Cadence Bank Announces Third Quarter 2023 Financial Results
HOUSTON and TUPELO, Miss., Oct. 23, 2023 /PRNewswire/ -- Cadence Bank (NYSE: CADE) (the Company), today announced financial results for the quarter ended September 30, 2023.
Highlights for the third quarter of 2023 included:
- Achieved quarterly net income available to common shareholders of $90.2 million, or $0.49 per diluted common share, and adjusted net income available to common shareholders,(1) which excludes non-routine income and expenses,(2) of $103.9 million, or $0.56 per diluted common share.
- Net interest margin was relatively stable at 2.98%, reflecting a slower pace of deposit mix shift from noninterest to interest bearing products and a decrease in brokered funds.
- Total loans were flat at $32.5 billion compared to the second quarter of 2023. On a year-to-date basis, loans have grown 9.6% annualized.
- Deposit balances remained relatively stable, declining $356.8 million compared to the second quarter of 2023. Excluding reduction in brokered deposits, total deposits increased $255.5 million, or 2.6% annualized. On a year-to-date basis, total deposits have declined 2.1% annualized.
- Continued to maintain strong balance sheet liquidity, with a loan-to-deposit ratio of 84.8% at September 30, 2023.
"Our third quarter results are highlighted by stability in our balance sheet and net interest margin," remarked Dan Rollins, Chairman and Chief Executive Officer of the Company. "While loan balances were flat for the quarter, we saw customer deposit growth of over $255 million excluding an intentional reduction in brokered deposits, and a reduction in pace of deposit mix shift from noninterest bearing to interest bearing products. We also continue our focus on improving expenses. Our total employee FTE count has declined by over 400 thus far in 2023 and is expected to decline by an additional 80 FTEs through year end. Similarly, our branch count has declined from 407 at merger to approximately 360 today, including the closure or consolidation of 35 locations in the third quarter."
Earnings Summary
For the third quarter of 2023, the Company reported net income available to common shareholders of $90.2 million, or $0.49 per diluted common share, compared with $121.0 million, or $0.66 per diluted common share, for the third quarter of 2022 and $111.7 million, or $0.61 per diluted common share, for the second quarter of 2023. Adjusted net income available to common shareholders(1) was $103.9 million, or $0.56 per diluted common share, for the third quarter of 2023, compared with $143.7 million, or $0.78 per diluted common share, for the third quarter of 2022 and $116.9 million, or $0.64 per diluted common share, for the second quarter of 2023. Additionally, the Company reported adjusted pre-tax pre-provision net revenue (PPNR)(1) of $153.6 million, or 1.25% of average assets on an annualized basis, for the third quarter of 2023 compared to $189.8 million, or 1.58% of average assets on an annualized basis, for the third quarter of 2022 and $168.8 million, or 1.38% of average assets on an annualized basis, for the second quarter of 2023.
Net Interest Revenue
Net interest revenue was $329.0 million for the third quarter of 2023, compared to $355.4 million for the third quarter of 2022 and $333.6 million for the second quarter of 2023. The net interest margin (fully taxable equivalent) was 2.98% for the third quarter of 2023, compared with 3.28% for the third quarter of 2022 and 3.03% for the second quarter of 2023.
Net interest revenue declined $4.5 million, or 1.4%, compared to the linked quarter as funding costs slightly outpaced improving yields on earning assets. Loan yield improvement was tempered by the slower loan originations in the third quarter of 2023. Accretion revenue was $6.6 million and $5.2 million for the third quarter of 2023 and the second quarter of 2023, respectively, adding approximately 7 basis points to the net interest margin for the third quarter of 2023 and 4 basis points for the second quarter of 2023.
Yield on net loans, loans held for sale, and leases excluding accretion, was 6.31% for the third quarter of 2023, up 13 basis points from 6.18% for the second quarter of 2023, while yield on total interest earning assets was 5.38% for the third quarter of 2023, up 17 basis points from 5.21% for the second quarter of 2023. Earning asset yields benefited from the immediate impact of the July Fed action on floating rate loans as well as other fixed and variable rate credits continuing to reprice at higher yields. Approximately 29% of our total loans are floating (reprice within 30 days), and another 19% reprice within 12 months. Our total loan beta, excluding accretion, is 44% cycle-to-date.
The average cost of total deposits increased to 2.14% for the third quarter of 2023, up 27 basis points during the quarter. The third quarter increase in total deposit costs slowed considerably, as the increase was nearly half the pace of the first and second quarters of 2023 cost increases of 52 and 59 basis point increases, respectively. Total interest-bearing liabilities cost increased to 3.17% from 2.92% during the third quarter of 2023. Our total deposit beta is 38% cycle-to-date.
Balance Sheet Activity
Loans and leases, net of unearned income, were $32.5 billion at September 30, 2023, essentially flat compared to $32.6 billion at the end of the second quarter of 2023. Total investment securities of $9.6 billion at September 30, 2023 decreased $611.3 million during the third quarter as routine portfolio cash flows each quarter continue to be used to fund loan growth and reduce higher cost funding, including brokered deposits.
Total deposits declined $356.8 million to $38.3 billion as of September 30, 2023. Total brokered deposits declined $612.3 million from $1.8 billion at the end of the second quarter of 2023 to $1.2 billion at September 30, 2023, or 3.2% of total deposits. Excluding this proactive decline in brokered deposits, total deposits actually increased $255.5 million, or 2.6% annualized, during the third quarter of 2023. The results reflect growth in both the Corporate and Community core deposit base, partially offset by seasonal declines in public fund deposits of approximately $250 million. The September 30, 2023 loan to deposit ratio was 84.8% and securities to total assets was 19.9%, reflecting continued strong liquidity. Noninterest bearing deposits represented 25.2% of total deposits at the end of the third quarter of 2023, declining slightly from 26.4% at June 30, 2023, reflective of the moderated deposit mix shift in the third quarter of 2023. The Company's deposit base continues to be very granular, with average transaction account balances of approximately $22,000 for consumer accounts and $131,000 for commercial accounts at September 30, 2023. Additionally, approximately 98% of the Company's deposit accounts have balances less than $250,000, and approximately 75% of our deposit balances were FDIC insured or collateralized at quarter-end.
Short-term borrowings were stable at $3.5 billion at September 30, 2023 while cash, due from balances and deposits at the Federal Reserve increased $267.1 million to $2.0 billion at September 30, 2023.
Credit Results, Provision for Credit Losses and Allowance for Credit Losses
Total non-performing assets as a percent of total assets were stable at 0.33% at September 30, 2023 compared to 0.27% at September 30, 2022 and 0.34% at June 30, 2023. Total non-performing loans and leases as a percent of loans and leases, net were 0.49% at September 30, 2023, compared to 0.40% at September 30, 2022 and 0.50% at June 30, 2023. Other real estate owned and other repossessed assets was $2.9 million at September 30, 2023 compared to the September 30, 2022 balance of $8.4 million and the June 30, 2023 balance of $2.9 million. For the third quarter of 2023, criticized loans declined by $10 million to $882 million or 2.71% of loans, down from 2.74% at June 30, 2023 while classified loans increased $65 million to $682 million or 2.10% compared to 1.90% at June 30, 2023 reflective of certain grade migration primarily in non-real estate C&I.
Net charge-offs for the third quarter of 2023 were $34.2 million, or 0.42% of average net loans and leases on an annualized basis, compared with net charge-offs of $6.7 million for the third quarter of 2022 and net charge-offs of $12.7 million for the second quarter of 2023. The increase in net charge-offs during the third quarter of 2023 was driven primarily by two C&I credits that were previously identified as impaired and reserved for in prior quarters. The provision for credit losses for the third quarter of 2023 was $17.0 million, compared with no recorded provision for third quarter of 2022 and $15.0 million for the second quarter of 2023. The allowance for credit losses of $446.9 million at September 30, 2023 represented 1.37% as a percent of total loans and leases, down slightly compared to the June 30, 2023 coverage of 1.43%.
Noninterest Revenue
Noninterest revenue was $119.0 million for the third quarter of 2023, compared with $124.5 million for the third quarter of 2022 and $132.3 million for the second quarter of 2023. Adjusted noninterest revenue(1) for the third quarter of 2023 was $125.6 million, compared with $124.6 million for the third quarter of 2022 and $132.2 million for the second quarter of 2023. Adjusted noninterest revenue(1) for the third quarter of 2023 excludes $6.7 million of facility and signage write-downs associated with the 35 branch closures effected in the third quarter of 2023. The linked quarter decline in adjusted noninterest revenue(1) was driven by lower mortgage production and servicing revenue, a negative mortgage servicing rights adjustment, as well as lower other noninterest income.
Insurance commission revenue continued to remain strong at $45.0 million for the third quarter of 2023, compared with $39.9 million for the third quarter of 2022 and $45.6 million for the second quarter of 2023. The year-over-year quarterly insurance revenue was up $5.1 million or 12.8% reflecting a continued firm pricing market and strong customer growth and retention.
Credit card, debit card and merchant fee revenue was $12.4 million for the third quarter of 2023, compared with $14.5 million for the third quarter of 2022 and $12.6 million for the second quarter of 2023. Deposit service charge revenue was $16.9 million for the third quarter of 2023 compared with $19.1 million for the third quarter of 2022 and $17.2 million for the second quarter of 2023. The declines include increases in earnings credit rate on corporate accounts. Other noninterest revenue was $17.9 million for the third quarter of 2023, compared with $22.7 million for the third quarter of 2022 and $26.7 million for the second quarter of 2023. The decline compared to the second quarter of 2023 is driven primarily by $6.7 million of facility and signage write-downs associated with the 35 branch closures effected in the third quarter of 2023. The remainder of this decline was driven by lower credit related fees, SBA income, and other investment income.
Mortgage production and servicing revenue totaled $5.8 million for the third quarter of 2023, compared with $4.7 million for the third quarter of 2022 and $6.8 million for the second quarter of 2023. The net mortgage servicing rights valuation adjustment was a negative $0.2 million for the third quarter of 2023, compared with a positive $4.3 million for the third quarter of 2022 and a positive $1.6 million for the second quarter of 2023 with the variances due to continued changes in the interest rate environment. Mortgage origination volume for the third quarter of 2023 was $615.2 million, compared with $769.9 million for the third quarter of 2022 and $848.9 million for the second quarter of 2023. The decline compared to the second quarter of 2023 reflects routine selling seasonality while the year-over-year decline was impacted by a decline in refinance activity due to the rate environment.
Noninterest Expense
Noninterest expense for the third quarter of 2023 was $312.3 million, compared with $319.7 million for the third quarter of 2022 and $303.9 million for the second quarter of 2023. Adjusted noninterest expense(1) for the third quarter of 2023 was $301.0 million, compared with $290.2 million for the third quarter of 2022 and $297.0 million for the second quarter of 2023. Adjusted noninterest expense(1) for the third quarter of 2023 excludes $10.6 million in restructuring charges related to efficiency initiatives including compensation matters as well as legal and advisory costs. The adjusted efficiency ratio(1) was 66.1% for the third quarter of 2023 compared to 63.6% for the second quarter of 2023.
The $4.0 million, or 1.4%, increase in adjusted noninterest expense(1) compared to the linked quarter was driven primarily by a $2.7 million increase in deposit insurance assessment expense resulting from an increase in insured deposits, higher second quarter loan balances and certain changes in credit quality metrics that impact the assessment. Salaries and employee benefits increased $4.0 million in the third quarter of 2023, reflecting an increase of $2.6 million in restructuring costs and the impact of our annual merit cycle effective July 1, partially offset by branch closures and reduced headcount during the third quarter of 2023. Employee headcount declined by 319 FTE during the third quarter of 2023, and over the last 12 months has declined by 469 FTE or 7%.
Capital Management
Total shareholders' equity was $4.4 billion at September 30, 2023 compared with $4.2 billion at September 30, 2022 and $4.5 billion at June 30, 2023. Estimated regulatory capital ratios at September 30, 2023 included Common Equity Tier 1 capital of 10.3%, Tier 1 capital of 10.8%, Total risk-based capital of 12.9%, and Tier 1 leverage capital of 8.6%. During the third quarter of 2023, the Company did not repurchase any shares of its common stock pursuant to its 10 million share repurchase authorization for 2023. Outstanding common shares were 182.6 million as of September 30, 2023.
Summary
Rollins concluded, "We are excited about the opportunities ahead of us. Our funding and margin dynamics have stabilized, credit quality remains well-managed and within risk tolerances, and our efficiency initiatives continue and should be more evident in our financial results as we move forward, particularly into 2024. Our bankers remain focused on both sides of the balance sheet - producing quality loan growth as well as protecting and growing core deposit relationships."
Conference Call and Webcast
The Company will conduct a conference call to discuss its third quarter 2023 financial results on October 24, 2023, at 10:00 a.m. (Central Time). This conference call will be an interactive session between management and analysts. Interested parties may listen to this live conference call via Internet webcast by accessing http://ir.cadencebank.com/events. The webcast will also be available in archived format at the same address.
(1) Considered a non-GAAP financial measure. A discussion regarding these non-GAAP measures and ratios, including reconciliations of non-GAAP measures to the most directly comparable GAAP measures and definitions for non-GAAP ratios, appears in Table 14 "Reconciliation of Non-GAAP Measures and Other Non-GAAP Ratio Definitions" beginning on page 22 of this news release. |
(2) See Table 14 for detail on non-routine income and expenses. |
About Cadence Bank
Cadence Bank (NYSE: CADE) is a leading regional banking franchise with approximately $50 billion in assets and more than 350 branch locations across the South and Texas. Cadence provides consumers, businesses and corporations with a full range of innovative banking and financial solutions. Services and products include consumer banking, consumer loans, mortgages, home equity lines and loans, credit cards, commercial and business banking, treasury management, specialized lending, asset-based lending, commercial real estate, equipment financing, correspondent banking, SBA lending, foreign exchange, wealth management, investment and trust services, financial planning, retirement plan management, and personal and business insurance. Cadence is committed to a culture of respect, diversity and inclusion in both its workplace and communities. Cadence Bank, Member FDIC. Equal Housing Lender.
Forward-Looking Statements
Certain statements made in this news release constitute "forward-looking statements" within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and are subject to the safe harbor under the Private Securities Litigation Reform Act of 1995 as well as the "bespeaks caution" doctrine. These statements are often, but not exclusively, made through the use of words or phrases like "assume," "believe," "budget," "contemplate," "continue," "could," "foresee," "indicate," "may," "might," "outlook," "prospect," "potential," "roadmap," "should," "target," "will," "would," the negative versions of such words, or comparable words of a future or forward-looking nature. These forward-looking statements may include, without limitation, discussions regarding general economic, interest rate, real estate market, competitive, employment, and credit market conditions, or any of the Company's comments related to topics in its risk disclosures or results of operations. Forward-looking statements are based upon management's expectations as well as certain assumptions and estimates made by, and information available to, the Company's management at the time such statements were made. Forward-looking statements are not guarantees of future results or performance and are subject to certain known and unknown risks, uncertainties and other factors that are beyond the Company's control and that may cause actual results to differ materially from those expressed in, or implied by, such forward-looking statements.
Risks, uncertainties and other factors the Company may face include, without limitation: general economic, unemployment, credit market and real estate market conditions, including inflation, and the effect of such conditions on customers, potential customers, assets, investments and liquidity; risks arising from market and consumer reactions to the general banking environment, or to conditions or situations at specific banks; risks arising from media coverage of the banking industry; risks arising from perceived instability in the banking sector; the risks of changes in interest rates and their effects on the level, cost, and composition of, and competition for, deposits, loan demand and timing of payments, the values of loan collateral, securities, and interest sensitive assets and liabilities; the ability to attract new or retain existing deposits, to retain or grow loans or additional interest and fee income, or to control noninterest expense; the effect of pricing pressures on the Company's net interest margin; the failure of assumptions underlying the establishment of reserves for possible credit losses, fair value for loans and other real estate owned; changes in real estate values; a deterioration of the credit rating for U.S. long-term sovereign debt, actions that the U.S. government may take to avoid exceeding the debt ceiling, or uncertainties surrounding the debt ceiling and the federal budget; uncertainties surrounding the functionality of the federal government; potential delays or other problems in implementing and executing the Company's growth, expansion, acquisition, or divestment strategies, including delays in obtaining regulatory or other necessary approvals, or the failure to realize any anticipated benefits or synergies from any acquisitions, growth, or divestment strategies; the ability to pay dividends or coupons on the Company's 5.5% Series A Non-Cumulative Perpetual Preferred Stock, par value $0.01 per share, or the 4.125% Fixed-to-Floating Rate Subordinated Notes due November 20, 2029; possible downgrades in the Company's credit ratings or outlook which could increase the costs or availability of funding from capital markets; the potential impact of the phase-out of the London Interbank Offered Rate ("LIBOR") or other changes involving LIBOR; changes in legal, financial, accounting, and/or regulatory requirements; the costs and expenses to comply with such changes; the enforcement efforts of federal and state bank regulators; the ability to keep pace with technological changes, including changes regarding maintaining cybersecurity and the impact of generative artificial intelligence; increased competition in the financial services industry, particularly from regional and national institutions; the impact of a failure in, or breach of, the Company's operational or security systems or infrastructure, or those of third parties with whom the Company does business, including as a result of cyber-attacks or an increase in the incidence or severity of fraud, illegal payments, security breaches or other illegal acts impacting the Company or the Company's customers. The Company also faces risks from natural disasters or acts of war or terrorism; international or political instability, including the impacts related to or resulting from Russia's military action in Ukraine and additional sanctions and export controls, as well as the broader impacts to financial markets and the global macroeconomic and geopolitical environments.
The Company also faces risks from: possible adverse rulings, judgments, settlements or other outcomes of pending, ongoing and future litigation, as well as governmental, administrative and investigatory matters; the impairment of the Company's goodwill or other intangible assets; losses of key employees and personnel; the diversion of management's attention from ongoing business operations and opportunities; and the company's success in executing its business plans and strategies, and managing the risks involved in all of the foregoing.
The foregoing factors should not be construed as exhaustive and should be read in conjunction with those factors that are set forth from time to time in the Company's periodic and current reports filed with the FDIC, including those factors included in the Company's Annual Report on Form 10-K for the year ended December 31, 2022, particularly those under the heading "Item 1A. Risk Factors," in the Company's Quarterly Reports on Form 10-Q under the heading "Part II-Item 1A. Risk Factors," and in the Company's Current Reports on Form 8-K.
Although the Company believes that the expectations reflected in these forward-looking statements are reasonable as of the date of this news release, if one or more events related to these or other risks or uncertainties materialize, or if the Company's underlying assumptions prove to be incorrect, actual results may prove to be materially different from the results expressed or implied by the forward-looking statements. Accordingly, undue reliance should not be placed on any forward-looking statements. The forward-looking statements speak only as of the date of this news release, and the Company does not undertake any obligation to publicly update or review any forward-looking statement, except as required by applicable law. All written or oral forward-looking statements attributable to the Company are expressly qualified in their entirety by this section.
Table 1 Selected Financial Data (Unaudited) | ||||||||
Quarter Ended | Year-to-date | |||||||
(In thousands) | Sep 2023 | Jun 2023 | Mar 2023 | Dec 2022 | Sep 2022 | Sep 2023 | Sep 2022 | |
Earnings Summary: | ||||||||
Interest revenue | $ 595,518 | $ 573,419 | $ 526,132 | $ 473,548 | $ 405,559 | $ 1,695,069 | $ 1,087,044 | |
Interest expense | 266,499 | 239,868 | 171,862 | 114,188 | 50,205 | 678,229 | 95,102 | |
Net interest revenue | 329,019 | 333,551 | 354,270 | 359,360 | 355,354 | 1,016,840 | 991,942 | |
Provision for credit losses | 17,000 | 15,000 | 10,000 | 6,000 | — | 42,000 | 1,000 | |
Net interest revenue, after provision for credit losses | 312,019 | 318,551 | 344,270 | 353,360 | 355,354 | 974,840 | 990,942 | |
Noninterest revenue | 118,997 | 132,290 | 74,071 | 114,873 | 124,491 | 325,358 | 378,160 | |
Noninterest expense | 312,267 | 303,878 | 319,279 | 340,671 | 319,734 | 935,424 | 897,289 | |
Income before income taxes | 118,749 | 146,963 | 99,062 | 127,562 | 160,111 | 364,774 | 471,813 | |
Income tax expense | 26,166 | 32,935 | 22,433 | 29,628 | 36,713 | 81,534 | 106,510 | |
Net income | 92,583 | 114,028 | 76,629 | 97,934 | 123,398 | 283,240 | 365,303 | |
Less: Preferred dividends | 2,372 | 2,372 | 2,372 | 2,372 | 2,372 | 7,116 | 7,116 | |
Net income available to common shareholders | $ 90,211 | $ 111,656 | $ 74,257 | $ 95,562 | $ 121,026 | $ 276,124 | $ 358,187 | |
Balance Sheet - Period End Balances | ||||||||
Total assets | $ 48,523,010 | $ 48,838,660 | $ 51,693,096 | $ 48,653,414 | $ 47,699,660 | $ 48,523,010 | $ 47,699,660 | |
Total earning assets | 43,729,220 | 44,012,570 | 46,808,612 | 43,722,544 | 42,832,355 | 43,729,220 | 42,832,355 | |
Available-for-sale securities | 9,643,231 | 10,254,580 | 10,877,879 | 11,944,096 | 12,441,894 | 9,643,231 | 12,441,894 | |
Loans and leases, net of unearned income | 32,520,593 | 32,556,708 | 31,282,594 | 30,349,277 | 29,296,450 | 32,520,593 | 29,296,450 | |
Allowance for credit losses (ACL) | 446,859 | 466,013 | 453,727 | 440,347 | 433,363 | 446,859 | 433,363 | |
Net book value of acquired loans | 6,895,487 | 7,357,174 | 7,942,980 | 8,754,526 | 8,841,588 | 6,895,487 | 8,841,588 | |
Unamortized net discount on acquired loans | 30,761 | 37,000 | 41,748 | 58,162 | 58,887 | 30,761 | 58,887 | |
Total deposits | 38,344,885 | 38,701,669 | 39,406,454 | 38,956,614 | 39,003,946 | 38,344,885 | 39,003,946 | |
Total deposits and repurchase agreements | 39,207,474 | 39,492,427 | 40,177,789 | 39,665,350 | 39,682,280 | 39,207,474 | 39,682,280 | |
Other short-term borrowings | 3,500,223 | 3,500,226 | 5,700,228 | 3,300,231 | 2,495,000 | 3,500,223 | 2,495,000 | |
Subordinated and long-term debt | 449,323 | 449,733 | 462,144 | 462,554 | 463,291 | 449,323 | 463,291 | |
Total shareholders' equity | 4,395,257 | 4,485,850 | 4,490,417 | 4,311,374 | 4,166,925 | 4,395,257 | 4,166,925 | |
Total shareholders' equity, excluding AOCI (1) | 5,705,178 | 5,648,925 | 5,572,303 | 5,533,912 | 5,464,737 | 5,705,178 | 5,464,737 | |
Common shareholders' equity | 4,228,264 | 4,318,857 | 4,323,424 | 4,144,381 | 3,999,932 | 4,228,264 | 3,999,932 | |
Common shareholders' equity, excluding AOCI (1) | $ 5,538,185 | $ 5,481,932 | $ 5,405,310 | $ 5,366,919 | $ 5,297,744 | $ 5,538,185 | $ 5,297,744 | |
Balance Sheet - Average Balances | ||||||||
Total assets | $ 48,655,138 | $ 49,067,121 | $ 48,652,201 | $ 47,790,494 | $ 47,595,557 | $ 48,791,497 | $ 47,446,436 | |
Total earning assets | 44,005,800 | 44,231,755 | 43,819,715 | 42,976,050 | 43,079,481 | 44,019,772 | 43,092,786 | |
Available-for-sale securities | 10,004,441 | 10,655,791 | 11,354,457 | 12,156,803 | 13,252,828 | 10,666,618 | 14,081,502 | |
Loans and leases, net of unearned income | 32,311,572 | 31,901,096 | 30,891,640 | 29,812,924 | 28,872,156 | 31,706,637 | 27,948,795 | |
Total deposits | 38,468,912 | 38,934,793 | 38,904,048 | 38,372,354 | 39,600,886 | 38,767,657 | 39,850,473 | |
Total deposits and repurchase agreements | 39,295,967 | 39,708,963 | 39,632,023 | 39,033,328 | 40,256,109 | 39,544,419 | 40,522,105 | |
Other short-term borrowings | 3,510,942 | 3,541,985 | 3,326,196 | 3,251,947 | 1,608,587 | 3,460,386 | 1,017,106 | |
Subordinated and long-term debt | 449,568 | 455,617 | 462,385 | 462,927 | 464,843 | 455,810 | 465,704 | |
Total shareholders' equity | 4,505,162 | 4,539,353 | 4,396,461 | 4,215,585 | 4,506,655 | 4,480,723 | 4,695,324 | |
Common shareholders' equity | $ 4,338,169 | $ 4,372,360 | $ 4,229,468 | $ 4,048,592 | $ 4,339,662 | $ 4,313,730 | $ 4,528,331 | |
Nonperforming Assets: | ||||||||
Nonaccrual loans and leases | $ 150,038 | $ 157,243 | $ 160,615 | $ 98,745 | $ 89,931 | $ 150,038 | $ 89,931 | |
Loans and leases 90+ days past due, still accruing | 9,152 | 4,412 | 5,164 | 2,068 | 11,984 | 9,152 | 11,984 | |
Accruing TDR (2) | — | — | — | 8,598 | 16,200 | — | 16,200 | |
Non-performing loans and leases (NPL) | 159,190 | 161,655 | 165,779 | 109,411 | 118,115 | 159,190 | 118,115 | |
Other real estate owned and other assets | 2,927 | 2,857 | 5,327 | 6,725 | 8,376 | 2,927 | 8,376 | |
Non-performing assets (NPA) | $ 162,117 | $ 164,512 | $ 171,106 | $ 116,136 | $ 126,491 | $ 162,117 | $ 126,491 | |
(1) | Denotes non-GAAP financial measure. Refer to related disclosure and reconciliation on pages 22 - 26. |
(2) | Cadence elected to adopt the new accounting guidance effective January 1, 2023, which eliminates the TDR recognition and measurement guidance via the modified retrospective transition method (ASU 2022-02). As such, there is no TDR reporting effective January 1, 2023. |
Table 2 Selected Financial Ratios | ||||||||
Quarter Ended | Year-to-date | |||||||
Sep 2023 | Jun 2023 | Mar 2023 | Dec 2022 | Sep 2022 | Sep 2023 | Sep 2022 | ||
Financial Ratios and Other Data: | ||||||||
Return on average assets (2) | 0.75 % | 0.93 % | 0.64 % | 0.81 % | 1.03 % | 0.78 % | 1.03 % | |
Adjusted return on average assets (1)(2) | 0.87 | 0.97 | 1.06 | 1.21 | 1.22 | 0.97 | 1.15 | |
Return on average common shareholders' equity (2) | 8.25 | 10.24 | 7.12 | 9.36 | 11.06 | 8.56 | 10.58 | |
Adjusted return on average common shareholders' equity (1)(2) | 9.50 | 10.72 | 11.93 | 14.00 | 13.13 | 10.70 | 11.79 | |
Return on average tangible common equity (1)(2) | 12.96 | 16.05 | 11.40 | 15.42 | 17.40 | 13.52 | 16.32 | |
Adjusted return on average tangible common equity (1)(2) | 14.92 | 16.80 | 19.10 | 23.04 | 20.66 | 16.89 | 18.19 | |
Pre-tax pre-provision net revenue to total average assets (1)(2) | 1.11 | 1.32 | 0.91 | 1.11 | 1.33 | 1.11 | 1.33 | |
Adjusted pre-tax pre-provision net revenue to total average assets (1)(2) | 1.25 | 1.38 | 1.46 | 1.62 | 1.58 | 1.36 | 1.48 | |
Net interest margin-fully taxable equivalent | 2.98 | 3.03 | 3.29 | 3.33 | 3.28 | 3.10 | 3.09 | |
Net interest rate spread-fully taxable equivalent | 2.21 | 2.29 | 2.65 | 2.84 | 3.05 | 2.37 | 2.93 | |
Efficiency ratio fully tax equivalent (1) | 69.53 | 65.08 | 74.36 | 71.67 | 66.49 | 69.53 | 65.34 | |
Adjusted efficiency ratio fully tax equivalent (1) | 66.06 | 63.62 | 63.46 | 58.69 | 60.33 | 64.36 | 61.40 | |
Loan/deposit ratio | 84.81 % | 84.12 % | 79.38 % | 77.91 % | 75.11 % | 84.81 % | 75.11 % | |
Full time equivalent employees | 6,160 | 6,479 | 6,567 | 6,572 | 6,629 | 6,160 | 6,629 | |
Credit Quality Ratios: | ||||||||
Net charge-offs (recoveries) to average loans and leases (2) | 0.42 % | 0.16 % | 0.02 % | (0.07) % | 0.09 % | 0.20 % | 0.02 % | |
Provision for credit losses to average loans and leases (2) | 0.21 | 0.19 | 0.13 | 0.08 | — | 0.18 | — | |
ACL to loans and leases, net | 1.37 | 1.43 | 1.45 | 1.45 | 1.48 | 1.37 | 1.48 | |
ACL to NPL | 280.71 | 288.28 | 273.69 | 402.47 | 366.90 | 280.71 | 366.90 | |
NPL to loans and leases, net | 0.49 | 0.50 | 0.53 | 0.36 | 0.40 | 0.49 | 0.40 | |
NPA to total assets | 0.33 | 0.34 | 0.33 | 0.24 | 0.27 | 0.33 | 0.27 | |
Equity Ratios: | ||||||||
Total shareholders' equity to total assets | 9.06 % | 9.19 % | 8.69 % | 8.86 % | 8.74 % | 9.06 % | 8.74 % | |
Total common shareholders' equity to total assets | 8.71 | 8.84 | 8.36 | 8.52 | 8.39 | 8.71 | 8.39 | |
Tangible common shareholders' equity to tangible assets (1) | 5.65 | 5.80 | 5.46 | 5.42 | 5.24 | 5.65 | 5.24 | |
Tangible common shareholders' equity to tangible assets, excluding AOCI (1) | 8.22 | 8.06 | 7.46 | 7.82 | 7.84 | 8.22 | 7.84 | |
Capital Adequacy (3): | ||||||||
Common Equity Tier 1 capital | 10.3 % | 10.1 % | 10.1 % | 10.2 % | 10.3 % | 10.3 | 10.3 % | |
Tier 1 capital | 10.8 | 10.5 | 10.6 | 10.7 | 10.7 | 10.8 | 10.7 | |
Total capital | 12.9 | 12.7 | 12.8 | 12.8 | 12.8 | 12.9 | 12.8 | |
Tier 1 leverage capital | 8.6 | 8.5 | 8.4 | 8.4 | 8.4 | 8.6 | 8.4 | |
(1) | Denotes non-GAAP financial measure. Refer to related disclosure and reconciliation on pages 22 - 26. |
(2) | Annualized. |
(3) | Current quarter regulatory capital ratios are estimated. |
Table 3 Selected Financial Information | ||||||||
Quarter Ended | Year-to-date | |||||||
Sep 2023 | Jun 2023 | Mar 2023 | Dec 2022 | Sep 2022 | Sep 2023 | Sep 2022 | ||
Common Share Data: | ||||||||
Diluted earnings per share | $ 0.49 | $ 0.61 | $ 0.40 | $ 0.52 | $ 0.66 | $ 1.50 | $ 1.94 | |
Adjusted earnings per share (1) | 0.56 | 0.64 | 0.68 | 0.78 | 0.78 | 1.87 | 2.16 | |
Cash dividends per share | 0.235 | 0.235 | 0.235 | 0.22 | 0.22 | 0.705 | 0.66 | |
Book value per share | 23.15 | 23.65 | 23.67 | 22.72 | 21.92 | 23.15 | 21.92 | |
Tangible book value per share (1) | 14.54 | 15.01 | 14.99 | 13.99 | 13.25 | 14.54 | 13.25 | |
Market value per share (last) | 21.22 | 19.88 | 20.76 | 24.66 | 25.41 | 21.22 | 25.41 | |
Market value per share (high) | 25.87 | 21.73 | 28.18 | 29.41 | 28.54 | 28.18 | 34.24 | |
Market value per share (low) | 19.00 | 16.95 | 19.24 | 22.43 | 22.04 | 16.95 | 22.04 | |
Market value per share (average) | 22.56 | 19.73 | 24.88 | 26.84 | 25.68 | 22.41 | 27.52 | |
Dividend payout ratio | 47.96 % | 38.52 % | 58.75 % | 42.31 % | 33.33 % | 47.00 % | 34.02 % | |
Adjusted dividend payout ratio (1) | 41.96 % | 36.72 % | 34.56 % | 28.21 % | 28.21 % | 37.70 % | 30.56 % | |
Total shares outstanding | 182,611,075 | 182,626,229 | 182,684,578 | 182,437,265 | 182,438,780 | 182,611,075 | 182,438,780 | |
Average shares outstanding - diluted | 184,645,004 | 183,631,570 | 183,908,798 | 183,762,008 | 183,313,831 | 184,062,368 | 184,747,880 | |
Yield/Rate: | ||||||||
(Taxable equivalent basis) | ||||||||
Loans, loans held for sale, and leases | 6.39 % | 6.24 % | 6.00 % | 5.54 % | 4.82 % | 6.22 % | 4.45 % | |
Loans, loans held for sale, and leases | 6.31 | 6.18 | 5.87 | 5.41 | 4.70 | 6.12 | 4.27 | |
Available-for-sale securities: | ||||||||
Taxable | 2.07 | 2.09 | 1.80 | 1.54 | 1.44 | 1.98 | 1.35 | |
Tax-exempt | 3.23 | 3.21 | 3.21 | 3.28 | 3.05 | 3.22 | 2.85 | |
Other investments | 5.36 | 5.05 | 4.64 | 3.69 | 2.32 | 5.02 | 1.10 | |
Total interest earning assets and revenue | 5.38 | 5.21 | 4.88 | 4.38 | 3.74 | 5.16 | 3.38 | |
Deposits | 2.14 | 1.87 | 1.28 | 0.76 | 0.35 | 1.76 | 0.22 | |
Interest bearing demand and money market | 2.79 | 2.49 | 2.03 | 1.34 | 0.60 | 2.43 | 0.35 | |
Savings | 0.56 | 0.51 | 0.36 | 0.31 | 0.17 | 0.47 | 0.10 | |
Time | 3.98 | 3.69 | 2.24 | 1.17 | 0.56 | 3.48 | 0.52 | |
Total interest bearing deposits | 2.88 | 2.58 | 1.86 | 1.17 | 0.53 | 2.46 | 0.34 | |
Fed funds purchased, securities sold under | 4.27 | 3.97 | 3.73 | 3.04 | 1.65 | 3.99 | 0.78 | |
Short-term FHLB borrowings | 3.54 | 5.24 | 4.66 | 3.84 | 2.05 | 4.91 | 1.56 | |
Short-term BTFP borrowings | 5.15 | 5.15 | — | — | — | 5.15 | — | |
Total interest bearing deposits and short-term | 3.16 | 2.90 | 2.20 | 1.50 | 0.64 | 2.77 | 0.39 | |
Long-term debt | 4.22 | 4.23 | 4.27 | 4.15 | 4.16 | 4.24 | 4.16 | |
Total interest bearing liabilities | 3.17 | 2.92 | 2.23 | 1.54 | 0.70 | 2.79 | 0.45 | |
Interest bearing liabilities to interest earning | 75.74 % | 74.57 % | 71.24 % | 68.42 % | 66.19 % | 73.87 % | 65.30 % | |
Net interest income tax equivalent adjustment | $ 1,081 | $ 1,063 | $ 1,051 | $ 1,071 | $ 1,052 | $ 3,197 | $ 3,141 | |
(1) | Denotes non-GAAP financial measure. Refer to related disclosure and reconciliation on pages 22 - 26. |
Table 4 Consolidated Balance Sheets (Unaudited) | |||||
As of | |||||
(In thousands) | Sep 2023 | Jun 2023 | Mar 2023 | Dec 2022 | Sep 2022 |
ASSETS | |||||
Cash and due from banks | $ 594,787 | $ 722,625 | $ 660,431 | $ 756,906 | $ 693,999 |
Interest bearing deposits with other banks and Federal funds sold | 1,403,020 | 1,008,048 | 4,452,029 | 1,241,246 | 895,630 |
Available-for-sale securities, at fair value | 9,643,231 | 10,254,580 | 10,877,879 | 11,944,096 | 12,441,894 |
Loans and leases, net of unearned income | 32,520,593 | 32,556,708 | 31,282,594 | 30,349,277 | 29,296,450 |
Allowance for credit losses | 446,859 | 466,013 | 453,727 | 440,347 | 433,363 |
Net loans and leases | 32,073,734 | 32,090,695 | 30,828,867 | 29,908,930 | 28,863,087 |
Loans held for sale, at fair value | 162,376 | 193,234 | 196,110 | 187,925 | 198,381 |
Premises and equipment, net | 818,006 | 830,184 | 826,439 | 817,430 | 802,382 |
Goodwill | 1,459,302 | 1,459,302 | 1,459,302 | 1,458,795 | 1,449,511 |
Other intangible assets, net | 114,127 | 119,098 | 125,724 | 132,764 | 132,953 |
Bank-owned life insurance | 639,073 | 634,985 | 631,174 | 630,046 | 624,696 |
Other assets | 1,615,354 | 1,525,909 | 1,635,141 | 1,575,276 | 1,597,127 |
Total Assets | $ 48,523,010 | $ 48,838,660 | $ 51,693,096 | $ 48,653,414 | $ 47,699,660 |
LIABILITIES | |||||
Deposits: | |||||
Demand: Noninterest bearing | $ 9,657,198 | $ 10,223,508 | $ 11,517,037 | $ 12,731,065 | $ 13,839,649 |
Interest bearing | 18,334,551 | 18,088,711 | 18,146,678 | 19,040,131 | 18,033,648 |
Savings | 2,837,348 | 2,983,709 | 3,226,685 | 3,473,746 | 3,676,340 |
Time deposits | 7,515,788 | 7,405,741 | 6,516,054 | 3,711,672 | 3,454,309 |
Total deposits | 38,344,885 | 38,701,669 | 39,406,454 | 38,956,614 | 39,003,946 |
Securities sold under agreement to repurchase | 862,589 | 790,758 | 771,335 | 708,736 | 678,334 |
Other short-term borrowings | 3,500,223 | 3,500,226 | 5,700,228 | 3,300,231 | 2,495,000 |
Subordinated and long-term debt | 449,323 | 449,733 | 462,144 | 462,554 | 463,291 |
Other liabilities | 970,733 | 910,424 | 862,518 | 913,905 | 892,164 |
Total Liabilities | 44,127,753 | 44,352,810 | 47,202,679 | 44,342,040 | 43,532,735 |
SHAREHOLDERS' EQUITY | |||||
Preferred stock | 166,993 | 166,993 | 166,993 | 166,993 | 166,993 |
Common stock | 456,528 | 456,566 | 456,711 | 456,093 | 456,097 |
Capital surplus | 2,733,003 | 2,724,021 | 2,715,981 | 2,709,391 | 2,695,646 |
Accumulated other comprehensive loss | (1,309,921) | (1,163,075) | (1,081,886) | (1,222,538) | (1,297,812) |
Retained earnings | 2,348,654 | 2,301,345 | 2,232,618 | 2,201,435 | 2,146,001 |
Total Shareholders' Equity | 4,395,257 | 4,485,850 | 4,490,417 | 4,311,374 | 4,166,925 |
Total Liabilities & Shareholders' Equity | $ 48,523,010 | $ 48,838,660 | $ 51,693,096 | $ 48,653,414 | $ 47,699,660 |
Table 5 Consolidated Quarterly Average Balance Sheets (Unaudited) | |||||
(In thousands) | Sep 2023 | Jun 2023 | Mar 2023 | Dec 2022 | Sep 2022 |
ASSETS | |||||
Cash and due from banks | $ 587,040 | $ 610,948 | $ 695,263 | $ 617,634 | $ 654,589 |
Interest bearing deposits with other banks and Federal funds sold | 1,574,134 | 1,607,830 | 1,526,755 | 943,806 | 851,185 |
Available-for-sale securities, at fair value | 10,004,441 | 10,655,791 | 11,354,457 | 12,156,803 | 13,252,828 |
Loans and leases, net of unearned income | 32,311,572 | 31,901,096 | 30,891,640 | 29,812,924 | 28,872,156 |
Allowance for credit losses | 459,698 | 457,027 | 442,486 | 434,785 | 441,042 |
Net loans and leases | 31,851,874 | 31,444,069 | 30,449,154 | 29,378,139 | 28,431,114 |
Loans held for sale, at fair value | 115,653 | 67,038 | 46,863 | 62,517 | 103,312 |
Premises and equipment, net | 837,516 | 829,938 | 824,190 | 802,771 | 809,799 |
Goodwill | 1,459,302 | 1,459,302 | 1,459,127 | 1,457,120 | 1,444,331 |
Other intangible assets, net | 116,715 | 123,313 | 128,957 | 132,091 | 136,149 |
Bank-owned life insurance | 636,335 | 632,489 | 630,601 | 625,938 | 613,973 |
Other assets | 1,472,128 | 1,636,403 | 1,536,834 | 1,613,675 | 1,298,277 |
Total Assets | $ 48,655,138 | $ 49,067,121 | $ 48,652,201 | $ 47,790,494 | $ 47,595,557 |
LIABILITIES | |||||
Deposits: | |||||
Demand: Noninterest bearing | $ 9,924,554 | $ 10,725,108 | $ 12,203,079 | $ 13,344,152 | $ 13,816,796 |
Interest bearing | 17,970,463 | 17,997,618 | 19,009,345 | 17,866,198 | 18,675,214 |
Savings | 2,913,027 | 3,088,174 | 3,363,236 | 3,555,911 | 3,720,218 |
Time deposits | 7,660,868 | 7,123,893 | 4,328,388 | 3,606,093 | 3,388,658 |
Total deposits | 38,468,912 | 38,934,793 | 38,904,048 | 38,372,354 | 39,600,886 |
Securities sold under agreement to repurchase | 827,055 | 774,170 | 727,975 | 660,974 | 655,223 |
Other short-term borrowings | 3,510,942 | 3,541,985 | 3,326,196 | 3,251,947 | 1,608,587 |
Subordinated and long-term debt | 449,568 | 455,617 | 462,385 | 462,927 | 464,843 |
Other liabilities | 893,499 | 821,203 | 835,136 | 826,707 | 759,363 |
Total Liabilities | 44,149,976 | 44,527,768 | 44,255,740 | 43,574,909 | 43,088,902 |
SHAREHOLDERS' EQUITY | |||||
Preferred stock | 166,993 | 166,993 | 166,993 | 166,993 | 166,993 |
Common stock | 456,557 | 456,755 | 456,354 | 456,095 | 456,130 |
Capital surplus | 2,726,686 | 2,717,866 | 2,710,501 | 2,701,121 | 2,689,340 |
Accumulated other comprehensive loss | (1,175,077) | (1,087,389) | (1,174,723) | (1,302,388) | (922,673) |
Retained earnings | 2,330,003 | 2,285,128 | 2,237,336 | 2,193,764 | 2,116,865 |
Total Shareholders' Equity | 4,505,162 | 4,539,353 | 4,396,461 | 4,215,585 | 4,506,655 |
Total Liabilities & Shareholders' Equity | $ 48,655,138 | $ 49,067,121 | $ 48,652,201 | $ 47,790,494 | $ 47,595,557 |
Table 6 Consolidated Statements of Income (Unaudited) | ||||||||
Quarter Ended | Year-to-date | |||||||
(Dollars in thousands, except per share data) | Sep 2023 | Jun 2023 | Mar 2023 | Dec 2022 | Sep 2022 | Sep 2023 | Sep 2022 | |
INTEREST REVENUE: | ||||||||
Loans and leases | $ 520,126 | $ 496,262 | $ 457,084 | $ 414,623 | $ 349,093 | $ 1,473,472 | $ 928,039 | |
Available-for-sale securities: | ||||||||
Taxable | 50,277 | 53,531 | 48,515 | 45,807 | 46,701 | 152,323 | 138,110 | |
Tax-exempt | 2,375 | 2,427 | 2,477 | 2,547 | 2,548 | 7,279 | 7,533 | |
Loans held for sale | 1,468 | 961 | 603 | 1,788 | 2,241 | 3,033 | 5,766 | |
Short-term investments | 21,272 | 20,238 | 17,453 | 8,783 | 4,976 | 58,962 | 7,596 | |
Total interest revenue | 595,518 | 573,419 | 526,132 | 473,548 | 405,559 | 1,695,069 | 1,087,044 | |
INTEREST EXPENSE: | ||||||||
Interest bearing demand deposits and money market accounts | 126,296 | 111,938 | 95,344 | 60,253 | 28,175 | 333,578 | 49,636 | |
Savings | 4,108 | 3,915 | 3,014 | 2,769 | 1,597 | 11,037 | 2,753 | |
Time deposits | 76,867 | 65,517 | 23,950 | 10,651 | 4,797 | 166,333 | 13,602 | |
Federal funds purchased and securities sold under agreement to | 9,004 | 7,656 | 7,667 | 8,365 | 3,944 | 24,327 | 5,067 | |
Short-term debt | 45,438 | 46,036 | 37,015 | 27,302 | 6,822 | 128,490 | 9,562 | |
Subordinated and long-term debt | 4,786 | 4,806 | 4,872 | 4,848 | 4,870 | 14,464 | 14,482 | |
Total interest expense | 266,499 | 239,868 | 171,862 | 114,188 | 50,205 | 678,229 | 95,102 | |
Net interest revenue | 329,019 | 333,551 | 354,270 | 359,360 | 355,354 | 1,016,840 | 991,942 | |
Provision for credit losses | 17,000 | 15,000 | 10,000 | 6,000 | — | 42,000 | 1,000 | |
Net interest revenue, after provision for credit losses | 312,019 | 318,551 | 344,270 | 353,360 | 355,354 | 974,840 | 990,942 | |
NONINTEREST REVENUE: | ||||||||
Mortgage banking | 5,684 | 8,356 | 6,076 | 2,571 | 9,080 | 20,115 | 42,289 | |
Credit card, debit card and merchant fees | 12,413 | 12,617 | 11,851 | 15,750 | 14,497 | 36,882 | 42,410 | |
Deposit service charges | 16,867 | 17,208 | 16,482 | 16,863 | 19,134 | 50,557 | 56,615 | |
Security gains (losses), net | 64 | 69 | (51,261) | (595) | (139) | (51,127) | 211 | |
Insurance commissions | 44,989 | 45,603 | 39,606 | 34,679 | 39,876 | 130,198 | 115,596 | |
Wealth management | 21,079 | 21,741 | 21,532 | 19,199 | 19,335 | 64,351 | 61,286 | |
Other noninterest income | 17,901 | 26,696 | 29,785 | 26,406 | 22,708 | 74,382 | 59,753 | |
Total noninterest revenue | 118,997 | 132,290 | 74,071 | 114,873 | 124,491 | 325,358 | 378,160 | |
NONINTEREST EXPENSE: | ||||||||
Salaries and employee benefits | 194,812 | 190,854 | 195,702 | 183,918 | 191,193 | 581,368 | 561,106 | |
Occupancy and equipment | 28,343 | 29,590 | 29,113 | 30,539 | 30,610 | 87,046 | 89,008 | |
Data processing and software | 29,933 | 28,073 | 31,869 | 29,289 | 28,079 | 89,875 | 84,644 | |
Merger expense | — | 137 | 5,075 | 20,276 | 19,690 | 5,212 | 30,938 | |
Amortization of intangibles | 4,971 | 6,626 | 5,005 | 5,251 | 5,417 | 16,601 | 15,240 | |
Deposit insurance assessments | 10,425 | 7,705 | 8,361 | 5,931 | 4,499 | 26,491 | 12,781 | |
Pension settlement expense | 600 | — | — | 6,127 | 2,896 | 600 | 2,896 | |
Other noninterest expense | 43,183 | 40,893 | 44,154 | 59,340 | 37,350 | 128,231 | 100,676 | |
Total noninterest expense | 312,267 | 303,878 | 319,279 | 340,671 | 319,734 | 935,424 | 897,289 | |
Income before income taxes | 118,749 | 146,963 | 99,062 | 127,562 | 160,111 | 364,774 | 471,813 | |
Income tax expense | 26,166 | 32,935 | 22,433 | 29,628 | 36,713 | 81,534 | 106,510 | |
Net income | 92,583 | 114,028 | 76,629 | 97,934 | 123,398 | 283,240 | 365,303 | |
Less: Preferred dividends | 2,372 | 2,372 | 2,372 | 2,372 | 2,372 | 7,116 | 7,116 | |
Net income available to common shareholders | $ 90,211 | $ 111,656 | $ 74,257 | $ 95,562 | $ 121,026 | $ 276,124 | $ 358,187 | |
Net income per common share: Diluted | $ 0.49 | $ 0.61 | $ 0.40 | $ 0.52 | $ 0.66 | $ 1.50 | $ 1.94 | |
Table 7 Selected Loan Portfolio Data (Unaudited) | |||||
Quarter Ended | |||||
(In thousands) | Sep 2023 | Jun 2023 | Mar 2023 | Dec 2022 | Sep 2022 |
LOAN AND LEASE PORTFOLIO: | |||||
Commercial and industrial | |||||
Non-real estate | $ 9,199,024 | $ 9,636,481 | $ 9,159,387 | $ 8,985,547 | $ 8,803,381 |
Owner occupied | 4,361,530 | 4,358,000 | 4,278,468 | 4,068,659 | 3,943,442 |
Total commercial and industrial | 13,560,554 | 13,994,481 | 13,437,855 | 13,054,206 | 12,746,823 |
Commercial real estate | |||||
Construction, acquisition and development | 3,819,307 | 3,744,114 | 3,703,137 | 3,547,986 | 3,244,425 |
Income producing | 5,720,606 | 5,596,134 | 5,368,676 | 5,150,680 | 5,098,470 |
Total commercial real estate | 9,539,913 | 9,340,248 | 9,071,813 | 8,698,666 | 8,342,895 |
Consumer | |||||
Residential mortgages | 9,186,179 | 8,989,614 | 8,536,032 | 8,319,242 | 7,924,378 |
Other consumer | 233,947 | 232,365 | 236,894 | 277,163 | 282,354 |
Total consumer | 9,420,126 | 9,221,979 | 8,772,926 | 8,596,405 | 8,206,732 |
Total loans and leases, net of unearned income | $ 32,520,593 | $ 32,556,708 | $ 31,282,594 | $ 30,349,277 | $ 29,296,450 |
NON-PERFORMING ASSETS | |||||
Non-performing Loans and Leases | |||||
Nonaccrual Loans and Leases | |||||
Commercial and industrial | |||||
Non-real estate | $ 67,962 | $ 72,592 | $ 65,783 | $ 23,907 | $ 23,916 |
Owner occupied | 6,486 | 7,541 | 9,089 | 7,944 | 8,327 |
Total commercial and industrial | 74,448 | 80,133 | 74,872 | 31,851 | 32,243 |
Commercial real estate | |||||
Construction, acquisition and development | 4,608 | 4,496 | 1,850 | 2,974 | 1,823 |
Income producing | 12,251 | 19,205 | 20,616 | 7,331 | 8,580 |
Total commercial real estate | 16,859 | 23,701 | 22,466 | 10,305 | 10,403 |
Consumer | |||||
Residential mortgages | 58,488 | 53,171 | 62,748 | 55,892 | 46,671 |
Other consumer | 243 | 238 | 529 | 697 | 614 |
Total consumer | 58,731 | 53,409 | 63,277 | 56,589 | 47,285 |
Total nonaccrual loans and leases | $ 150,038 | $ 157,243 | $ 160,615 | $ 98,745 | $ 89,931 |
Loans and leases 90+ days past due, still accruing | 9,152 | 4,412 | 5,164 | 2,068 | 11,984 |
Restructured loans and leases, still accruing | — | — | — | 8,598 | 16,200 |
Total non-performing loans and leases | $ 159,190 | $ 161,655 | $ 165,779 | $ 109,411 | $ 118,115 |
Other real estate owned and repossessed assets | 2,927 | 2,857 | 5,327 | 6,725 | 8,376 |
Total non-performing assets | $ 162,117 | $ 164,512 | $ 171,106 | $ 116,136 | $ 126,491 |
Additions to nonaccrual loans and leases during the quarter | $ 41,773 | $ 57,764 | $ 89,779 | $ 38,945 | $ 34,432 |
Table 8 Allowance for Credit Losses (Unaudited) | |||||
Quarter Ended | |||||
(Dollars in thousands) | Sep 2023 | Jun 2023 | Mar 2023 | Dec 2022 | Sep 2022 |
ALLOWANCE FOR CREDIT LOSSES: | |||||
Balance, beginning of period | $ 466,013 | $ 453,727 | $ 440,347 | $ 433,363 | $ 440,112 |
Charge-offs: | |||||
Commercial and industrial | (34,959) | (13,598) | (2,853) | (2,295) | (11,551) |
Commercial real estate | (931) | (126) | (1,988) | (426) | (1,116) |
Consumer | (1,608) | (1,916) | (2,189) | (2,650) | (2,653) |
Total loans charged-off | (37,498) | (15,640) | (7,030) | (5,371) | (15,320) |
Recoveries: | |||||
Commercial and industrial | 2,240 | 1,360 | 3,399 | 6,405 | 3,657 |
Commercial real estate | 201 | 618 | 779 | 2,851 | 3,509 |
Consumer | 903 | 948 | 977 | 1,099 | 1,405 |
Total recoveries | 3,344 | 2,926 | 5,155 | 10,355 | 8,571 |
Net (charge-offs) recoveries | (34,154) | (12,714) | (1,875) | 4,984 | (6,749) |
Adoption of new ASU related to modified loans (3) | — | — | 255 | — | — |
Provision for credit losses related to loans and leases | 15,000 | 25,000 | 15,000 | 2,000 | — |
Total provision for loans and leases | 15,000 | 25,000 | 15,000 | 2,000 | — |
Balance, end of period | $ 446,859 | $ 466,013 | $ 453,727 | $ 440,347 | $ 433,363 |
Average loans and leases, net of unearned income, for period | $ 32,311,572 | $ 31,901,096 | $ 30,891,640 | $ 29,812,924 | $ 28,872,156 |
Ratio: Net charge-offs (recoveries) to average loans and leases (2) | 0.42 % | 0.16 % | 0.02 % | (0.07) % | 0.09 % |
RESERVE FOR UNFUNDED COMMITMENTS (1) | |||||
Balance, beginning of period | $ 13,551 | $ 23,551 | $ 28,551 | $ 24,551 | $ 24,551 |
Provision (reversal) for credit losses for unfunded commitments | 2,000 | (10,000) | (5,000) | 4,000 | — |
Balance, end of period | $ 15,551 | $ 13,551 | $ 23,551 | $ 28,551 | $ 24,551 |
(1) | The Reserve for Unfunded Commitments is classified in other liabilities on the consolidated balance sheets. |
(2) | Annualized. |
(3) | Cadence elected to adopt the new accounting guidance effective January 1, 2023, which eliminates the TDR recognition and measurement guidance via the modified retrospective transition method (ASU 2022-02). As such, there is no TDR reporting effective January 1, 2023. |
Table 9 Loan Portfolio by Grades (Unaudited) | ||||||
September 30, 2023 | ||||||
(In thousands) | Pass | Special | Substandard | Impaired | Purchased | Total |
LOAN AND LEASE PORTFOLIO: | ||||||
Commercial and industrial | ||||||
Non-real estate | $ 8,690,172 | $ 100,118 | $ 388,741 | $ 15,337 | $ 4,656 | $ 9,199,024 |
Owner occupied | 4,281,916 | 30,414 | 46,803 | 1,275 | 1,122 | 4,361,530 |
Total commercial and industrial | 12,972,088 | 130,532 | 435,544 | 16,612 | 5,778 | 13,560,554 |
Commercial real estate | ||||||
Construction, acquisition and development | 3,798,695 | 2,975 | 17,637 | — | — | 3,819,307 |
Income producing | 5,519,028 | 65,473 | 124,731 | 11,374 | — | 5,720,606 |
Total commercial real estate | 9,317,723 | 68,448 | 142,368 | 11,374 | — | 9,539,913 |
Consumer (1) | ||||||
Residential mortgages | 9,114,880 | 1,366 | 68,359 | — | 1,574 | 9,186,179 |
Other consumer | 233,505 | — | 442 | — | — | 233,947 |
Total consumer | 9,348,385 | 1,366 | 68,801 | — | 1,574 | 9,420,126 |
Total loans and leases, net of unearned income | $ 31,638,196 | $ 200,346 | $ 646,713 | $ 27,986 | $ 7,352 | $ 32,520,593 |
(1) | During the second quarter of 2023, the Company began determining the risk rating classification of its Consumer portfolio based on nonaccrual and |
June 30, 2023 | |||||||
(In thousands) | Pass | Special | Substandard | Doubtful | Impaired | Purchased | Total |
LOAN AND LEASE PORTFOLIO: | |||||||
Commercial and industrial | |||||||
Non-real estate | $ 9,126,727 | $ 160,652 | $ 311,119 | $ — | $ 34,027 | $ 3,956 | $ 9,636,481 |
Owner occupied | 4,276,518 | 29,991 | 48,068 | — | 1,762 | 1,661 | 4,358,000 |
Total commercial and industrial | 13,403,245 | 190,643 | 359,187 | — | 35,789 | 5,617 | 13,994,481 |
Commercial real estate | |||||||
Construction, acquisition and development | 3,711,414 | 20,339 | 12,158 | 203 | — | — | 3,744,114 |
Income producing | 5,390,435 | 63,323 | 113,021 | — | 10,760 | 18,595 | 5,596,134 |
Total commercial real estate | 9,101,849 | 83,662 | 125,179 | 203 | 10,760 | 18,595 | 9,340,248 |
Consumer | |||||||
Residential mortgages | 8,927,494 | — | 59,267 | — | 1,279 | 1,574 | 8,989,614 |
Other consumer | 231,978 | — | 387 | — | — | — | 232,365 |
Total consumer | 9,159,472 | — | 59,654 | — | 1,279 | 1,574 | 9,221,979 |
Total loans and leases, net of unearned income | $ 31,664,566 | $ 274,305 | $ 544,020 | $ 203 | $ 47,828 | $ 25,786 | $ 32,556,708 |
Table 10 Geographical Loan Information (Unaudited) | |||||||||||
September 30, 2023 | |||||||||||
(Dollars in thousands) | Alabama | Arkansas | Florida | Georgia | Louisiana | Mississippi | Missouri | Tennessee | Texas | Other | Total |
LOAN AND LEASE PORTFOLIO: | |||||||||||
Commercial and industrial | |||||||||||
Non-real estate | $ 360,970 | $ 162,650 | $ 491,854 | $ 514,031 | $ 330,072 | $ 516,449 | $ 65,475 | $ 341,777 | $ 3,884,907 | $ 2,530,839 | $ 9,199,024 |
Owner occupied | 351,835 | 252,880 | 284,886 | 319,982 | 288,640 | 594,127 | 92,167 | 164,564 | 1,660,831 | 351,618 | 4,361,530 |
Total commercial and industrial | 712,805 | 415,530 | 776,740 | 834,013 | 618,712 | 1,110,576 | 157,642 | 506,341 | 5,545,738 | 2,882,457 | 13,560,554 |
Commercial real estate | |||||||||||
Construction, acquisition and development | 210,809 | 73,567 | 306,869 | 422,605 | 59,957 | 201,138 | 49,584 | 163,621 | 1,885,210 | 445,947 | 3,819,307 |
Income producing | 427,591 | 275,663 | 374,452 | 634,494 | 217,475 | 423,473 | 193,555 | 328,808 | 2,047,954 | 797,141 | 5,720,606 |
Total commercial real estate | 638,400 | 349,230 | 681,321 | 1,057,099 | 277,432 | 624,611 | 243,139 | 492,429 | 3,933,164 | 1,243,088 | 9,539,913 |
Consumer | |||||||||||
Residential mortgages | 1,204,991 | 388,592 | 634,059 | 405,382 | 459,661 | 1,138,245 | 175,973 | 720,227 | 3,799,189 | 259,860 | 9,186,179 |
Other consumer | 31,446 | 18,075 | 5,188 | 7,268 | 11,360 | 86,899 | 1,706 | 16,914 | 50,039 | 5,052 | 233,947 |
Total consumer | 1,236,437 | 406,667 | 639,247 | 412,650 | 471,021 | 1,225,144 | 177,679 | 737,141 | 3,849,228 | 264,912 | 9,420,126 |
Total loans and leases, net of | $ 2,587,642 | $ 1,171,427 | $ 2,097,308 | $ 2,303,762 | $ 1,367,165 | $ 2,960,331 | $ 578,460 | $ 1,735,911 | $ 13,328,130 | $ 4,390,457 | $ 32,520,593 |
Loan growth, excluding loans acquired | $ (14,602) | $ 12,160 | $ (3,504) | $ 29,586 | $ 32,312 | $ 7,060 | $ 901 | $ 4,127 | $ 133,358 | $ (237,513) | $ (36,115) |
Loan growth, excluding loans acquired | (2.23) % | 4.16 % | (0.66) % | 5.16 % | 9.60 % | 0.95 % | 0.62 % | 0.95 % | 4.01 % | (20.36) % | (0.44) % |
June 30, 2023 | |||||||||||
(Dollars in thousands) | Alabama | Arkansas | Florida | Georgia | Louisiana | Mississippi | Missouri | Tennessee | Texas | Other | Total |
LOAN AND LEASE PORTFOLIO: | |||||||||||
Commercial and industrial | |||||||||||
Non-real estate | $ 377,605 | $ 153,433 | $ 535,035 | $ 553,110 | $ 324,964 | $ 508,159 | $ 80,894 | $ 348,478 | $ 3,961,249 | $ 2,793,554 | $ 9,636,481 |
Owner occupied | 358,089 | 244,598 | 304,871 | 315,771 | 281,270 | 596,732 | 91,474 | 169,620 | 1,634,523 | 361,052 | 4,358,000 |
Total commercial and industrial | 735,694 | 398,031 | 839,906 | 868,881 | 606,234 | 1,104,891 | 172,368 | 518,098 | 5,595,772 | 3,154,606 | 13,994,481 |
Commercial real estate | |||||||||||
Construction, acquisition and development | 200,551 | 81,766 | 261,666 | 404,301 | 48,211 | 199,099 | 44,273 | 146,479 | 1,874,670 | 483,098 | 3,744,114 |
Income producing | 454,443 | 279,541 | 371,717 | 595,999 | 211,076 | 436,653 | 190,959 | 335,009 | 1,995,521 | 725,216 | 5,596,134 |
Total commercial real estate | 654,994 | 361,307 | 633,383 | 1,000,300 | 259,287 | 635,752 | 235,232 | 481,488 | 3,870,191 | 1,208,314 | 9,340,248 |
Consumer | |||||||||||
Residential mortgages | 1,180,606 | 382,172 | 622,179 | 398,080 | 457,968 | 1,127,557 | 168,403 | 715,992 | 3,677,451 | 259,206 | 8,989,614 |
Other consumer | 30,950 | 17,757 | 5,344 | 6,915 | 11,364 | 85,071 | 1,556 | 16,206 | 51,358 | 5,844 | 232,365 |
Total consumer | 1,211,556 | 399,929 | 627,523 | 404,995 | 469,332 | 1,212,628 | 169,959 | 732,198 | 3,728,809 | 265,050 | 9,221,979 |
Total loans and leases, net of | $ 2,602,244 | $ 1,159,267 | $ 2,100,812 | $ 2,274,176 | $ 1,334,853 | $ 2,953,271 | $ 577,559 | $ 1,731,784 | $ 13,194,772 | $ 4,627,970 | $ 32,556,708 |
Table 11 Noninterest Revenue and Expense (Unaudited) | ||||||||
Quarter Ended | Year-to-date | |||||||
(In thousands) | Sep 2023 | Jun 2023 | Mar 2023 | Dec 2022 | Sep 2022 | Sep 2023 | Sep 2022 | |
NONINTEREST REVENUE: | ||||||||
Mortgage banking excl. MSR and MSR hedge market value adjustment | $ 5,842 | $ 6,774 | $ 8,379 | $ 5,408 | $ 4,746 | $ 20,995 | $ 19,234 | |
MSR and MSR hedge market value adjustment | (158) | 1,582 | (2,303) | (2,837) | 4,334 | (880) | 23,055 | |
Credit card, debit card and merchant fees | 12,413 | 12,617 | 11,851 | 15,750 | 14,497 | 36,882 | 42,410 | |
Deposit service charges | 16,867 | 17,208 | 16,482 | 16,863 | 19,134 | 50,557 | 56,615 | |
Security gains (losses), net | 64 | 69 | (51,261) | (595) | (139) | (51,127) | 211 | |
Insurance commissions | 44,989 | 45,603 | 39,606 | 34,679 | 39,876 | 130,198 | 115,596 | |
Trust income | 10,574 | 10,084 | 10,553 | 9,113 | 9,011 | 31,211 | 28,201 | |
Annuity fees | 1,882 | 1,702 | 2,192 | 951 | 600 | 5,775 | 1,957 | |
Brokerage commissions and fees | 8,623 | 9,955 | 8,787 | 9,135 | 9,724 | 27,365 | 31,128 | |
Bank-owned life insurance | 4,108 | 3,811 | 3,647 | 5,436 | 3,537 | 11,566 | 10,158 | |
Other miscellaneous income | 13,793 | 22,885 | 26,138 | 20,970 | 19,171 | 62,816 | 49,595 | |
Total noninterest revenue | $ 118,997 | $ 132,290 | $ 74,071 | $ 114,873 | $ 124,491 | $ 325,358 | $ 378,160 | |
NONINTEREST EXPENSE: | ||||||||
Salaries and employee benefits | $ 194,812 | $ 190,854 | $ 195,702 | $ 183,918 | $ 191,193 | $ 581,368 | $ 561,106 | |
Occupancy and equipment | 28,343 | 29,590 | 29,113 | 30,539 | 30,610 | 87,046 | 89,008 | |
Deposit insurance assessments | 10,425 | 7,705 | 8,361 | 5,931 | 4,499 | 26,491 | 12,781 | |
Pension settlement expense | 600 | — | — | 6,127 | 2,896 | 600 | 2,896 | |
Advertising and public relations | 5,738 | 5,708 | 4,331 | 28,659 | 4,085 | 15,777 | 13,095 | |
Foreclosed property expense | 270 | 323 | 980 | 400 | 1,093 | 1,573 | 430 | |
Telecommunications | 1,702 | 1,541 | 1,717 | 1,714 | 1,882 | 4,960 | 5,699 | |
Travel and entertainment | 3,287 | 3,898 | 3,508 | 5,310 | 4,149 | 10,693 | 10,372 | |
Data processing and software | 29,933 | 28,073 | 31,869 | 29,289 | 28,079 | 89,875 | 84,644 | |
Professional, consulting and outsourcing | 5,163 | 5,519 | 4,417 | 3,598 | 2,724 | 15,099 | 10,231 | |
Amortization of intangibles | 4,971 | 6,626 | 5,005 | 5,251 | 5,417 | 16,601 | 15,240 | |
Legal | 3,592 | 1,908 | 1,491 | 758 | 2,054 | 6,991 | 5,310 | |
Merger expense | — | 137 | 5,075 | 20,276 | 19,690 | 5,212 | 30,938 | |
Postage and shipping | 2,421 | 2,070 | 2,452 | 1,925 | 2,098 | 6,943 | 6,154 | |
Other miscellaneous expense | 21,010 | 19,926 | 25,258 | 16,976 | 19,265 | 66,195 | 49,385 | |
Total noninterest expense | $ 312,267 | $ 303,878 | $ 319,279 | $ 340,671 | $ 319,734 | $ 935,424 | $ 897,289 | |
INSURANCE COMMISSIONS: | ||||||||
Property and casualty commissions | $ 35,016 | $ 34,273 | $ 28,202 | $ 24,682 | $ 30,021 | $ 97,491 | $ 85,093 | |
Life and health commissions | 7,172 | 7,847 | 8,024 | 7,151 | 7,254 | 23,043 | 22,332 | |
Risk management income | 659 | 703 | 657 | 887 | 654 | 2,018 | 2,085 | |
Other | 2,142 | 2,780 | 2,723 | 1,959 | 1,947 | 7,646 | 6,086 | |
Total insurance commissions | $ 44,989 | $ 45,603 | $ 39,606 | $ 34,679 | $ 39,876 | $ 130,198 | $ 115,596 | |
Table 12 Average Balance and Yields (Unaudited) | |||||||||||
Quarter Ended | |||||||||||
September 30, 2023 | June 30, 2023 | September 30, 2022 | |||||||||
(Dollars in thousands) | Average Balance | Income/ | Yield/ Rate | Average Balance | Income/ | Yield/ Rate | Average Balance | Income/ | Yield/ Rate | ||
ASSETS | |||||||||||
Interest-earning assets: | |||||||||||
Loans and leases, excluding accretion | $ 32,311,572 | $ 513,989 | 6.31 % | $ 31,901,096 | $ 491,473 | 6.17 % | $ 28,872,156 | $ 341,334 | 4.69 % | ||
Accretion income on acquired loans | 6,587 | 0.08 | 5,207 | 0.07 | 8,134 | 0.11 | |||||
Loans held for sale | 115,653 | 1,468 | 5.04 | 67,038 | 961 | 5.75 | 103,312 | 2,241 | 8.61 | ||
Investment securities | |||||||||||
Taxable | 9,635,084 | 50,277 | 2.07 | 10,272,425 | 53,531 | 2.09 | 12,833,857 | 46,701 | 1.44 | ||
Tax-exempt | 369,357 | 3,006 | 3.23 | 383,366 | 3,072 | 3.21 | 418,971 | 3,225 | 3.05 | ||
Total investment securities | 10,004,441 | 53,283 | 2.11 | 10,655,791 | 56,603 | 2.13 | 13,252,828 | 49,926 | 1.49 | ||
Other investments | 1,574,134 | 21,272 | 5.36 | 1,607,830 | 20,238 | 5.05 | 851,185 | 4,976 | 2.32 | ||
Total interest-earning assets | 44,005,800 | 596,599 | 5.38 % | 44,231,755 | 574,482 | 5.21 % | 43,079,481 | 406,611 | 3.74 % | ||
Other assets | 5,109,036 | 5,292,393 | 4,957,118 | ||||||||
Allowance for credit losses | 459,698 | 457,027 | 441,042 | ||||||||
Total assets | $ 48,655,138 | $ 49,067,121 | $ 47,595,557 | ||||||||
LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||||||
Interest-bearing liabilities: | |||||||||||
Interest bearing demand and money market | $ 17,970,463 | $ 126,296 | 2.79 % | $ 17,997,618 | $ 111,938 | 2.49 % | $ 18,675,214 | 28,175 | 0.60 % | ||
Savings deposits | 2,913,027 | 4,108 | 0.56 | 3,088,174 | 3,915 | 0.51 | 3,720,218 | 1,597 | 0.17 | ||
Time deposits | 7,660,868 | 76,867 | 3.98 | 7,123,893 | 65,517 | 3.69 | 3,388,658 | 4,797 | 0.56 | ||
Total interest-bearing deposits | 28,544,358 | 207,271 | 2.88 | 28,209,685 | 181,370 | 2.58 | 25,784,090 | 34,569 | 0.53 | ||
Fed funds purchased, securities | $ 837,773 | $ 9,007 | 4.27 | $ 774,170 | $ 7,658 | 3.97 | $ 946,419 | 3,944 | 1.65 | ||
Short-term FHLB borrowings | 224 | 2 | 3.54 | 2,388,139 | 31,219 | 5.24 | 1,317,391 | 6,822 | 2.05 | ||
Short-term BTFP borrowings | 3,500,000 | 45,433 | 5.15 | 1,153,846 | 14,815 | 5.15 | — | — | — | ||
Long-term borrowings | 449,568 | 4,786 | 4.22 | 455,617 | 4,806 | 4.23 | 464,843 | 4,870 | 4.16 | ||
Total interest-bearing liabilities | 33,331,923 | 266,499 | 3.17 % | 32,981,457 | 239,868 | 2.92 % | 28,512,743 | 50,205 | 0.70 % | ||
Noninterest-bearing liabilities: | |||||||||||
Demand deposits | 9,924,554 | 10,725,108 | 13,816,796 | ||||||||
Other liabilities | 893,499 | 821,203 | 759,363 | ||||||||
Total liabilities | 44,149,976 | 44,527,768 | 43,088,902 | ||||||||
Shareholders' equity | 4,505,162 | 4,539,353 | 4,506,655 | ||||||||
Total liabilities and shareholders' equity | $ 48,655,138 | $ 49,067,121 | $ 47,595,557 | ||||||||
Net interest income/net interest spread | 330,100 | 2.21 % | 334,614 | 2.29 % | 356,406 | 3.05 % | |||||
Net yield on earning assets/net interest margin | 2.98 % | 3.03 % | 3.28 % | ||||||||
Taxable equivalent adjustment: | |||||||||||
Loans and investment securities | (1,081) | (1,063) | (1,052) | ||||||||
Net interest revenue | $ 329,019 | $ 333,551 | $ 355,354 | ||||||||
Table 12 Average Balance and Yields Cont. | |||||||
For the Nine Months Ended | |||||||
September 30, 2023 | September 30, 2022 | ||||||
(Dollars in thousands) | Average Balance | Income/ | Yield/ Rate | Average Balance | Income/ | Yield/ Rate | |
ASSETS | |||||||
Interest-earning assets: | |||||||
Loans and leases, excluding accretion | $ 31,706,637 | $ 1,452,912 | 6.13 % | $ 27,948,795 | $ 891,585 | 4.27 % | |
Accretion income on acquired loans | 21,822 | 0.09 | 37,592 | 0.18 | |||
Loans held for sale | 76,770 | 3,033 | 5.28 | 142,152 | 5,766 | 5.42 | |
Investment securities | |||||||
Taxable | 10,283,587 | 152,323 | 1.98 | 13,633,964 | 138,110 | 1.35 | |
Tax-exempt | 383,031 | 9,214 | 3.22 | 447,538 | 9,536 | 2.85 | |
Total investment securities | 10,666,618 | 161,537 | 2.02 | 14,081,502 | 147,646 | 1.40 | |
Other investments | 1,569,747 | 58,962 | 5.02 | 920,337 | 7,596 | 1.10 | |
Total interest-earning assets | 44,019,772 | 1,698,266 | 5.16 % | 43,092,786 | 1,090,185 | 3.38 % | |
Other assets | 5,224,858 | 4,795,001 | |||||
Allowance for credit losses | 453,133 | 441,351 | |||||
Total assets | $ 48,791,497 | $ 47,446,436 | |||||
LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||
Interest-bearing liabilities: | |||||||
Interest bearing demand and money market | $ 18,322,003 | 333,578 | 2.43 % | $ 18,768,943 | $ 49,636 | 0.35 % | |
Savings deposits | 3,119,830 | 11,037 | 0.47 | 3,692,027 | 2,753 | 0.10 | |
Time deposits | 6,383,257 | 166,333 | 3.48 | 3,524,949 | 13,602 | 0.52 | |
Total interest-bearing deposits | 27,825,090 | 510,948 | 2.46 | 25,985,919 | 65,991 | 0.34 | |
Fed funds purchased, securities sold under agreement to repurchase and other | 814,943 | 24,334 | 3.99 | 867,676 | 5,069 | 0.78 | |
Short-term FHLB borrowings | 1,858,102 | 68,235 | 4.91 | 821,062 | 9,560 | 1.56 | |
Short-term BTFP borrowings | 1,564,103 | 60,248 | 5.15 | — | — | — | |
Long-term borrowings | 455,810 | 14,464 | 4.24 | 465,704 | 14,482 | 4.16 | |
Total interest-bearing liabilities | 32,518,048 | 678,229 | 2.79 % | 28,140,361 | 95,102 | 0.45 % | |
Noninterest-bearing liabilities: | |||||||
Demand deposits | 10,942,567 | 13,864,554 | |||||
Other liabilities | 850,159 | 746,197 | |||||
Total liabilities | 44,310,774 | 42,751,112 | |||||
Shareholders' equity | 4,480,723 | 4,695,324 | |||||
Total liabilities and shareholders' equity | $ 48,791,497 | $ 47,446,436 | |||||
Net interest income/net interest spread | 1,020,037 | 2.37 % | 995,083 | 2.93 % | |||
Net yield on earning assets/net interest margin | 3.10 % | 3.09 % | |||||
Taxable equivalent adjustment: | |||||||
Loans and investment securities | (3,197) | (3,141) | |||||
Net interest revenue | $ 1,016,840 | $ 991,942 | |||||
Table 13 Selected Additional Data (Unaudited) | |||||
Quarter Ended | |||||
(Dollars in thousands) | Sep 2023 | Jun 2023 | Mar 2023 | Dec 2022 | Sep 2022 |
MORTGAGE SERVICING RIGHTS ("MSR"): | |||||
Fair value, beginning of period | $ 111,417 | $ 106,942 | $ 109,744 | $ 112,767 | $ 102,021 |
Originations of servicing assets | 4,065 | 1,990 | 1,385 | 2,283 | 3,890 |
Changes in fair value: | |||||
Due to payoffs/paydowns | (2,104) | (2,621) | (1,078) | (2,308) | (3,085) |
Due to update in valuation assumptions | 2,888 | 5,106 | (3,109) | (2,998) | 9,941 |
Fair value, end of period | $ 116,266 | $ 111,417 | $ 106,942 | $ 109,744 | $ 112,767 |
MORTGAGE BANKING REVENUE: | |||||
Origination | $ 2,031 | $ 3,495 | $ 3,344 | $ 1,793 | $ 1,916 |
Servicing | 5,915 | 5,900 | 6,113 | 5,923 | 5,915 |
Payoffs/Paydowns | (2,104) | (2,621) | (1,078) | (2,308) | (3,085) |
Total mortgage banking revenue excluding MSR | 5,842 | 6,774 | 8,379 | 5,408 | 4,746 |
Market value adjustment on MSR | 2,888 | 5,106 | (3,109) | (2,998) | 9,941 |
Market value adjustment on MSR Hedge | (3,046) | (3,524) | 806 | 161 | (5,607) |
Total mortgage banking revenue | $ 5,684 | $ 8,356 | $ 6,076 | $ 2,571 | $ 9,080 |
Mortgage loans serviced | $ 7,643,885 | $ 7,550,676 | $ 7,633,236 | $ 7,692,744 | $ 7,723,605 |
MSR/mortgage loans serviced | 1.52 % | 1.48 % | 1.40 % | 1.43 % | 1.46 % |
Quarter Ended | |||||
(In thousands) | Sep 2023 | Jun 2023 | Mar 2023 | Dec 2022 | Sep 2022 |
AVAILABLE-FOR-SALE SECURITIES, at fair value | |||||
U.S. Treasury securities | $ 1,996 | $ 8,959 | $ 15,849 | $ 1,458,513 | $ 1,451,461 |
Obligations of U.S. government agencies | 1,004,374 | 1,112,326 | 1,358,350 | 1,477,127 | 1,820,913 |
Mortgage-backed securities issued or guaranteed by U.S. agencies ("MBS"): | |||||
Residential pass-through: | |||||
Guaranteed by GNMA | 73,649 | 79,261 | 83,649 | 84,368 | 87,063 |
Issued by FNMA and FHLMC | 5,541,895 | 5,895,704 | 6,164,294 | 6,274,970 | 6,427,152 |
Other residential mortgage-back securities | 146,063 | 157,294 | 166,449 | 168,452 | 181,317 |
Commercial mortgage-backed securities | 2,271,680 | 2,357,047 | 2,427,808 | 1,881,853 | 1,880,949 |
Total MBS | 8,033,287 | 8,489,306 | 8,842,200 | 8,409,643 | 8,576,481 |
Obligations of states and political subdivisions | 392,252 | 433,316 | 447,731 | 466,002 | 444,953 |
Other domestic debt securities | 71,741 | 71,356 | 73,557 | 82,718 | 98,615 |
Foreign debt securities | 139,581 | 139,317 | 140,192 | 50,093 | 49,471 |
Total available-for-sale securities | $ 9,643,231 | $ 10,254,580 | $ 10,877,879 | $ 11,944,096 | $ 12,441,894 |
Table 14 |
Management evaluates the Company's capital position and adjusted performance by utilizing certain financial measures not calculated in accordance with GAAP, including adjusted net income, adjusted net income available to common shareholders, pre-tax pre-provision net revenue, adjusted pre-tax pre-provision net revenue, total adjusted noninterest expense, tangible common shareholders' equity to tangible assets, total shareholders' equity (excluding AOCI), common shareholders' equity (excluding AOCI), tangible common shareholders' equity to tangible assets (excluding AOCI), return on average tangible common equity, adjusted return on average tangible common equity, adjusted return on average assets, adjusted return on average common shareholders' equity, pre-tax pre-provision net revenue to total average assets, adjusted pre-tax pre-provision net revenue to total average assets, adjusted earnings per common share, tangible book value per common share, tangible book value per common share, excluding AOCI, efficiency ratio (tax equivalent), adjusted efficiency ratio (tax equivalent), and adjusted dividend payout ratio. The Company has included these non-GAAP financial measures in this release for the applicable periods presented. Management believes that the presentation of these non-GAAP financial measures: (i) provides important supplemental information that contributes to a proper understanding of the Company's capital position and adjusted performance, (ii) enables a more complete understanding of factors and trends affecting the Company's business and (iii) allows investors to evaluate the Company's performance in a manner similar to management, the financial services industry, bank stock analysts and bank regulators. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures are presented in the tables below. These non-GAAP financial measures should not be considered as substitutes for GAAP financial measures, and the Company strongly encourages investors to review the GAAP financial measures included in this news release and not to place undue reliance upon any single financial measure. In addition, because non-GAAP financial measures are not standardized, it may not be possible to compare the non-GAAP financial measures presented in this news release with other companies' non-GAAP financial measures having the same or similar names. |
Quarter Ended | Year-to-date | |||||||
(In thousands) | Sep 2023 | Jun 2023 | Mar 2023 | Dec 2022 | Sep 2022 | Sep 2023 | Sep 2022 | |
Adjusted net income available to common shareholders | ||||||||
Net income | $ 92,583 | $ 114,028 | $ 76,629 | $ 97,934 | $ 123,398 | $ 283,240 | $ 365,303 | |
Plus: Merger expense | — | 137 | 5,075 | 20,276 | 19,690 | 5,212 | 30,938 | |
Incremental merger related expense | — | 1,671 | 8,960 | 32,704 | 6,912 | 10,631 | 19,543 | |
Gain on extinguishment of debt | — | (1,140) | — | — | — | (1,140) | — | |
Restructuring and other nonroutine expenses | 10,649 | 6,219 | 212 | 2,254 | 6 | 17,080 | 839 | |
Pension settlement expense | 600 | — | — | 6,127 | 2,896 | 600 | 2,896 | |
Less: Security gains (losses), net | 64 | 69 | (51,261) | (595) | (139) | (51,127) | 211 | |
Nonroutine gains (losses), net | (6,653) | — | — | — | — | (6,653) | — | |
Tax adjustment | 4,190 | 1,602 | 15,394 | 14,665 | 7,016 | 21,186 | 12,783 | |
Adjusted net income | 106,231 | 119,244 | 126,743 | 145,225 | 146,025 | 352,217 | 406,525 | |
Less: Preferred dividends | 2,372 | 2,372 | 2,372 | 2,372 | 2,372 | 7,116 | 7,116 | |
Adjusted net income available to common shareholders | $ 103,859 | $ 116,872 | $ 124,371 | $ 142,853 | $ 143,653 | $ 345,101 | $ 399,409 | |
Quarter Ended | Year-to-date | |||||||
(In thousands) | Sep 2023 | Jun 2023 | Mar 2023 | Dec 2022 | Sep 2022 | Sep 2023 | Sep 2022 | |
Pre-tax pre-provision net revenue | ||||||||
Net income | $ 92,583 | $ 114,028 | $ 76,629 | $ 97,934 | $ 123,398 | $ 283,240 | $ 365,303 | |
Plus: Provision for credit losses | 17,000 | 15,000 | 10,000 | 6,000 | — | 42,000 | 1,000 | |
Income tax expense | 26,166 | 32,935 | 22,433 | 29,628 | 36,713 | 81,534 | 106,510 | |
Pre-tax pre-provision net revenue | $ 135,749 | $ 161,963 | $ 109,062 | $ 133,562 | $ 160,111 | $ 406,774 | $ 472,813 | |
Quarter Ended | Year-to-date | |||||||
(In thousands) | Sep 2023 | Jun 2023 | Mar 2023 | Dec 2022 | Sep 2022 | Sep 2023 | Sep 2022 | |
Adjusted pre-tax pre-provision net revenue | ||||||||
Net income | $ 92,583 | $ 114,028 | $ 76,629 | $ 97,934 | $ 123,398 | $ 283,240 | $ 365,303 | |
Plus: Provision for credit losses | 17,000 | 15,000 | 10,000 | 6,000 | — | 42,000 | 1,000 | |
Merger expense | — | 137 | 5,075 | 20,276 | 19,690 | 5,212 | 30,938 | |
Incremental merger related expense | — | 1,671 | 8,960 | 32,704 | 6,912 | 10,631 | 19,543 | |
Gain on extinguishment of debt | — | (1,140) | — | — | — | (1,140) | — | |
Restructuring and other nonroutine expenses | 10,649 | 6,219 | 212 | 2,254 | 6 | 17,080 | 839 | |
Pension settlement expense | 600 | — | — | 6,127 | 2,896 | 600 | 2,896 | |
Income tax expense | 26,166 | 32,935 | 22,433 | 29,628 | 36,713 | 81,534 | 106,510 | |
Less: Security gains (losses), net | 64 | 69 | (51,261) | (595) | (139) | (51,127) | 211 | |
Nonroutine gains (losses), net | $ (6,653) | $ — | $ — | $ — | $ — | (6,653) | — | |
Adjusted pre-tax pre-provision net revenue | $ 153,587 | $ 168,781 | $ 174,570 | $ 195,518 | $ 189,754 | $ 496,937 | $ 526,818 | |
Quarter Ended | Year-to-date | |||||||
(In thousands) | Sep 2023 | Jun 2023 | Mar 2023 | Dec 2022 | Sep 2022 | Sep 2023 | Sep 2022 | |
Total adjusted noninterest revenue | ||||||||
Total noninterest revenue | $ 118,997 | $ 132,290 | $ 74,071 | $ 114,873 | $ 124,491 | $ 325,358 | $ 378,160 | |
Less: Security gains (losses), net | 64 | 69 | (51,261) | (595) | (139) | (51,127) | 211 | |
Nonroutine gains (losses), net | (6,653) | — | — | — | — | (6,653) | — | |
Total adjusted noninterest revenue | $ 125,586 | $ 132,221 | $ 125,332 | $ 115,468 | $ 124,630 | $ 383,138 | $ 377,949 | |
Quarter Ended | Year-to-date | |||||||
(In thousands) | Sep 2023 | Jun 2023 | Mar 2023 | Dec 2022 | Sep 2022 | Sep 2023 | Sep 2022 | |
Total adjusted noninterest expense | ||||||||
Total noninterest expense | $ 312,267 | $ 303,878 | $ 319,279 | $ 340,671 | $ 319,734 | $ 935,424 | $ 897,289 | |
Less: Merger expense | — | 137 | 5,075 | 20,276 | 19,690 | 5,212 | 30,938 | |
Incremental merger related expense | — | 1,671 | 8,960 | 32,704 | 6,912 | 10,631 | 19,543 | |
Gain on extinguishment of debt | — | (1,140) | — | — | — | (1,140) | — | |
Restructuring and other nonroutine expenses | 10,649 | 6,219 | 212 | 2,254 | 6 | 17,080 | 839 | |
Pension settlement expense | 600 | — | — | 6,127 | 2,896 | 600 | 2,896 | |
Total adjusted noninterest expense | $ 301,018 | $ 296,991 | $ 305,032 | $ 279,310 | $ 290,230 | $ 903,041 | $ 843,073 | |
Quarter Ended | Year-to-date | |||||||
(In thousands) | Sep 2023 | Jun 2023 | Mar 2023 | Dec 2022 | Sep 2022 | Sep 2023 | Sep 2022 | |
Total tangible assets, excluding AOCI | ||||||||
Total assets | $ 48,523,010 | $ 48,838,660 | $ 51,693,096 | $ 48,653,414 | $ 47,699,660 | $ 48,523,010 | $ 47,699,660 | |
Less: Goodwill | 1,459,302 | 1,459,302 | 1,459,302 | 1,458,795 | 1,449,511 | 1,459,302 | 1,449,511 | |
Other identifiable intangible assets | 114,127 | 119,098 | 125,724 | 132,764 | 132,953 | 114,127 | 132,953 | |
Total tangible assets | 46,949,581 | 47,260,260 | 50,108,070 | 47,061,855 | 46,117,196 | 46,949,581 | 46,117,196 | |
Less: AOCI | (1,309,921) | (1,163,075) | (1,081,886) | (1,222,538) | (1,297,812) | (1,309,921) | (1,297,812) | |
Total tangible assets, excluding AOCI | $ 48,259,502 | $ 48,423,335 | $ 51,189,956 | $ 48,284,393 | $ 47,415,008 | $ 48,259,502 | $ 47,415,008 | |
Quarter Ended | Year-to-date | |||||||
(Dollars in thousands, except per share data) | Sep 2023 | Jun 2023 | Mar 2023 | Dec 2022 | Sep 2022 | Sep 2023 | Sep 2022 | |
PERIOD END BALANCES: | ||||||||
Total shareholders' equity, excluding AOCI | ||||||||
Total shareholders' equity | $ 4,395,257 | $ 4,485,850 | $ 4,490,417 | $ 4,311,374 | $ 4,166,925 | $ 4,395,257 | $ 4,166,925 | |
Less: AOCI | (1,309,921) | (1,163,075) | (1,081,886) | (1,222,538) | (1,297,812) | (1,309,921) | (1,297,812) | |
Total shareholders' equity, excluding AOCI | $5,705,178 | $ 5,648,925 | $ 5,572,303 | $ 5,533,912 | $ 5,464,737 | $ 5,705,178 | $ 5,464,737 | |
Common shareholders' equity, excluding AOCI | ||||||||
Total shareholders' equity | $ 4,395,257 | $ 4,485,850 | $ 4,490,417 | $ 4,311,374 | $ 4,166,925 | $ 4,395,257 | $ 4,166,925 | |
Less: preferred stock | 166,993 | 166,993 | 166,993 | 166,993 | 166,993 | 166,993 | 166,993 | |
Common shareholders' equity | 4,228,264 | 4,318,857 | 4,323,424 | 4,144,381 | 3,999,932 | 4,228,264 | 3,999,932 | |
Less: AOCI | (1,309,921) | (1,163,075) | (1,081,886) | (1,222,538) | (1,297,812) | (1,309,921) | (1,297,812) | |
Common shareholders' equity, excluding AOCI | $ 5,538,185 | $ 5,481,932 | $ 5,405,310 | $ 5,366,919 | $ 5,297,744 | $ 5,538,185 | $ 5,297,744 | |
Total tangible common shareholders' equity, excluding AOCI | ||||||||
Total shareholders' equity | $ 4,395,257 | $ 4,485,850 | $ 4,490,417 | $ 4,311,374 | $ 4,166,925 | $ 4,395,257 | $ 4,166,925 | |
Less: Goodwill | 1,459,302 | 1,459,302 | 1,459,302 | 1,458,795 | 1,449,511 | 1,459,302 | 1,449,511 | |
Other identifiable intangible assets | 114,127 | 119,098 | 125,724 | 132,764 | 132,953 | 114,127 | 132,953 | |
Preferred stock | 166,993 | 166,993 | 166,993 | 166,993 | 166,993 | 166,993 | 166,993 | |
Total tangible common shareholders' equity | 2,654,835 | 2,740,457 | 2,738,398 | 2,552,822 | 2,417,468 | 2,654,835 | 2,417,468 | |
Less: AOCI | (1,309,921) | (1,163,075) | (1,081,886) | (1,222,538) | (1,297,812) | (1,309,921) | (1,297,812) | |
Total tangible common shareholders' equity, excluding AOCI | $ 3,964,756 | $ 3,903,532 | $ 3,820,284 | $ 3,775,360 | $ 3,715,280 | $ 3,964,756 | $ 3,715,280 | |
AVERAGE BALANCES: | ||||||||
Total tangible common shareholders' equity | ||||||||
Total shareholders' equity | $4,505,162 | $4,539,353 | $4,396,461 | $4,215,585 | $4,506,655 | $4,480,723 | $4,695,324 | |
Less: Goodwill | 1,459,302 | 1,459,302 | 1,459,127 | 1,457,120 | 1,444,331 | 1,459,244 | 1,420,052 | |
Other identifiable intangible assets | 116,715 | 123,313 | 128,957 | 132,091 | 136,149 | 122,950 | 173,333 | |
Preferred stock | 166,993 | 166,993 | 166,993 | 166,993 | 166,993 | 166,993 | 166,993 | |
Total tangible common shareholders' equity | $2,762,152 | $2,789,745 | $2,641,384 | $2,459,381 | $2,759,182 | $2,731,536 | $2,934,946 | |
Total average assets | $48,655,138 | $49,067,121 | $48,652,201 | $47,790,494 | $47,595,557 | $48,791,497 | $47,446,436 | |
Total shares of common stock outstanding | 182,611,075 | 182,626,229 | 182,684,578 | 182,437,265 | 182,438,780 | 182,611,075 | 182,438,780 | |
Average shares outstanding-diluted | 184,645,004 | 183,631,570 | 183,908,798 | 183,762,008 | 183,313,831 | 184,062,368 | 184,747,880 | |
Tangible common shareholders' equity to tangible assets (1) | 5.65 % | 5.80 % | 5.46 % | 5.42 % | 5.24 % | 5.65 % | 5.24 % | |
Tangible common shareholders' equity to tangible assets, | 8.22 | 8.06 | 7.46 | 7.82 | 7.84 | 8.22 | 7.84 | |
Return on average tangible common equity (3) | 12.96 | 16.05 | 11.40 | 15.42 | 17.40 | 13.52 | 16.32 | |
Adjusted return on average tangible common equity (4) | 14.92 | 16.80 | 19.10 | 23.04 | 20.66 | 16.89 | 18.19 | |
Adjusted return on average assets (5) | 0.87 | 0.97 | 1.06 | 1.21 | 1.22 | 0.97 | 1.15 | |
Adjusted return on average common shareholders' equity (6) | 9.50 | 10.72 | 11.93 | 14.00 | 13.13 | 10.70 | 11.79 | |
Pre-tax pre-provision net revenue to total average assets (7) | 1.11 | 1.32 | 0.91 | 1.11 | 1.33 | 1.11 | 1.33 | |
Adjusted pre-tax pre-provision net revenue to total average assets (8) | 1.25 | 1.38 | 1.46 | 1.62 | 1.58 | 1.36 | 1.48 | |
Tangible book value per common share (9) | $ 14.54 | $ 15.01 | $ 14.99 | $ 13.99 | $ 13.25 | $ 14.54 | $ 13.25 | |
Tangible book value per common share, excluding AOCI (10) | 21.71 | 21.37 | 20.91 | 20.69 | 20.36 | 21.71 | 20.36 | |
Adjusted earnings per common share (11) | $ 0.56 | $ 0.64 | $ 0.68 | $ 0.78 | $ 0.78 | $ 1.87 | $ 2.16 | |
Adjusted dividend payout ratio (12) | 41.96 % | 36.72 % | 34.56 % | 28.21 % | 28.21 % | 37.70 % | 30.56 % | |
Definitions of Non-GAAP Measures: | |
(1) | Tangible common shareholders' equity to tangible assets is defined by the Company as total shareholders' equity less preferred stock, goodwill and other identifiable intangible assets, divided by the difference of total assets less goodwill and other identifiable intangible assets. |
(2) | Tangible common shareholders' equity to tangible assets, excluding AOCI, is defined by the Company as total shareholders' equity less preferred stock, goodwill, other identifiable intangible assets and accumulated other comprehensive loss, divided by the difference of total assets less goodwill, accumulated other comprehensive loss, and other identifiable intangible assets. |
(3) | Return on average tangible common equity is defined by the Company as annualized net income available to common shareholders divided by average tangible common shareholders equity. |
(4) | Adjusted return on average tangible common equity is defined by the Company as annualized net adjusted income available to common shareholders divided by average tangible common shareholders' equity. |
(5) | Adjusted return on average assets is defined by the Company as annualized net adjusted income divided by total average assets. |
(6) | Adjusted return on average common shareholders' equity is defined by the Company as annualized net adjusted income available to common shareholders divided by average common shareholders' equity. |
(7) | Pre-tax pre-provision net revenue to total average assets is defined by the Company as annualized pre-tax pre-provision net revenue divided by total average assets. |
(8) | Adjusted pre-tax pre-provision net revenue to total average assets is defined by the Company as annualized adjusted pre-tax pre-provision net revenue divided by total average assets adjusted for items included in the definition and calculation of net adjusted income. |
(9) | Tangible book value per common share is defined by the Company as tangible common shareholders' equity divided by total shares of common stock outstanding. |
(10) | Tangible book value per common share, excluding AOCI is defined by the Company as tangible common shareholders' equity less accumulated other comprehensive loss divided by total shares of common stock outstanding. |
(11) | Adjusted earnings per common share is defined by the Company as net adjusted income available to common shareholders divided by average common shares outstanding-diluted. |
(12) | Adjusted dividend payout ratio is defined by the Company as common share dividends divided by net adjusted income available to common shareholders. |
Efficiency Ratio-Fully Taxable Equivalent and Adjusted Efficiency Ratio-Fully Taxable Equivalent Definitions
The efficiency ratio and the adjusted efficiency ratio are supplemental financial measures utilized in management's internal evaluation of the Company's use of resources and are not defined under GAAP. The efficiency ratio is calculated by dividing total noninterest expense by total revenue, which includes net interest income plus noninterest income plus the tax equivalent adjustment. The adjusted efficiency ratio excludes income and expense items otherwise disclosed as non-routine from total noninterest expense.
SOURCE Cadence Bank
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