr. Haston has voting power and 3,519 held by the company’s Salary Reduction Thrift Plan with respect to which Mr. Haston has investment authority. Also includes 350 shares held in an IRA for Mr. Haston’s wife, as to which he disclaims beneficial ownership.

⁽¹²⁾

Includes 2,188 shares held by the company’s employee stock ownership plan with respect to which Mr. Davis has voting power and 2,124 held by the company’s Salary Reduction Thrift Plan with respect to which Mr. Davis has investment authority. Also includes 133 shares held in an IRA for Mr. Davis’s wife and 666 shares held in his wife’s name, to both of which he disclaims beneficial ownership.

⁽¹³⁾	Includes 274 held by the company’s Salary Reduction Thrift Plan with respect to which Mr. Williams has investment authority

THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE ELECTION OF ALL NOMINEES.

PROPOSAL 2: RATIFICATION OF INDEPENDENT AUDITORS FOR YEAR ENDED DECEMBER 31, 2008

(Item 2 on the Proxy Card)

T. E. Lott & Company, a U.S. based accounting firm, has been our independent auditors since 1974. The audit committee, in its capacity as a committee of the board, has appointed T. E. Lott & Company to audit our financial statements for the fiscal year ending December 31, 2008. Representatives of T. E. Lott & Company plan to attend the Annual Meeting and will be available to answer appropriate questions from shareholders. These representatives will be able to make a statement at the meeting if they wish, although we do not expect them to do so.

Shareholder ratification of the appointment of T. E. Lott & Company is not required by the rules of NASDAQ or the SEC or by our bylaws. However, our board is submitting the appointment of T. E. Lott & Company to you for ratification as a matter of good corporate practice. If our shareholders fail to ratify the appointment, our audit committee will review its future selection of our independent auditors. Even if the appointment of T. E. Lott & Company is ratified, the audit committee may change to a different independent registered public accounting firm if it determines a change may be in the best interest of us and our shareholders

Voting

The ratification of T. E. Lott & Company as our independent auditors for the year ended December 31, 2008 requires the affirmative vote of the holders of a majority of the shares represented at the meeting, in person or by proxy, and entitled to vote. For the ratification of our independent auditors, you may vote “FOR” or “AGAINST” or abstain from voting. If you hold your shares in your own name and abstain from voting on this matter, your abstention will have the effect of a negative vote. If you hold your shares through a broker, bank, trustee or other nominee and you do not instruct them how to vote on this proposal, your broker may have authority to vote your shares. Broker non-votes will have no effect on the approval of this proposal.

Independent Public Accountant Fees

In the years ended December 31, 2007 and 2006, T.E. Lott & Company provided services in the following categories and amounts:

•

Audit Fees – Aggregate fees for professional services rendered by T. E. Lott & Company in connection with the integrated audit of the company’s consolidated financial statements and internal controls over financial reporting, for reviews of the financial information in the company’s quarterly reports on Form 10-Q, annual reports on Form 10-K and consents and comfort letter included in filings with the SEC were approximately $257,560 in 2007 and $309,775 in 2006.

•

Audit Related Fees – Aggregate fees for services rendered by T. E. Lott & Company for audit related services, which included employee benefit plan audits, regulatory examinations, acquisition consultations, regulatory filings, and consultations concerning accounting and financial reporting standards were approximately $45,271 in 2007 and $49,489 in 2006.

•

Tax Fees – Aggregate fees for services rendered by T. E. Lott & Company for preparation of income and other tax returns, tax advice and tax planning were approximately $39,874 in 2007 and $41,794 in 2006.

•

All Other Fees – There were no other fees for services provided by T. E. Lott & Company other than those set forth above.

All of the services listed above were pre-approved by the audit committee. The committee has considered the compatibility of the performance of these non-audit services with maintaining T. E. Lott & Company’s independence.

In connection with the engagement of the independent auditor, the audit committee’s pre-approval process of specific services and fees includes a review of specific services to be performed based on the four categories of services outlined above, a review of fees incurred for such services in the past, a review of expected fees to be incurred, a comparison of fees for similar services, and the establishment of pre-approval limits. The term of any pre-approval is twelve months from the date of the pre-approval, unless the audit committee specifically provides for a more definitive period. The audit committee must separately approve fees for any services that will exceed the pre-approval limits. During the year, circumstances may also arise when it becomes necessary to engage the independent auditor for additional services not contemplated by the original pre-approval engagement. In those instances, the audit committee requires separate pre-approval before engaging the independent auditor for such services. In this regard, the audit committee may delegate pre-approval authority to one or more of its members. The member or members to whom such authority is delegated shall report any pre-approval decisions to the audit committee at its next meeting. The audit committee may not delegate its responsibilities to pre-approve services performed by the independent auditor to management.

Policy on Audit Committee Pre-Approval of Audit and Non-Audit Services of Independent Auditor

The audit committee’s policy is to pre-approve all auditing services and non-audit services provided by the independent auditors. These services may include audit services, audit-related services, tax services and other services subject to the de minimis exceptions for non-audit services described in Section 10A(i)(1)(B) of the Exchange Act which are approved by the audit committee prior to the completion of the audit. Alternatively, the engagement of the independent auditor may be entered into pursuant to pre-approval policies and procedures established by the audit committee, provided that the policies and procedures are detailed as to the particular services and the audit committee is informed of each service. The audit committee may form and delegate authority to subcommittees consisting of one or more members when appropriate, including the authority to grant pre-approvals of audit and permitted non-audit services, provided that decisions of such subcommittee to grant preapprovals shall be presented to the full audit committee at its next scheduled meeting.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE RATIFICATION OF T. E. LOTT & COMPANY AS OUR INDEPENDENT AUDITORS FOR THE FISCAL YEAR ENDED DECEMBER 31, 2008.

EXECUTIVE COMPENSATION

Compensation Discussion and Analysis

Compensation Objectives

The primary objectives of the company’s executive compensation program are to align management’s incentives with the long-term interests of the company and its shareholders and to attract and retain key executives necessary for growth. The compensation committee has the responsibility to make recommendations to the board of directors regarding the compensation and benefits of the company’s executive officers and directors and the establishment and administration of the company’s executive compensation program.

Each year, the committee reviews the current compensation practices of financial institutions of similar asset size. Also, the committee obtains information about comparable compensation practices from Watson Wyatt, an independent national compensation-consulting firm. Watson Wyatt has been engaged by both the company’s compensation committee and the company. The compensation committee requested Watson Wyatt to provide a competitive market survey of the Company’s top five executive officer positions, and the company has engaged Watson Wyatt to provide general consulting services on compensation benchmarking and merit matrix for all other employee positions. Watson Wyatt conducts a benchmark study to assess base salary levels and total cash compensation levels. A detailed description of the benchmarking process is contained below under “Elements of Compensation.”

The chief executive officer and the human resources director make recommendations to the compensation committee on all employee positions within the company based on the report from Watson Wyatt. Additionally, the compensation committee reviews the market assessment prepared by Watson Wyatt relating to the company’s top five executive officer positions. The chief executive officer and human resources director review their recommendations with the compensation committee and generally respond to any questions from the committee. The compensation committee then meets without any officers or other employees of the company present to discuss and vote on executive and other employee compensation.

Under Section 162(m) of the Internal Revenue Code, compensation in excess of $1 million paid to a chief executive officer or to any of the four other most highly compensated officers generally cannot be deducted. The committee has determined the company’s compensation practices and policies are not currently affected by this limitation.

Elements of Compensation

The company’s executive compensation program consists of three basic components: base salary, short-term bonuses, and long-term incentives. Each component of the compensation program serves a particular purpose. Base salary and short term bonuses are primarily designed to reward current and past performance, while grants of long-term incentives are primarily designed to tie a portion of each executive’s compensation to the company’s future performance. In addition, executives participate in the benefit plans and programs that are generally available to all employees of the company. The company utilizes a “market philosophy” based on surveys by Watson Wyatt and surveys compiled by Watson Wyatt in determining allocation between different elements of compensation. The company chooses to allocate between short-term and

long-term elements in accordance with the norms of similarly situated companies based on such surveys. Although our compensation committee does review total compensation, we do not believe that significant compensation derived from one component of compensation should negate or reduce compensation from other components.

Base Salary

Each year, the committee reviews the base salary of each executive officer and other senior officers through the senior vice president level of the company and Cadence Bank. In determining the appropriate level of compensation for each executive officer, the committee evaluates the executive’s performance as it relates to the company’s goals, objectives and strategic plan; reviews the compensation data from similarly situated companies and reviews the salary survey data developed by Watson Wyatt. The benchmark study of Watson Wyatt is compiled using surveys of organizations of similar size and scope, both from the financial services industry and other general industries. The study is used to generate “job grades,” showing the range of salaries for comparable companies for a given position. The midpoint of the job grade is deemed the market price for the position. The data is aged to March 1st of the current year for use in annual salary planning. Following the benchmark study, the company’s job and employee data is then analyzed for market competitiveness. Watson Wyatt develops a series of six merit matrices for the company (one for each of the company’s banking regions) that approximate the cost of merit adjustments to employees based on performance and their current place in the respective job’s pay grade as compared to the region in which they work.

Short-Term Bonuses

Executive officers are eligible to receive short-term bonuses under the company’s short-term bonus plan. Short-term bonuses consist of cash compensation that may be awarded annually, provided the performance goals designated each year by the committee are achieved. For 2007, the performance goals for Messrs. Mallory, Abernathy, Haston, Williams and Davis related to the company’s net operating income. The committee determined that the 2007 goals were not satisfied for Messrs Mallory, Abernathy, Haston and Williams and no bonuses were paid, as reflected in the Summary Compensation Table. Mr. Davis’s goals were attained and a bonus was awarded under his program as reflected in the Summary Compensation Table.

If the performance goals are met, a bonus will be paid to the chief executive officer equal to 50% of his base salary. Likewise, bonus payments for Mr. Abernathy and Mr. Haston equal to 40% of their base salaries will be paid if the performance goals are met. Mr. Davis will be paid a bonus payment equal to 35% of his base salary if the performance goals are met. Mr. Williams will receive a bonus payment equal to 30% of his base salary if the performance goals are met.

Long-Term Incentive Compensation

During 2001 and 2003, the company adopted long-term incentive plans, the purpose of which was to further link the financial performance of the company to the financial interests of its executives. In June 2006, the company’s shareholders approved the 2006 Long-Term Incentive Compensation Plan, which was effective December 31, 2005. In adopting the 2006 Long-Term Incentive Compensation Plan, the board of directors determined to supersede and replace the two prior long-term incentive plans adopted by the company.

The 2006 Long-Term Incentive Compensation Plan is administered and managed within the discretion of the compensation committee. The compensation committee may delegate to a committee of one or more directors or to the company officers the ability to grant awards and take certain other actions with respect to participants who are not executive officers. Incentives under the plan may be granted to eligible employees, director-employees and employees of the company and certain of the company’s affiliates in any one or a combination of incentive options, non-statutory stock options, stock appreciation rights, restricted stock grants, stock grants and performance shares. The company currently has 473 employees, all of whom are eligible to participate under the 2006 Long-Term Incentive Compensation Plan. There are 750,000 common shares reserved for issuance under the plan. The plan will terminate on December 31, 2015. During 2007, no stock or option awards were granted to the named executive officers under this plan.

The compensation committee determines at the date of grant when each such award becomes vested and/or exercisable. Option awards generally vest in four years unless otherwise determined in the compensation committee’s discretion. The exercise price of stock options or stock appreciation rights granted under the 2006 Long-Term Incentive Compensation Plan may not be less than the fair market value of the common stock on the date of grant. The term of stock option or stock appreciation rights awards may not be longer than ten years. The compensation committee may make the grant, issuance, retention and/or vesting of restricted stock awards and options contingent upon continued employment (or engagement) with the company, the passage of time, or such performance criteria and the level of achievement compared to such criteria as it deems appropriate. Awards may, but need not, include performance criteria that satisfy Section 162(m) of the Internal Revenue Code. To the extent that an award under the 2006 Long-Term Incentive Compensation Plan is designated as a “performance award,” but is not intended to qualify as performance-based compensation under Section 162(m), the performance criteria can include the achievement of strategic objectives as determined by the board of directors.

Phantom Stock Plan

The company provides a phantom stock plan for certain employees whereby 11,245 units or phantom shares of company stock were assigned for the benefit of certain key employees. Under the terms of the plan, a unit or phantom share of common stock at the time of payment will be equal to the fair market value of a share of the company’s common stock plus all cash dividends paid since the adoption of the agreement. An expense was recorded at the date of the award based on the fair market value of the common stock. Any increase or decrease in the value of the common stock is recorded as an adjustment to employee benefits expense prior to payment.

Only Mr. Mallory and Mr. Abernathy participate in the phantom stock plan. No units were awarded under the phantom stock plan in 2007. As of December 31, 2007, the values of Messrs. Mallory and Abernathy’s accounts in the plan were $214,024 and $66,130, respectively, and the aggregate numbers of units credited to the accounts were 8,579.20 and 2,666.68, respectively.

Other Compensation

Executive officers are eligible to participate in all of our employee benefit plans, such as a defined benefit pension plan, a defined contribution pension plan, a 401(k) plan, an employee stock ownership plan, an indexed retirement plan, or deferred compensation plan, medical plan,

group life insurance plan, and disability plan, in each case on the same basis as other employees. Mr. Williams is ineligible to participate in the defined benefit pension plan and the employee stock ownership plan because they were closed prior to the time he became employed by the company.

Defined Benefit Pension Plan and Defined Contribution Pension Plan

Employees hired prior to January 1, 2001 participate in a noncontributory defined benefit pension plan. The plan calls for benefits to be paid to eligible employees at retirement based primarily upon years of service and compensation. Contributions to the plan reflect benefits attributed to employees’ services to date, as well as services expected to be earned in the future. The annual pension cost charged to expense is actuarially determined in accordance with the provisions of FASB Statement No. 87, “Employers’ Accounting for Pensions.” The plan was amended effective January 1, 2001, to close participation in the plan. Employees hired subsequent to December 31, 2000, are not eligible to participate. Current participants continue to accrue benefits, but benefits accrued are offset by contributions to the defined contribution pension plan.

On January 1, 2001, the company and its subsidiaries adopted a defined contribution pension plan. Employer contributions are made annually equal to 3% of each participant’s base compensation. Participant accounts are 100% vested upon completion of five years of service under the plan. Under the Pension Protection Act, effective January 1, 2007, the participant accounts are 100% vested upon completion of three years of service. Effective, January 1, 2008, this plan was closed to new participants.

The defined benefit pension plan and defined contribution pension plan are a floor offset arrangement, under which the benefits payable from the defined benefit pension plan are offset, or reduced, by amounts payable from the defined contribution pension plan. There are no reductions in benefits under this plan for social security payments. Benefits under the defined benefit pension plan are based upon a formula that takes into account average compensation and years of credited service. Average compensation is determined over the five consecutive year period in which compensation is the greatest. Compensation taken into account for the named executives is listed in the salary column of the Summary Compensation Table, subject to an annual limitation that is imposed under the Internal Revenue Code, which was $225,000 for 2007.

401(k) Plan

The company and its subsidiaries provide a deferred compensation arrangement 401(k) plan whereby employees contribute a percentage of their compensation. The 401(k) plan provides for matching contributions of fifty percent of employee contributions of six percent or less for employees with less than twenty years of service. For employees with service of twenty years or more, the matching contribution is seventy-five percent of employee contributions of six percent or less. This plan was amended, effective January 1, 2008, to provide for matching contributions of one hundred percent of employee contributions of six percent or less.

Employee Stock Ownership Plan

Employees participate in an employee stock ownership plan through which common stock of the company is purchased at its market price for the benefit of employees. Effective January 1,

2001, the employee stock ownership plan was amended to freeze the plan and to allow no new entrants into the plan. All participants at December 31, 2000, became 100% vested in their accounts. The employee stock ownership plan is accounted for in accordance with Statement of Position 93-6, “Employers’ Accounting for Employee Stock Ownership Plans.”

Indexed Retirement Plan

The company has entered into agreements with certain senior officers to establish an indexed retirement plan. Benefit amounts are based on additional earnings from bank owned life insurance policies compared to the yield on treasury securities. Benefit payments are not guaranteed because there may not be a positive spread between the bank owned life insurance policies’ earnings and the yield on selected treasury securities. However, life insurance assets have historically generated more net earnings than treasury securities. The annual cost charged to expense and the estimated present value of the projected payments is determined in accordance with the provisions of Accounting Principles Board No. 12 relating to deferred compensation contracts.

Deferred Compensation Plan

The company provides a voluntary deferred compensation plan for certain of its executive and senior officers. Under this plan, the participants may defer up to 25% of their annual base compensation and 100% of any cash bonuses paid under the short-term bonus plan. The company may, but is not obligated to, contribute to the plan. Amounts contributed to this plan are credited to a separate booking account for each participant and are subject to a risk of loss in the event of the company’s insolvency. The company made no contributions to this plan in 2007.

Compensation Policies

Effect of Accounting and Tax Treatment. Prior to January 1, 2006, the company’s stock option plans were accounted for under the recognition and measurement provisions of Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees,” as permitted by Financial Accounting Standards Board (“FASB”) Statement No. 123, “Accounting for Stock-Based Compensation.” As such, the company did not recognize any compensation expense for stock options granted, since all stock options were priced at the fair market value of the company’s common stock on the date of grant.

In the third quarter of 2005, the compensation committee reviewed the company’s stock option plans and the outstanding options. All outstanding options that were not vested were out-of-the-money and had been in that position for much of the year. In the committee’s opinion, the options were not achieving their intended purposes of incentive compensation and employee retention; thus, the committee recommended to the board of directors that all outstanding options be vested. The board of directors voted to vest all outstanding options, effective August 31, 2005. In accordance with the disclosure requirements of Statement No. 123, the appropriate expense was disclosed for the year ended December 31, 2005.

Effective January 1, 2006, the company adopted FASB Statement No. 123(R), “Share-Based Payment.” This Statement requires that the fair value of equity instruments exchanged for employee services, as determined on the grant date of the award, be recognized as compensation

cost over the period during which an employee is required to provide service in exchange for the award – the requisite service period (usually the vesting period). Changes in fair value during the requisite service period will be recognized as compensation cost over that period. The Statement’s provisions are to be applied to new awards and to awards modified, repurchased, or cancelled after the required effective date. Additionally, compensation cost for the portion of awards for which the requisite service has not been rendered that are outstanding as of the required effective date shall be recognized as the requisite service is rendered on or after the required effective date.

As all of the company’s outstanding options are fully vested, the adoption of Statement No. 123(R) will not impact the company’s future results of operations unless the board of directors makes additional grants under the 2006 Long-Term Incentive Compensation Plan. The plan permits the compensation committee to award eligible employees with incentive-based and non-incentive-based compensation. The plan provides for up to 750,000 shares of the company’s stock to be reserved for issuance under the plan. As of December 31, 2007, 35,450 shares had been issued under this plan, none of which have been issued to any named executive officers.

Stock Ownership Guidelines. The board has not adopted specific stock ownership guidelines for executive officers. Under the terms of the 2006 Long-Term Incentive Compensation Plan, however, in any given year, no individual may receive incentives covering more than 20% of the aggregate number of shares which may be issued pursuant to the plan. Except as may otherwise be permitted by the Internal Revenue Code, incentive options granted to an individual during one calendar year shall be limited, such that at the time the incentive options are granted, the fair market value (as defined in the 2006 Long-Term Incentive Compensation Plan) of the common stock covered by all incentive options first exercisable in any calendar year may not, in the aggregate, exceed $100,000. The maximum performance-based incentive payment to any one individual during one performance period is 20% of the aggregate number of shares that may be issued pursuant to the 2006 Long-Term Incentive Compensation Plan, or if paid in cash, that number of shares multiplied by the fair market value of the stock as of the date the incentive is granted.

Basis for Allocation Among Incentives. Incentives under the 2006 Long-Term Incentive Compensation Plan may be granted in any one or a combination of (a) incentive options (or other statutory stock option); (b) nonstatutory stock options; (c) stock appreciation rights; (d) restricted stock; and (e) performance shares.

Specific Items of Corporate Performance. The company ties many of its performance-based incentives to specific items of performance for the company as a whole or for certain of the company’s divisions. For 2007, performance based incentives were based on the following items of corporate performance: net operating income, loan volume, asset quality and deposit volume. For a complete list of items of corporate performance that may be tied to grants of performance-based incentives, see “2006 Long-Term Incentive Compensation Plan” above.

Adjustment or Recovery of Awards upon Restatement of Company Performance. The board adopted a formal policy requiring executives to return cash and equity incentive awards if the relevant performance targets upon which the awards are based are ever restated or otherwise adjusted in a manner that would reduce the size of an award or payment when such restatement or adjustment was due to a willful misstatement by management. The board would generally not require executives to return cash or equity incentive awards if the restatements or adjustments

were based on changes in generally accepted accounting principles by the FASB when prior to such changes the company was applying generally accepted accounting principles in accordance with the published guidance of FASB or other exceptional circumstances not connected to the performance by management. Under the 2006 Long-Term Incentive Compensation Plan, however, in determining the actual size of any performance-based incentives, the compensation committee may reduce or eliminate the amount of the performance-based incentives earned over the relevant period, if, in its sole and absolute discretion, such reduction or elimination is appropriate.

Additionally, at any time prior to the end of a performance period, the committee may revise the performance goals and the computation of payment if unforeseen events occur that have a substantial effect on the performance of the company or an affiliate of the company and that in the judgment of the Committee make the application of the performance goals unfair unless a revision is made.

Role of Executive Officers in Executive Compensation Decisions. For compensation decisions relating to executive officers (other than our chief executive officer), the chief executive officer makes recommendations for anyone serving as a senior vice president or higher. These recommendations go to the compensation committee. The compensation committee makes recommendations to the full board of directors, which bears ultimate responsibility for compensation decisions. Under the 2006 Long-Term Incentive Compensation Plan, no person who makes or participates in making an award under the plan, whether as a member of the committee, a delegate of the committee, or in any other capacity, can make or participate in making an award to himself or herself.

Chief Executive Officer Compensation

The compensation committee practices described above were used to set the compensation of Mr. Mallory, the chairman and chief executive officer of the company. Generally, the company does not believe that the chief executive officer should be paid a certain percentage of total compensation in the form of base salary. In years where performance goals are not met, the chief executive officer’s compensation will consist of substantially all base salary. Base salary and incentives are not compared on an annual basis.

Mr. Mallory’s base salary increased in 2007 from $371,700 to $400,000. In 2007, Mr. Mallory did not receive a bonus.

Mr. Mallory also participates in the phantom stock plan. Pursuant to this plan, Mr. Mallory was awarded a designated number of units or phantom shares of the company’s common stock at the plan’s inception, which were expensed at that time. Upon Mr. Mallory’s retirement, he will receive the fair market value of each share of the company’s common stock for each phantom share of common stock plus any dividends paid since the date of the plan’s inception.

Summary Compensation

The following table sets forth the compensation for services in all capacities to the company for the fiscal years ending December 31, 2007, 2006 and 2005 of the chief executive officer, the chief financial officer and the other three most highly compensated executive officers.

Summary Compensation Table


Name and Principal Position	Year	Salary ($)		Bonus ($)		Stock Awards ($)		Option Awards ($)		Non-Equity Incentive Plan Compensation ($)		Change in Pension Value and Non-Qualified Deferred Compensation Earnings ($)		All Other Compensation ($)		Total ($)
(a)	(b)	(c)		(d)		(e)		(f)		(g)		(h)		(i)		(j)
Lewis F. Mallory, Jr.	2007	$	392,900	$	—	$	—	$	—	$	—	$	239,007	$	27,085	$	658,992
Chairman and Chief Executive Officer	2006	$	371,700	$	—	$	—	$	—	$	185,580	$	149,618	$	26,710	$	733,608
Chairman and Chief Executive Officer	2005	$	354,000	$	—	$	—	$	—	$	160,000	$	151,024	$	31,330	$	696,354

Mark A. Abernathy	2007	$	260,300	$	—	$	—	$	—	$	—	$	43,064	$	14,400	$	317,764
President and Chief Operating Officer	2006	$	231,000	$	—	$	—	$	—	$	92,400	$	31,936	$	14,100	$	369,436
President and Chief Operating Officer	2005	$	222,500	$	—	$	—	$	—	$	89,000	$	39,180	$	14,575	$	365,255

Richard T. Haston	2007	$	186,400	$	—	$	—	$	—	$	—	$	66,356	$	16,327	$	269,083
Executive Vice President and Chief Financial Officer	2006	$	178,900	$	—	$	—	$	—	$	71,560	$	49,176	$	14,760	$	314,396
Executive Vice President and Chief Financial Officer	2005	$	172,500	$	—	$	—	$	—	$	69,000	$	54,203	$	14,293	$	309,996

John R. Davis	2007	$	133,900	$	—	$	—	$	—	$	46,851	$	32,936	$	11,071	$	224,758
Vice President	2006	$	129,865	$	—	$	—	$	—	$	45,453	$	22,910	$	8,495	$	206,723
Vice President	2005	$	114,756	$	—	$	—	$	—	$	17,213	$	22,434	$	7,515	$	161,918

Shane C. Williams	2007	$	143,300	$	—	$	—	$	—	$	—	$	1,448	$	7,127	$	151,875
Vice President and Treasurer	2006	$	134,300	$	—	$	—	$	—	$	40,290	$	—	$	3,054	$	177,644
Vice President and Treasurer	2005	$	61,667	$	—	$	—	$	—	$	16,250	$	—	$	—	$	77,917

⁽¹⁾	The terms of the employment contracts of the named executive officers are described elsewhere herein under “Compensation Discussion and Analysis” and “Employment Agreements, Termination of Employment and Change in Control Arrangements.”

⁽²⁾	Under Column (e), Messrs Mallory and Abernathy participate in a phantom stock plan that is equal to the value of specific shares allocated to their accounts. The value of the shares declined in 2007.

⁽³⁾	Mr. Williams began his employment with the Company on July 11, 2005.

⁽⁴⁾

Under Column (h), all named executive officers except for Mr. Williams are covered under a defined benefit plan. All named executive officers are covered under an indexed retirement plan. Under the defined benefit plan , the change in pension value reflects the annual aggregate change in the actuarial present value of the accumulated pension benefit for each participant. Under the indexed retirement plan, the change represents the change in the actuarial present value of the liability that has been accrued for each participant. The change of value for each participant and each plan is as follows:


Name		Defined Benefit Plan		Indexed Retirement Plan
Lewis F. Mallory, Jr.	2007	$	217,967	$	21,040
	2006	$	127,171	$	22,447
	2005	$	113,754	$	37,270

Mark A. Abernathy	2007	$	33,183	$	9,881
	2006	$	21,030	$	10,906
	2005	$	23,696	$	15,484

Richard T. Haston	2007	$	57,081	$	9,275
	2006	$	37,331	$	11,845
	2005	$	34,376	$	19,827


Name		Defined Benefit Plan		Indexed Retirement Plan
John R. Davis	2007	$	32,150	$	786
	2006	$	21,967	$	943
	2005	$	20,944	$	1,490

Shane C. Williams	2007	$	—	$	1,448
	2006	$	—	$	—
	2005	$	—	$	—

⁽⁵⁾

Column (i) includes all other compensation related to the named executive officers. These totals are composed of the company’s contributions to the defined contribution plan, the company’s matching contribution to the 401(k) plan and the value of life insurance premiums paid for each named executive officer (other than Messrs. Davis and Williams). The aggregate value of all perquisites for each named executive officer was less than $10,000; therefore, no perquisites were included in the Other Compensation column. The amount and type benefit paid for each named executive officer are as follows:


Name		Defined Contribution Plan		401(k) Plan		Insurance Premium
Lewis F. Mallory, Jr.	2007	$	6,750	$	10,125	$	10,210
	2006	$	6,600	$	9,900	$	10,210
	2005	$	10,620	$	10,500	$	10,210

Mark A. Abernathy	2007	$	6,750	$	6,750	$	900
	2006	$	6,600	$	6,600	$	900
	2005	$	6,675	$	7,000	$	900

Richard T. Haston	2007	$	5,592	$	6,750	$	3,985
	2006	$	5,367	$	5,408	$	3,985
	2005	$	5,175	$	5,133	$	3,985

John R. Davis	2007	$	4,016	$	7,055	$	—
	2006	$	3,596	$	4,899	$	—
	2005	$	3,443	$	4,069	$	—

Shane C. Williams	2007	$	4,299	$	2,828	$	—
	2006	$	—	$	3,054	$	—
	2005	$	—	$	—	$	—

2007 Grants of Plan-Based Awards

The following table sets forth certain information with respect to each grant of an award made to a named executive officer in 2007 under our plans.

Grants of Plan-Based Awards Table


		Estimated Future Payouts Under Non-Equity Incentive Plan Awards				Estimated Future Payouts Under Equity Incentive Plan Awards				All Other Stock Awards: Number of Shares of Stock or Units (#)	All Other Option Awards: Number of Securities Underlying Options (#)	Exercise or Base Price of Option Awards ($/Sh)
Name	Grant Date	Threshold ($)	Target ($)		Maximum ($)	Threshold (#)	Target (#)		Maximum (#)			Exercise or Base Price of Option Awards ($/Sh)
(a)	(b)	(c)	(d)		(e)	(f)	(g)		(h)	(i)	(j)	(k)
Lewis F. Mallory, Jr.			$	191,000			$	—		—	—
Mark A. Abernathy			$	95,000			$	—		—	—
Richard T. Haston			$	73,000			$	—		—	—
John R. Davis			$	47,000			$	—		—	—
Shane C. Williams			$	41,000			$	—		—	—

⁽¹⁾

During 2007, no awards were made under this plan. The amounts shown in column (d) are estimates. Under the plan, if the company meets a net operating income goal of $14,650,000 in 2008, the named executive officers receive a non-equity incentive award. The award is based upon the named executive officer’s base compensation times a predetermined percentage. The level of 2008 salary was estimated based upon the 2007 level, increased for an average increase used by the company in budgeting 2008 total salary levels. The predetermined percentages are as follows:


Name	Percentage
Lewis F. Mallory, Jr.	50	%
Mark A. Abernathy	40	%
Richard T. Haston	40	%
John R. Davis	35	%
Shane C. Williams	30	%

Outstanding Equity Awards at Fiscal Year-End

The following table sets forth information regarding unexercised options, stock that has not vested and equity incentive plan awards for each named executive officer outstanding as of December 31, 2007. During 2007, no awards were made under the 2006 Long-Term Incentive Plan.

Outstanding Equity Awards at Fiscal Year-End Table


	Option Awards						Stock Awards
	Number of Securities Underlying Unexercised Options (#)	Number of Securities Underlying Unexercised Options (#)	Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#)	Option Exercise Price ($)		Option Expiration Date	Number of Shares or Units of Stock That Have Not Vested (#)	Market Value of Shares or Units of Stock That Have Not Vested ($)	Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)	Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)
Name	Exercisable (1)	Unexercisable		Option Exercise Price ($)		Option Expiration Date	Number of Shares or Units of Stock That Have Not Vested (#)
(a)	(b)	(c)	(d)	(e)		(f)	(g)	(h)	(i)	(j)
Lewis F. Mallory, Jr.	33,333	—	—	$	20.75	6/12/2011	—	—	—	—
	33,333	—	—	$	24.11	6/12/2012	—	—	—	—
	33,333	—	—	$	25.18	4/29/2014	—	—	—	—

Mark A. Abernathy	13,333	—	—	$	20.75	6/12/2011	—	—	—	—
	13,333	—	—	$	24.11	6/12/2012	—	—	—	—
	13,333	—	—	$	25.18	4/29/2014	—	—	—	—

Richard T. Haston	8,667	—	—	$	20.75	6/12/2011	—	—	—	—
	8,667	—	—	$	24.11	6/12/2012	—	—	—	—
	8,667	—	—	$	25.18	4/29/2014	—	—	—	—

John R. Davis	4,667	—	—	$	20.75	6/12/2011	—	—	—	—
	4,667	—	—	$	24.11	6/12/2012	—	—	—	—
	4,667	—	—	$	25.18	4/29/2014	—	—	—	—

Shane C. Williams	—	—	—	$	—	—	—	—	—	—

⁽¹⁾	All awards were made under the company’s prior long-term incentive compensation plans. These awards vested in 2005.

Pension Benefits

The following table sets forth information regarding the company’s defined benefit pension plan for the named executive officers during 2007. See the Compensation Discussion and Analysis for a description of the material terms and conditions of the defined pension benefit plan.


Name and Principal Position	Plan Name	Number of Years of Credited Service	Present Value of Accumulated Benefit		Payments During Last Fiscal Year
(a)	(b)	(c)	(d)		(e)
Lewis F. Mallory, Jr.	Defined Benefit Pension Plan	43	$	1,686,597	$	—
Chairman and Chief Executive Officer

Mark A. Abernathy	Defined Benefit Pension Plan	13	$	174,083	$	—
President and Chief Operating Officer

Richard T. Haston	Defined Benefit Pension Plan	11	$	246,934	$	—
Executive Vice President and Chief Financial Officer

John R. Davis	Defined Benefit Pension Plan	21	$	171,718	$	—
Vice President

Shane C. Williams	Defined Benefit Pension Plan	—	$	—	$	—
Vice President and Treasurer

⁽¹⁾	The defined benefit pension plan was frozen to new participants on December 31, 2000; therefore, Mr. Williams is not a participant in the plan.

The foregoing table was prepared using the following assumptions:


Assumption	Basis for Assumption	12/31/2006	12/31/2007
Discount rate	As per Securities and Exchange Commission rules, discount rate used to measure pension liabilities under FASB Statement No. 87, “Employers’ Accounting for Pensions”	5.75%	6.00%

Rate of future salary increases	As per Securities and Exchange Commission rules, no salary increase projected	0.00%	0.00%

Form of payment	Form of payment elected by officer	100% are assumed to elect a lump sum payment	100% are assumed to elect a lump sum payment

Lump sum interest rate	Long-term assumption for IRC 417(e) interest rate used to measure pension liabilities under FASB statement No. 87	5.75%	5.25%

Date of retirement	As per Securities and Exchange Commission rules, use normal retirement age	65	65

Nonqualified Deferred Compensation

The following table sets forth information regarding the company’s indexed retirement plan that provides for the deferral of compensation for the named executive officers that is not tax-qualified. This plan is noncontributory and is funded by the earnings from bank owned life insurance policies in excess of the yield on one-year treasury securities. Benefit payments are not guaranteed because there may not be a positive spread between the insurance policies and yield on the treasury securities. Benefits are to be paid at the later of becoming 65 years of age or retirement from the company. The benefits on the plan will be the accrued balance at the beginning of the payout period paid equally over 15 years. Additionally the participant will receive the earnings that are now funding the accrual until death. This plan is designed to be revenue neutral for the company because before the participant receives any earnings from the plan, the company receives the equivalent earnings based on the yield of one-year treasury securities.


Name	Executive Contributions in Last Fiscal Year ($)		Registrant Contributions in Last Fiscal Year ($)		Aggregate Earnings in Last Fiscal Year ($)		Aggregate Withdrawals/ Distributions ($)		Aggregate Balance at Last Fiscal Year-End ($)
(a)	(b)		(c)		(d)		(e)		(e)
Lewis F. Mallory, Jr.	$	—	$	—	$	21,040	$	—	$	310,656
Mark A. Abernathy	$	—	$	—	$	9,881	$	—	$	141,120
Richard T. Haston	$	—	$	—	$	9,275	$	—	$	200,166
John R. Davis	$	—	$	—	$	786	$	—	$	14,718
Shane C. Williams	$	—	$	—	$	1,448	$	—	$	1,448

⁽¹⁾	The amounts shown in Column (d) are included in the Summary Compensation Table under column (h), “Change in Pension Value and Nonqualified Deferred Compensation Earnings.”

⁽²⁾	The amounts shown in Column (e) were previously reported as compensation to the named executive officers in the Summary Compensation Tables for the company’s prior fiscal years.

Employment Agreements, Termination of Employment and Change in Control Arrangements

The company, through its subsidiary Cadence Bank, N.A., is a party to executive employment agreements with Messrs. Mallory and Abernathy, which expire on March 14, 2009. Thereafter, the employment agreements, at the election of the company and Messrs. Mallory and Abernathy, will be renewed for successive one-year terms. The agreements provide that should Messrs. Mallory or Abernathy be terminated by the company, without cause or as the result of a change in control, the company would pay all accrued salary and bonus to the date of termination and a termination benefit equal to 2.99 times their base compensation in effect immediately prior

to the triggering event. If the termination results from a change in control, Messrs. Mallory and Abernathy will also receive a continuation of medical insurance coverage for a period of one year and vesting shall be accelerated, any restrictions shall lapse, and all performance objectives shall be deemed satisfied as to any outstanding grants or awards to Messrs. Mallory and Abernathy. Additionally, upon voluntary termination, Messrs. Mallory and Abernathy are bound by the confidentiality and non-compete provisions of their contracts for a one-year period. In consideration, Messrs. Mallory and Abernathy are to be paid one times their base compensation.

The company has also entered into an agreement with Mr. Haston, which expires on March 14, 2009. Thereafter, the employment agreement, at the election of the company and Mr. Haston, will be renewed for successive one-year terms. The agreement provides that should Mr. Haston be terminated by the company, without cause or as the result of a change in control, the company would pay all accrued salary and bonus to the date of termination and a termination benefit equal to two times his base compensation in effect immediately prior to the triggering event. If the termination results from a change in control, Mr. Haston will also receive a continuation of medical insurance coverage for a period of one year and vesting shall be accelerated, any restrictions shall lapse, and all performance objectives shall be deemed satisfied as to any outstanding grants or awards. Additionally, upon voluntary termination, Mr. Haston is bound by the confidentiality and non-compete provisions of the contract for a one-year period. In consideration, Mr. Haston is to be paid one times his base compensation.

Mr. Davis and Mr. Williams also have change in control agreements, effective December 31, 2006, that would pay them one times their base compensation amount in effect immediately prior to the change in control and a continuation of medical insurance for a period of one year.

In addition to the change of control arrangements described above, under the company’s 2006 Long-Term Incentive Compensation Plan, in the event of a change of control of the company (as defined in that plan), all outstanding options, restricted stock and stock appreciation rights become immediately exercisable in full. In addition, in the event of a change of control, all performance shares or other performance-based awards shall be immediately payable based upon the extent, as determined by the compensation committee, to which the performance goals for the performance period then in progress have been met up through the date of the change in control or based on 100% of the value on the date of grant of the performance shares of other performance-based award, if such amount is higher.

The following tables set forth the potential payments that our named executive officers would receive upon termination or a change in control of the company. The amounts appearing in each table assume that the triggering event occurred as of December 31, 2007 and that the named executive elected to receive lump-sum payments on all benefit plans where that option is available, which includes all retirement plans other than the indexed retirement plan.

Lewis F. Mallory , Jr.


Compensation Components	Change in Control		Voluntary Termination		Early Retirement		Death		Disability		Involuntary With Cause		Involuntary Without Cause
	(a)		(b)		(c)		(d)		(e)		(f)		(g)
Severance	$	1,196,000	$	400,000	$	—	$	—	$	—	$	—	$	1,196,000
Intrinsic Value of Accelerated Equity		—		—		—		—		—		—		—
Total Value of Outstanding Equity		214,024		214,024		214,024		214,024		214,024		214,024		214,024
Retirement Benefits		2,430,832		2,451,542		2,430,832		1,828,334		2,430,832		2,430,832		2,451,542
Health Benefits		13,121		—		—		—		—		—		—

Total Benefit to Employee	$	3,853,977	$	3,065,566	$	2,644,856	$	2,042,358	$	2,644,856	$	2,644,856	$	3,861,566

Severance	$	1,196,000	$	400,000	$	—	$	—	$	—	$	—	$	1,196,000
Health Benefits		13,121		—		—		—		—		—		—

Total Direct Cost to Company	$	1,209,121	$	400,000	$	—	$	—	$	—	$	—	$	1,196,000

(a)

In the event of a change in control, under his contract, Mr. Mallory receives a severance of 2.99 times his base salary and executive and dependent health care at the company’s cost for twelve months (balance shown above as health benefits). The total value of outstanding equity represents the vested balance in Mr. Mallory’s phantom stock plan. The retirement benefit includes Mr. Mallory’s vested benefits in his 401(k) plan of $602,764, defined contribution pension plan of $55,889 and defined benefit pension plan of $1,772,179. Mr. Mallory’s employment contract states that if payments or benefits are of an amount that would cause the excise taxes to be paid under Internal Revenue Code Section 280(G), the payments and benefits shall be reduced by the amount necessary to avoid the excise taxes.

(b)

Under the provisions of Mr. Mallory’s employment contract, upon voluntary termination, he is bound by the confidentiality and non-compete provisions of his contract for a period of one year. In consideration, Mr. Mallory is to be paid one times his base compensation. The total value of outstanding equity represents the vested balance in Mr. Mallory’s phantom stock plan. The retirement benefit includes Mr. Mallory’s vested benefits in his 401(k) plan of $602,764, defined contribution pension plan of $55,889, defined benefit pension plan of $1,772,179 and one-fifteenth of the vested balance in the indexed retirement plan of $20,710. Under the indexed retirement plan, Mr. Mallory is eligible to receive the accrued balance if he does not compete with the company within a 75-mile radius.

(c)	The total value of outstanding equity represents the vested balance in Mr. Mallory’s phantom stock plan. The retirement benefits include Mr. Mallory’s vested benefits in his 401(k) plan of $602,764, defined contribution pension plan of $55,889 and defined benefit pension plan of $1,772,179.

(d)

The total value of outstanding equity represents the vested balance in Mr. Mallory’s phantom stock plan. The retirement benefits include Mr. Mallory’s vested benefits in his 401(k) plan of $602,764, defined contribution pension plan of $55,889, indexed retirement plan of $310,656 and the defined benefit pension plan of $859,025. The benefit computed for the defined benefit pension plan is computed as if Mr. Mallory retired, elected a 50% joint and survivor annuity, and then died the following day.

(e)	The total value of outstanding equity represents the vested balance in Mr. Mallory’s phantom stock plan. The retirement benefits include Mr. Mallory’s vested benefits in his 401(k) plan of $602,764, defined contribution pension plan of $55,889 and defined benefit pension plan of $1,772,179.

(f)

(g)

The total value of outstanding equity represents the vested balance in Mr. Mallory’s phantom stock plan. The retirement benefits include Mr. Mallory’s vested benefits in his 401(k) plan of $602,889, defined contribution pension plan of $55,889, indexed retirement plan of $20,710 and defined benefit pension plan of $1,772,179. Under the indexed retirement plan, Mr. Mallory would have received one-fifteenth of the vested balance in his account. The benefit computed for the defined benefit pension plan is the amount Mr. Mallory would have received if he had retired immediately. Mr. Mallory would also be entitled to be paid 2.99 times his base compensation, which is shown as severance.

Mark A. Abernathy


Compensation Components	Change in Control		Voluntary Termination		Early Retirement		Death		Disability		Involuntary With Cause		Involuntary Without Cause
	(a)		(b)		(c)		(d)		(e)		(f)		(g)
Severance	$	807,300	$	270,000	$	—	$	—	$	—	$	—	$	807,300
Intrinsic Value of Accelerated Equity		—		—		—		—				—		—
Total Value of Outstanding Equity		66,130		66,130		66,130		66,130		66,130		66,130		66,130
Retirement Benefits		468,541		477,949		259,147		504,450		471,981		468,541		477,949
Health Benefits		13,121		—		—		—		—		—		—

Total Benefit to Employee	$	1,355,092	$	814,079	$	325,277	$	570,580	$	538,111	$	534,671	$	1,351,379

Severance	$	807,300	$	270,000	$	—	$	—	$	—	$	—	$	807,300
Health Benefits		13,121		—		—		—		—		—		—

Total Direct Cost to Company	$	820,421	$	270,000	$	—	$	—	$	—	$	—	$	807,300

(a)

In the event of a change in control, under his contract, Mr. Abernathy receives a severance of 2.99 times his base salary and executive and dependent health care at the company’s cost for twelve months (balance shown above as health benefits). The total value of outstanding equity represents the vested balance in Mr. Abernathy’s phantom stock plan. The retirement benefit includes Mr. Abernathy’s vested benefits in his 401(k) plan of $204,146, defined contribution pension plan of $55,001 and defined benefit pension plan of $209,394. Mr. Abernathy’s employment contract states that if payments or benefits are of an amount that would cause the excise taxes to be paid under Internal Revenue Code Section 280(G), the payments and benefits shall be reduced by the amount necessary to avoid the excise taxes.

(b)

Under the provisions of Mr. Abernathy’s employment contract, upon voluntary termination, he is bound by the confidentiality and non-compete provisions of his contract for a period of one year. In consideration, Mr. Abernathy is to be paid one times his base compensation. The total value of the outstanding equity represents the vested balance in Mr. Abernathy’s phantom stock plan. The retirement benefits include Mr. Abernathy’s vested benefits in his 401(k) plan of $204,146, defined contribution pension plan of $55,001, defined benefit pension plan of $209,394 and one-fifteenth of the vested balance in the indexed retirement plan of $9,408. Under the indexed retirement plan, Mr. Abernathy is eligible to receive the accrued balance if he does not compete with the company within a 75-mile radius. Upon termination, Mr. Abernathy is eligible to receive the defined pension benefit payable immediately, actuarially reduced for early commencement.

(c)

(d)

The total value of the outstanding equity represents the vested balance in Mr. Abernathy’s phantom stock plan. The retirement benefits include Mr. Abernathy’s vested benefits in his 401(k) plan of $204,146, defined contribution pension plan of $55,001, indexed retirement plan of $141,120 and the defined benefit pension plan of $104,183. The benefit computed for the defined benefit pension plan is computed as if Mr. Abernathy had retired at the earliest retirement age, assuming no further service accruals, elected a 50% joint and survivor annuity, and then died the following day. The earliest retirement age for Mr. Abernathy, assuming no further service accruals, is age 55.

(e)

The total value of the outstanding equity represents the vested balance in Mr. Abernathy’s phantom stock plan. The retirement benefits include Mr. Abernathy’s vested benefits in his 401(k) plan of $204,146, defined contribution pension plan of $55,001 and defined benefit pension plan of $212,834. The benefit computed for the defined benefit pension plan is reduced by one-fifteenth for each of the first five years and one-thirtieth for each of the next five years that Mr. Abernathy’s age on December 31, 2007 is less than age 65 and further actuarially from age 55.

(f)	The total value of the outstanding equity represents the vested balance in Mr. Abernathy’s phantom stock plan. The retirement benefits include Mr. Abernathy’s vested benefits in his 401(k) plan of $204,146, defined

contribution pension plan of $55,001 and defined benefit pension plan of $209,394. The benefit computed for the defined benefit pension plan is the same amount as if Mr. Abernathy had retired immediately from the plan.

(g)

The total value of the outstanding equity represents the vested balance in Mr. Abernathy’s phantom stock plan. The retirement benefits include Mr. Abernathy’s vested benefits in his 401(k) plan of $204,146, defined contribution pension plan of $55,001, indexed retirement plan of $9,408 and the defined benefit pension plan of $209,394. Under the indexed retirement plan, Mr. Abernathy would have received one-fifteenth of the vested balance in his account. The benefit computed for the defined benefit pension plan would be the same amount Mr. Abernathy would have received if he had retired immediately from the plan. Mr. Abernathy would also be entitled to be paid 2.99 times his base compensation, which is shown as severance.

Richard T. Haston


Compensation Components	Change in Control		Voluntary Termination		Early Retirement		Death		Disability		Involuntary With Cause		Involuntary Without Cause
	(a)		(b)		(c)		(d)		(e)		(f)		(g)
Severance	$	377,800	$	188,900	$	—	$	—	$	—	$	—	$	377,800
Intrinsic Value of Accelerated Equity		—		—		—		—	$	—		—		—
Total Value of Outstanding Equity		—		—		—		—	$	—		—		—
Retirement Benefits		515,598		528,942		515,598		579,809		515,598		515,598		528,942
Health Benefits		13,121		—		—		—		—		—

Total Benefit to Employee	$	906,519	$	717,842	$	515,598	$	579,809	$	515,598	$	515,598	$	906,742

Severance	$	377,800	$	188,900	$	—	$	—	$	—	$	—	$	377,800
Health Benefits		13,131		—		—		—	$	—		—		—

Total Direct Cost to Company	$	390,931	$	188,900	$	—	$	—	$	—	$	—	$	377,800

(a)

In the event of a change in control, under his contract, Mr. Haston receives a severance of two times his base salary and executive and dependent health care at the company’s cost for twelve months (balance shown above as health benefits). The retirement benefit includes Mr. Haston’s vested benefits in his 401(k) plan of $207,423, defined contribution pension plan of $43,334 and defined benefit pension plan of $264,841. From the defined benefit pension plan, Mr. Haston would receive the same benefit amount as if he had retired immediately from the plan. Mr. Haston’s employment contract states that if payments or benefits are of an amount that would cause the excise taxes to be paid under Internal Revenue Code Section 280(G), the payments and benefits shall be reduced by the extent necessary to avoid the excise taxes.

(b)

Under the provisions of Mr. Haston’s employment contract, upon voluntary termination, he is bound by the confidentiality and non-compete provisions of his contract for a period of one year. In consideration, Mr. Haston is to be paid one times his base compensation. The retirement benefits include Mr. Haston’s vested benefits in his 401(k) plan of $207,423, defined contribution pension plan of $43,334, defined benefit pension plan of $264,841 and one-fifteenth of the vested balance in the indexed retirement plan of $13,344. Under the indexed retirement plan, Mr. Haston is eligible to receive the accrued balance if he does not compete with the Company within a 75-mile radius. Upon termination, Mr. Haston is eligible to receive the defined pension benefit payable immediately, actuarially reduced for early commencement.

(c)

The retirement benefits include Mr. Haston’s vested benefits in his 401(k) plan of $207,423, defined contribution pension plan of $43,334, and defined benefit pension plan of $264,841. The amount computed for the defined benefit pension plan is reduced by one-fifteenth for each year that Mr. Haston’s age is less than 65.

(d)

The retirement benefits include Mr. Haston’s vested benefits in his 401(k) of $207,423, defined contribution pension plan of $43,334, indexed retirement plan of $200,166 and the defined benefit pension plan of $128,886. The benefit computed for the defined benefit pension plan is computed as if Mr. Haston retired, elected a 50% joint and survivor annuity, and then died the following day.

(e)

The retirement benefits include Mr. Haston’s vested benefits in his 401(k) plan of $207,423, defined contribution pension plan of $43,334 and defined benefit pension plan of $264,841. The amount computed for the defined benefit pension plan is reduced by one-fifteenth for each year that Mr. Haston’s age is less than 65.

(f)

The retirement benefits include Mr. Haston’s vested benefits in his 401(k) plan of $207,423, defined contribution pension plan of $43,334, and defined benefit pension plan of $264,841. The amount computed for the defined benefit pension plan would have been the same benefit as if Mr. Haston had retired immediately from the plan.

(g)

The retirement benefits include Mr. Haston’s vested benefits in his 401(k) plan of $207,423, defined contribution pension plan of $43,334, indexed retirement plan of $13,344 and the defined benefit pension plan of $264,841. Under the indexed retirement plan, Mr. Haston would have received one-fifteenth of the vested balance in his account. The benefit computed for the defined benefit pension plan is the amount Mr. Haston would have received if he had retired immediately. Mr. Haston would also be entitled to be paid two times his base compensation, which is shown as severance.

John R. Davis


Compensation Components	Change in Control		Voluntary Termination		Early Retirement		Death		Disability		Involuntary Termination With Cause		Involuntary Termination Without Cause
	(a)		(b)		(c)		(d)		(e)		(f)		(g)
Severance	$	135,191	$	—	$	—	$	—	$	—	$	—	$	—
Intrinsic Value of Accelerated Equity		—		—		—		—	$	—		—		—
Total Value of Outstanding Equity		—		—		—		—				—		—
Retirement Benefits		482,662		483,643		282,198		396,585		485,650		482,662		483,643
Health Benefits		13,121		—		—		—		—		—

Total Benefit to Employee	$	630,974	$	483,643	$	282,198	$	396,585	$	485,650	$	482,662	$	483,643

Severance	$	135,191	$	—	$	—	$	—	$	—	$	—	$	—
Health Benefits		13,121		—		—		—		—		—		—

Total Direct Cost to Company	$	148,312	$	—	$	—	$	—	$	—	$	—	$	—

(a)

In the event of a change in control, under his contract, Mr. Davis receives a severance of one times his base salary and the cost of one year’s health care under the company’s group medical cost (balance shown above as health benefits). The retirement benefit includes Mr. Davis’s vested benefits in his 401(k) plan of $252,057, defined contribution pension plan of $30,141 and defined benefit pension plan of $200,464. From the defined benefit pension plan, Mr. Davis would receive the same benefit amount as if he had terminated from the plan.

(b)

The retirement benefits include Mr. Davis’s vested benefits in his 401(k) plan of $252,057, defined contribution pension plan of $30,141, defined benefit pension plan $200,464 and one-fifteenth of the vested balance in the indexed retirement plan of $981. Under the indexed retirement plan, Mr. Davis is eligible to receive the accrued balance if he does not compete with the company within a 75-mile radius. Upon termination, Mr. Davis is eligible to receive the defined pension benefit payable immediately, actuarially reduced for early commencement.

(c)	The retirement benefits include Mr. Davis’s vested benefits in his 401(k) plan of $252,057 and defined contribution pension plan of $30,141. Since Mr. Davis is not eligible for early retirement, there would be no benefit under the defined benefit pension plan.

(d)

The retirement benefits include Mr. Davis’s vested benefits in his 401(k) plan of $252,057, defined contribution pension plan of $30,141, indexed retirement plan of $14,718 and the defined benefit pension plan of $99,669. The benefit computed for the defined benefit pension plan is computed as if Mr. Davis retired, elected a 50% joint and survivor annuity, and then died the following day.

(e)

The retirement benefits include Mr. Davis’s vested benefits in his 401(k) plan of $252,057, defined contribution pension plan of $30,141 and defined benefit pension plan of $203,452. The amount computed for the defined benefit pension plan is reduced by one-fifteenth for each of the first five years and one-thirtieth for each of the next five years that Mr. Davis’s age is less than 65.

(f)

The retirement benefits include Mr. Davis’s vested benefits in his 401(k) plan of $252,057, defined contribution pension plan of $30,141, and defined benefit pension plan of $200,464. The amount computed for the defined benefit pension plan would have been the same benefit as if Mr. Davis had retired immediately from the plan.

(g)

The retirement benefits includes Mr. Davis’s vested benefits in his 401(k) plan of $252,057, defined contribution pension plan of $30,141, indexed retirement plan of $981 and the defined benefit pension plan of $200,464. Under the indexed retirement plan, Mr. Davis would have received one-fifteenth of the vested balance in his account. The benefit computed for the defined benefit pension plan is the amount Mr. Davis would have received if he had retired immediately.

Shane C. Williams


Compensation Components	Change in Control		Voluntary Termination		Retirement		Death		Disability		Involuntary Termination With Cause		Involuntary Termination Without Cause
	(a)		(b)		(c)		(d)		(e)		(g)		(g)
Severance	$	146,300	$	—	$	—	$	—	$	—	$	—	$	—
Intrinsic Value of Accelerated Equity		—		—		—		—		—		—		—
Total Value of Outstanding Equity		—		—		—		—		—		—		—
Retirement Benefits		19,713		19,810		19,713		21,161		19,713		19,713		19,810
Health Benefits		13,121		—		—		—		—		—		—

Total Benefit to Employee	$	179,134	$	19,810	$	19,713	$	21,161	$	19,713	$	19,713	$	19,810

Severance	$	146,300	$	—	$	—	$	—	$	—	$	—	$	—
Health Benefits		13,121		—		—		—		—		—		—

Total Direct Cost to Company	$	159,421	$	—	$	—	$	—	$	—	$	—	$	—

(a)

In the event of a change in control, under his contract, Mr. Williams receives a severance of one times his base salary and the cost of one year’s health care under the company’s group medical cost (balance shown above as health benefits). The retirement benefits are Mr. Williams’s vested benefits in his 401(k) plan of $15,414 and defined contribution plan of $4,299.

(b)

The retirement benefits include Mr. Williams’s vested benefits in his 401(k) plan of $15,414 and defined contribution plan of $4,299, and one-fifteenth of the vested balance in the indexed retirement plan of $97. Under the indexed retirement plan, Mr. Williams is eligible to receive the accrued balance if he does not compete with the company within a 75-mile radius.

(c)	The retirement benefits include Mr. Williams’s vested benefits in his 401(k) plan of $15,414 and defined contribution plan of $4,299.

(d)	The retirement benefits include Mr. Williams’s vested benefits in his 401(k) plan of $15,414 and defined contribution plan of $4,299, and indexed retirement plan of $1,448.

(e)	The retirement benefits include Mr. Williams’s vested benefits in his 401(k) plan of $15,414 and defined contribution plan of $4,299.

(f)	The retirement benefits include Mr. Williams’s vested benefits in his 401(k) plan of $15,414 and defined contribution plan of $4,299.

(g)	The retirement benefits include Mr. Williams’s vested benefits in his 401(k) plan of $15,414 and defined contribution plan of $4,299, and one-fifteenth of the vested balance in the indexed retirement plan of $97.

COMPENSATION COMMITTEE REPORT

Six non-employee directors serve on the board’s compensation committee. Among other duties, the committee administers the company’s executive compensation programs and recommends to the board the salary and bonus for the chief executive officer and other executive officers. The committee met six times during 2007.

The compensation committee has reviewed and discussed the Compensation Discussion and Analysis included in this Proxy Statement with management. Based on the compensation committee’s review of and discussions with management with respect to the Compensation Discussion and Analysis, the compensation committee has recommended to the board of directors that the Compensation Discussion and Analysis be included in this Proxy Statement.

Respectfully submitted,

The Compensation Committee of the Board of Directors,

J. Nutie Dowdle, Chairman

Robert L. Calvert, III

James D. Graham

Dan R. Lee

Allen B. Puckett, III

H. Stokes Smith

Compensation Committee Interlocks and Insider Participation in Compensation Decisions

The members of the compensation committee are set forth above. There were no committee interlocks or insider participation in compensation decisions in 2007.

AUDIT COMMITTEE REPORT

The audit committee supervises the company’s internal audit function and general auditor, directs an examination of the company’s books and records at least annually and reviews regulatory examination reports, including internal audit reports and audit reports issued by the company’s independent auditors. The audit committee held five meetings during 2007. Each member of the audit committee is an “independent director” as defined in Section 121(A) of the NASDAQ’s Listing Standards and in Section 10A of the Securities Exchange Act of 1934, as amended. Mr. Dan R. Lee is an audit committee financial expert, as such term is defined in Item 407 of Regulation S-K. The audit committee operates under a written charter that was adopted by the board of directors. A copy of the charter can be viewed on the company’s web site at www.cadencebanking.com under the “Investor Relations” section. As required by Section 10A of the Securities Exchange Act of 1934, the audit committee has direct responsibility for the appointment, compensation, retention and oversight of the work of the external auditor, T. E. Lott & Company. As a result, the external auditor reports directly to the audit committee, and the audit committee has the ultimate authority to approve the terms of all audit engagements.

The audit committee has reviewed and discussed the audited financial statements with management and T. E. Lott & Company. The discussions with T. E. Lott & Company included the matters required to be discussed by the Public Company Accounting Oversight Board Interim Auditing Standard AU Section 380, “Communication with Audit Committees.” In addition, the audit committee received the written disclosures and the letter required by Independence Standards Board Standard No. 1 and discussed the independence of the auditor with representatives of T. E. Lott & Company.

Based upon the review and discussions referred to above, the audit committee recommended to the board of directors that the audited financial statements be included in the company’s annual report on Form 10-K for the fiscal year ended December 31, 2007, for filing with the SEC.

Respectfully submitted,

The Audit Committee of the Board of Directors,


Robert A. Cunningham, Chairman		James D. Graham
David Byars		Dan R. Lee
Robert S. Caldwell, Jr.		H. Stokes Smith

Independent Public Accountants

The company’s consolidated financial statements for the year ended December 31, 2007, were audited by the firm of T. E. Lott & Company. T. E. Lott & Company has also been appointed to audit the company’s financial statements for 2008. A representative of the firm is expected to be present at the annual meeting. If present, the representative will have the opportunity to make a statement and will be available to respond to appropriate questions.

The fees billed for services rendered by T. E. Lott & Company for the fiscal years 2007 and 2006 were as follows:

•

Audit Fees – Aggregate fees for professional services rendered by T. E. Lott & Company in connection with the integrated audit of the company’s consolidated financial statements and internal controls over financial reporting, for reviews of the financial information in the company’s quarterly reports on Form 10-Q, annual report on Form 10-K and consents and comfort letter included in filings with the SEC were approximately $257,560 in 2007 and $309,775 in 2006.

•

All Other Fees – There were no other fees for services provided by T. E. Lott & Company other than those set forth above.

All of the services listed above were pre-approved by the audit committee

CERTAIN RELATIONSHIPS, RELATED TRANSACTIONS AND INDEBTEDNESS

Certain directors and officers of the company, businesses with which they are associated, and members of their immediate families are customers of Cadence Bank, N.A., a wholly-owned subsidiary of the company, and had transactions with the bank in the ordinary course of its business during the year ended December 31, 2007. As of December 31, 2007, the aggregate principal amount of indebtedness (including unfunded commitments) owed to the bank by these related parties was $25,193,805. This indebtedness comprised approximately 1.88% of the bank’s total currently outstanding loans as of December 31, 2007. In the opinion of the board, such transactions were made in the ordinary course of business, were made on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with other persons, and do not involve more than the normal risk of collectibility or present other unfavorable features.

Under Section 402 of the Sarbanes-Oxley Act of 2002, loans to executive officers are generally prohibited. However, the law exempts any loan made or maintained by an insured depository institution if the loan is subject to the insider lending restrictions of Section 22(h) of the Federal Reserve Act. All loans to executive officers made by the bank are subject to the above referenced section of the Federal Reserve Act. All such loans are included in the total of related party transactions discussed in the preceding paragraph.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Securities Exchange Act of 1934, as amended, requires the company’s directors, executive officers, and any person beneficially owning more than 10% of the company’s common stock to file reports of securities ownership and changes in that ownership with the SEC. Officers, directors and greater than 10% shareholders also are required to furnish the company with copies of all Section 16(a) forms that they file. Based solely upon a review of the copies of the forms filed during 2007 and to the date of this proxy, the company believes that its officers, directors and greater than 10% beneficial owners complied with all applicable Section 16(a) filing requirements, except J. Nutie Dowdle who filed a late Form 4 on April 3, 2007 for 3,553 shares purchased on March 27, 2007, 3,162 shares purchased on March 28, 2007 and 3,285 shares purchased on March 29, 2007.

OTHER MATTERS

Management of the company is not aware of any other matters to be brought before the annual meeting. However, if any other matters are properly brought before the annual meeting, the persons named in the enclosed form of proxy will have discretionary authority to vote all proxies with respect to such matters in accordance with their judgment.

PROPOSALS OF SHAREHOLDERS

At the annual meeting each year, the board of directors submits to shareholders its nominees for election as directors. The board of directors may also submit other matters to the shareholders for action at the annual meeting. Shareholders of the company may also submit proposals for inclusion in the proxy materials. Proposals of shareholders intended to be presented at the 2009 annual meeting of shareholders must be received by Lewis F. Mallory, Jr., Chairman of the Board and Chief Executive Officer of the company, at 301 East Main Street, Starkville, Mississippi 39759, no later than Friday, December 12, 2008, in order for such proposals to be considered for inclusion in the proxy statement and form of proxy relating to the 2009 annual meeting. Nominees to be proposed for election as directors must be delivered in accordance with the company’s bylaws and received by the Corporate Secretary, at 301 East Main Street, Starkville, Mississippi 39759, no later than Monday, January 12, 2009, in order for such nominations to be considered duly nominated. Nominations received after business reopens will be untimely.

AVAILABILITY OF ANNUAL REPORT ON FORM 10-K

Upon the written request of any record holder or beneficial owner of the shares entitled to vote at the annual meeting, the company, without charge, will provide a copy of its annual report on Form 10-K for the year ended December 31, 2007, which was filed with the SEC on March 13, 2008. Requests should be mailed to Richard T. Haston, Executive Vice President and Chief Financial Officer, at P.O. Box 1187, Starkville, Mississippi, 39760.

BY ORDER OF THE BOARD OF DIRECTORS

/s/ LEWIS F. MALLORY, JR.

Lewis F. Mallory, Jr.

Chairman and Chief Executive Officer

Starkville, Mississippi

April 9, 2008

LOGO

REVOCABLE PROXY

CADENCE FINANCIAL CORPORATION

ANNUAL MEETING OF SHAREHOLDERS

May 13, 2008

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

The undersigned hereby appoints Robert L. Calvert, III, Robert A. Cunningham, Allen B. Puckett, III, and Sammy J. Smith, or any of them, with full power of substitution in each, to act as proxy for the undersigned, and to vote all shares of common stock of Cadence Financial Corporation which the undersigned is entitled to vote only at the Annual Meeting of Shareholders to be held on May 13, 2008 and at any and all adjournments thereof, with all of the powers the undersigned would possess if personally present.

PLEASE COMPLETE, DATE, SIGN, AND MAIL THIS PROXY CARD PROMPTLY IN THE ENCLOSED

POSTAGE-PAID ENVELOPE OR PROVIDE YOUR INSTRUCTIONS TO VOTE VIA

THE INTERNET OR BY TELEPHONE.

(Continued, and to be marked, dated and signed, on the other side)

FOLD AND DETACH HERE

CADENCE FINANCIAL CORPORATION — ANNUAL MEETING, MAY 13, 2008

YOUR VOTE IS IMPORTANT!

You can vote in one of three ways:

1. Call toll free 1-866-598-8805 on a Touch-Tone Phone. There is NO CHARGE to you for this call.

2. Via the Internet at https://www.proxyvotenow.com/cade and follow the instructions.

3. Mark, sign and date your proxy card and return it promptly in the enclosed envelope.

PLEASE SEE REVERSE SIDE FOR VOTING INSTRUCTIONS

LOGO

PLEASE MARK VOTES X AS IN THIS EXAMPLE

REVOCABLE PROXY

CADENCE FINANCIAL CORPORATION

ANNUAL MEETING OF SHAREHOLDERS

MAY 13, 2008

1. The election as directors of all nominees listed (unless the “For All Except” box is marked and the instructions below are complied with).

Nominees:

(01) Mark A. Abernathy (02) David Byars (03) Robert S. Caldwell, Jr. (04) Robert L. Calvert, III (05) Robert A. Cunningham (06) J. Nutie Dowdle (07) James C. Galloway, Jr. (08) James D. Graham (09) Clifton S. Hunt (10) Dan R. Lee (11) Lewis F. Mallory, Jr. (12) Allen B. Puckett, III (13) Sammy J. Smith (14) H. Stokes Smith

2. The ratification of the appointment of T. E. Lott & Company as the independent registered public accounting firm of Cadence Financial Corporation for the fiscal year ending December 31, 2008.

For Against Abstain

THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” EACH OF THE LISTED PROPOSALS.

This proxy is revocable and will be voted as directed, but if no instructions are specified, this proxy, properly signed and dated, will be voted “FOR” each of the proposals listed. If any other business is presented at the Annual Meeting, including whether or not to adjourn the meeting, this proxy will be voted by the proxies in their judgment. At the present time, the Board of Directors knows of no other business to be presented at the Annual Meeting.

INSTRUCTION: To withhold authority to vote for any nominee(s), mark “For All Except” and write that nominee(s’) name(s) or number(s) in the space provided below.

Mark here if you plan to attend the meeting

Mark here for address change and note change

Please be sure to date and sign this proxy card in the box below.

Date

Please sign exactly as your name appears on this card. When signing as attorney, executor, administrator, trustee or guardian, please give your full title. If shares are held jointly, each holder may sign but only one signature is required.

Sign above

IF YOU WISH TO PROVIDE YOUR INSTRUCTIONS TO VOTE BY TELEPHONE OR INTERNET, PLEASE READ THE INSTRUCTIONS BELOW

FOLD AND DETACH HERE IF YOU ARE VOTING BY MAIL

PROXY VOTING INSTRUCTIONS

Stockholders of record have three ways to vote:

1. By Mail; or

2. By Telephone (using a Touch-Tone Phone); or

3. By Internet.

A telephone or Internet vote authorizes the named proxies to vote your shares in the same manner as if you marked, signed, dated and returned this proxy. Please note telephone and Internet votes must be cast prior to 3 a.m., May 13, 2008. It is not necessary to return this proxy if you vote by telephone or Internet.

Vote by Telephone

Call Toll-Free on a Touch-Tone Phone anytime prior to 3 a.m., May 13, 2008:

1-866-598-8805

Vote by Internet

anytime prior to 3 a.m., May 13, 2008 go to

https://www.proxyvotenow.com/cade

Please note that the last vote received, whether by telephone, Internet or by mail, will be the vote counted.

Your vote is important!