Skip to main content

Cadence Bancorporation Reports Record Second Quarter 2018 Results and Increase in Quarterly Dividend

HOUSTON, TEXAS (July 23, 2018) – Cadence Bancorporation (NYSE:CADE) (“Cadence”) today announced net income for the quarter ended June 30, 2018 of $48.0 million, or $0.57 per diluted common share (“per share”), compared to $38.8 million, or $0.46 per share, in the first quarter of 2018, and $29.0 million, or $0.35 per share, in the second quarter of 2017. Tangible book value per share(1) increased $0.53, or 4.3%, to $12.85 per share for the second quarter of 2018, compared to $12.32 per share as of March 31, 2018. On July 20, 2018, the Board of Directors of Cadence declared a 20% increase in the quarterly cash dividend to $0.15 per share of common stock, representing an annualized dividend of $0.60 per share.

 

 “We are very pleased to report to you another consecutive quarter of strong organic growth and record earnings for second quarter of 2018,” stated Paul B. Murphy, Jr., Chairman and Chief Executive Officer of Cadence Bancorporation. “Our performance for the first half of the year has exceeded expectations with annualized, double digit growth in the balance sheet and earnings trending favorably.  We have been fortunate to operate in attractive markets with extraordinary bankers, focused on doing a great job for clients and driving our financial results.  We were excited to announce our merger with State Bank in May and are well underway in the integration planning to ensure a successful combination.  I believe this strategically compelling deal, combining two great companies, will add to our attractive story in the future.”

 

(1)Considered a non-GAAP financial measure. See Table 7 “Reconciliation of Non-GAAP Financial Measures” for a reconciliation of our non-GAAP measures to the most directly comparable GAAP financial measure.

 

Highlights:

  • Second quarter of 2018 net income was $48.0 million, representing an increase of $9.1 million, or 23.6%, compared to the first quarter of 2018 and an increase of $19.0 million, or 65.6%, compared to second quarter of 2017.

     

    • On a per-share basis, net income was $0.57 per share for the second quarter of 2018, compared to $0.46 per share for the first quarter of 2018, and $0.35 per share for the second quarter of 2017.
    • Annualized returns on average assets, common equity and tangible common equity(1) for the second quarter of 2018 were 1.72%, 14.16% and 18.58%, respectively, compared to 1.44%, 11.73% and 15.52%, respectively, for the first quarter of 2018, and 1.19%, 9.29% and 12.63%, respectively, for the second quarter of 2017.
    • A summary of non-routine items in the second quarter of 2018 are included in the table below. See Table 8 – Non-Routine Income/Expense for more information related to non-routine items and comparative period information.

       

       

       

       

       

       

       

      After-tax Increase(Decrease) in

       

      (In thousands, except per share data)

       

      Income/

      Expense

       

       

      EPS

       

       

      ROA

       

       

      ROTCE

       

      Noninterest income (non-routine)

       

      $

      3,058

       

       

      $

      0.03

       

       

       

      0.08

      %

       

       

      0.91

      %

      Noninterest expense (non-routine)

       

       

      (3,066

      )

       

       

      (0.03

      )

       

       

      (0.08

      )

       

       

      (0.91

      )

      Tax expense - Timing of legacy loan bad debt deduction for tax

       

       

      5,991

       

       

       

      0.07

       

       

       

      0.21

       

       

       

      2.32

       

      Total

       

      $

      5,983

       

       

      $

      0.07

       

       

       

      0.21

      %

       

       

      2.32

      %

  • Loans were $9.0 billion as of June 30, 2018, an increase of $328.8 million, or 3.8%, as compared to $8.6 billion at March 31, 2018, and an increase of $1.3 billion, or 16.3%, as compared to $7.7 billion at June 30, 2017.
  • Core deposits (total deposits excluding brokered) were $8.7 billion as of June 30, 2018, up $451.1 million, or 5.5%, from March 31, 2018, and up $1.5 billion, or 20.8%, from June 30, 2017.
  • Total revenue for the second quarter of 2018 was $120.1 million, up 3.4% from the linked quarter and up 13.9% from the same period in 2017 driven by strong loan, core deposit, and spread income growth due to a favorably positioned, asset-sensitive balance sheet benefiting from rising short-term rates.
  • Our fully tax-equivalent net interest margin (“NIM”) for the second quarter of 2018 was 3.66%, an increase from 3.64% for the first quarter of 2018 and a decrease from 3.71% for the second quarter of 2017, reflecting our asset sensitivity. Our NIM excluding recovery accretion for acquired-impaired loans was 3.64% for the second quarter of 2018, up 2 bp from 3.62% in the first quarter of 2018 and up 13 bp from 3.51% in the second quarter of 2017.
  • The efficiency ratio(1) for the second quarter of 2018 was 52.0%, an improvement from both linked and prior quarter efficiency ratios of 53.4% and 53.3%, respectively.The improvement in the efficiency ratio reflects ongoing focus on managing expenses and expanding revenue.Second quarter 2018 revenues increased $4.0 million over first quarter 2018 and $14.7 million over second quarter 2017. The second quarter of 2018 included non-routine revenues and expenses, including a $4.9 million pre-tax gain on the sale of the assets of our insurance company, $1.8 million net loss on sales of securities, $1.2 million of secondary offering expenses, $0.8 million of acquisition related costs and $1.1 million of expenses related to the sale of the assets of our insurance company.Excluding these non-routine revenues and expenses, the adjusted efficiency ratio(1) was 50.7% for the second quarter of 2018.This compares to an adjusted efficiency ratio of 50.2% and 53.1% for the first quarter of 2018 and second quarter of 2017, respectively.See Table 8 – Non-Routine Income/Expense for more information related to non-routine items.
  • Total nonperforming assets declined 21.9% during the second quarter 2018, a decrease of $15.9 million to $56.8 million, or 0.6% of total loans, OREO and other NPAs. Total nonperforming assets have dropped $84.6 million, or 59.8%, from $141.4 million, or 1.8% of total loans, OREO and other NPAs, as of June 30, 2017.

(1)Considered a non-GAAP financial measure. See Table 7 “Reconciliation of Non-GAAP Financial Measures” for a reconciliation of our non-GAAP measures to the most directly comparable GAAP financial measure.

 

Balance Sheet:

 

Cadence continued its solid growth during the quarter with total assets reaching $11.3 billion as of June 30, 2018, an increase of $306.1 million, or 2.8%, from March 31, 2018, and an increase of $1.5 billion, or 15.2%, from June 30, 2017.

 

Loans at June 30, 2018 were $9.0 billion, an increase of $328.8 million, or 3.8%, from March 31, 2018, and an increase of $1.3 billion, or 16.3%, from June 30, 2017.  Average loans for the second quarter of 2018 were $8.8 billion, an increase of $404.9 million, or 4.8%, from first quarter of 2018, and an increase of $1.2 billion, or 15.7%, from second quarter of 2017.  Increases in loans reflect continued demand primarily in our specialized and general C&I portfolios compared to linked quarter and in our specialized, general C&I and residential portfolios compared to prior year.

 

Total deposits at June 30, 2018 were $9.3 billion, an increase of $282.1 million, or 3.1%, from March 31, 2018, and an increase of $1.4 billion, or 17.7%, from June 30, 2017.  Average total deposits for the second quarter of 2018 were $9.1 billion, an increase of $123.0 million, or 1.4%, from first quarter of 2018, and an increase of $1.2 billion, or 15.0%, from second quarter of 2017.

 

  • Deposit increases reflect growth in core deposits, specifically with success in expanding commercial deposit relationships and treasury management services.
  • Noninterest bearing deposits as a percent of total deposits were 22.9%, compared to 22.6% at March 31, 2018 and 23.4% at June 30, 2017.
  • The year-over-year core deposit growth supported a $93.8 million reduction in brokered deposits since June 30, 2017.As of June 30, 2018, brokered deposits totaled $649.3 million, or 7.0% of total deposits, down from 9.0% of total deposits at March 31, 2018 and down from 9.4% of total deposits at June 30, 2017, respectively.

Shareholders’ equity was $1.4 billion at June 30, 2018, an increase of $32.9 million from March 31, 2018, and an increase of $85.9 million from June 30, 2017.

 

  • Tangible common shareholder’s equity(1) was $1.1 billion at June 30, 2018, an increase of $44.5 million from March 31, 2018, and an increase of $100.5 million from June 30, 2017. Tangible book value per share(1) increased $0.53, or 4.3%, to $12.85 per share for the second quarter of 2018, compared to $12.32 per share as of March 31, 2018, driven by strong earnings growth and goodwill recovery due to the sale of the assets of our insurance company.
  • In June 2018, Cadence paid a $0.125 per common share dividend totaling $10.5 million.
  • In November 2017, February 2018 and May 2018, Cadence completed secondary offerings whereby its controlling stockholder, Cadence Bancorp LLC, sold 10,925,000, 9,200,000 and 20,700,000 of Cadence Bancorporation shares, respectively, reducing its ownership in Cadence to 76.6%, 65.6% and 40.9%, respectively.All proceeds from these transactions were received by Cadence Bancorp LLC and did not impact Cadence Bancorporation’s equity or outstanding shares.

(1)Considered a non-GAAP financial measure. See Table 7 “Reconciliation of Non-GAAP Financial Measures” for a reconciliation of our non-GAAP measures to the most directly comparable GAAP financial measure.

 

Asset Quality:

 

Credit quality metrics reflected continued improvement in the energy portfolio and general credit stability in the second quarter of 2018.

 

  • Net-charge offs for the quarter ended June 30, 2018 were $2.2 million, compared to $0.4 million for the three months ended March 31, 2018 and $1.8 million for the three months ended June 30, 2017. Annualized net-charge offs as a percent of average loans for the quarter ended June 30, 2018 were 0.10%, compared to 0.06%, for the full year of 2017. Total second quarter 2018 charge-offs of $3.7 million and recoveries of $1.5 million were primarily due to two seasoned energy credits that have been in active resolution.
  • NPAs totaled $56.8 million, or 0.6%, of total loans, OREO and other NPAs as of June 30, 2018, compared to $72.7 million, or 0.8%, as of March 31, 2018, and down from $141.4 million, or 1.8%, as of June 30, 2017.
  • The allowance for credit losses (“ACL”) was $90.6 million, or 1.01% of total loans, as of June 30, 2018, as compared to $91.5 million, or 1.06% of total loans, as of March 31, 2018 and $93.2 million, or 1.21% of total loans, as of June 30, 2017.The year-over-year decline in the ACL as a percentage of total loans resulted primarily from the reduction in non-performing loans and related valuation reserves (largely from the energy portfolio) and improved environmental factors in the energy sector over the past year.

Total Revenue:

 

Total revenue for the second quarter of 2018 was $120.1 million, up 3.4% from the linked quarter and up 13.9% from the same period in 2017.  The revenue increases were primarily a result of both strong loan growth during the period and meaningful increases in net interest margins.

 

Net interest income for the second quarter of 2018 was $95.4 million, an increase of $4.3 million, or 4.7%, from the first quarter of 2018 and an increase of $13.0 million, or 15.8%, from the same period in 2017, reflecting strong growth in our earning assets combined with increases in net interest margin.

 

  • Our fully tax-equivalent net interest margin (“NIM”) for the second quarter of 2018 was 3.66% as compared to 3.64% for the first quarter of 2018 and 3.71% for the second quarter of 2017.The linked quarter increase in NIM is primarily a result of our asset sensitive balance sheet and earning asset yields increasing more significantly than our funding costs in the recent rising rate environment.Our NIM excluding recovery accretion for acquired-impaired loans was 3.64%, 3.62% and 3.51% for the second quarter of 2018, first quarter of 2018 and second quarter of 2017 respectively.
  • Earning asset yields for the second quarter of 2018 were 4.75%, up 24 basis points from 4.51% in the first quarter of 2018, and up 30 basis points from 4.45% in the second quarter of 2017, driven by increases in loan yields.

     

    • Over 71% of our loan portfolio is floating rate and has benefited from the short-term rate increases during the periods.
    • Yield on loans, excluding acquired-impaired loans, increased meaningfully to 5.04% for the second quarter of 2018, as compared to 4.81% and 4.36% for the first quarter of 2018 and second quarter of 2017, respectively.
    • Total accretion for acquired-impaired loans was $5.6 million in the second quarter of 2018, essentially flat from the first quarter of 2018 and down $4.9 million from the second quarter of 2017.The year-over-year decline in accretion was due to recovery timing.Recovery accretion was $0.6 million, $0.4 million and $4.5 million for the second quarter of 2018, first quarter of 2018 and second quarter of 2017, respectively.
    • Total loan yields increased to 5.16% for the second quarter of 2018 versus 4.94% for the first quarter of 2018 and 4.74% for the second quarter of 2017.
  • Total cost of funds for the second quarter of 2018 was 118 basis points versus 94 basis points in the linked quarter and 81 basis points in the second quarter of 2017.

     

    • Total cost of deposits for the second quarter of 2018 was 98 basis points versus 75 basis points in the linked quarter and 59 basis points in the second quarter of 2017, due primarily to rising interest rates as well as approximately $1.2 billion in our “Up CD” product that reset on April 1, 2018 based on the semi-annual reset schedule with the index rate increasing 50 basis points from the first quarter of 2018.This increase in Up CD rates accounted for 8 basis points of the quarterly increase in cost of deposits. Over $600 million of the Up CDs are scheduled to mature by year end 2018.

Noninterest income for the second quarter of 2018 was $24.7 million, a decrease of $0.3 million, or 1.2%, from the first quarter of 2018, and an increase of $1.7 million, or 7.3%, from the same period of 2017. 

 

  • Total service fees and revenue for the second quarter of 2018 were $21.4 million, a decrease of $2.5 million, or 10.5%, from the first quarter of 2018, and a decrease of $0.7 million, or 3.4%, from the same period of 2017.The second quarter of 2018 decrease compared to the linked quarter was driven by the decrease in insurance revenue due to the sale of the assets of our insurance company. Compared to the prior year’s quarter, decreases in trust services revenue, insurance revenue and mortgage banking revenue were partially offset by increases in credit-related fees and investment advisory revenue.
  • Total other noninterest income for the second quarter of 2018 was $3.3 million, an increase of $2.2 million from the first quarter of 2018, and an increase of $2.4 million from the same period of 2017.The increase from linked quarter was largely a result of the $4.9 million pre-tax gain on sale of the assets of our insurance company, offset by a $1.8 million loss from the sale of certain securities within tax-exempt investment securities portfolio. See Table 8 – Non-Routine Income/Expense for more information related to non-routine items.

Noninterest expense for the second quarter of 2018 was $62.4 million, an increase of $0.5 million, or 0.8%, from $61.9 million for the first quarter of 2018, and an increase of $6.3 million, or 11.2%, from $56.1 million during the same period in 2017.  The linked quarter included an increase of $0.9 million in salaries and benefits, offset by decreases in consulting and professional fees and legal expenses.  The increase in expenses from the prior year’s quarter was due to a $3.6 million growth in salaries and benefits driven by business growth and related incentives, $1.2 million in consulting and professional fees and other expenses related to the May 2018 secondary offering, $1.1 million in expenses related to the sale of the assets of our insurance company and $0.8 million in other expenses specific to acquisition related costs.  Adjusted noninterest expenses(1) of $59.3 million for the second quarter of 2018 was up slightly from $58.3 million in the first quarter of 2018 and up 5.8% from the second quarter of 2017 total of $56.1 million.  See Table 8 – Non-Routine Income/Expense for information related to non-routine items.

 

(1)Considered a non-GAAP financial measure. See Table 7 “Reconciliation of Non-GAAP Financial Measures” for a reconciliation of our non-GAAP measures to the most directly comparable GAAP financial measure.

 

Our efficiency ratio(1) for the second quarter of 2018 was 52.0%, as compared to the first quarter of 2018 and second quarter of 2017 ratios of 53.4% and 53.3%, respectively. The improvement in the efficiency ratio reflects ongoing focus on managing expenses and expanding revenue.  The second quarter of 2018 included non-routine revenues and expenses.  Excluding these non-routine revenues and expenses, the adjusted efficiency ratio(1) was 50.7% for the second quarter of 2018.  This compares to an adjusted efficiency ratio of 50.2% and 53.1% for the first quarter of 2018 and second quarter of 2017, respectively.  See Table 8 – Non-Routine Income/Expense for more information related to non-routine items.

 

(1)Considered a non-GAAP financial measure. See Table 7 “Reconciliation of Non-GAAP Financial Measures” for a reconciliation of our non-GAAP measures to the most directly comparable GAAP financial measure.

 

Taxes:

The effective tax rate for the quarter ended June 30, 2018 was 14.9% as compared to 22.0% in the first quarter of 2018 and 31.9% in the second quarter of 2017.  The decreased rate in the second quarter of 2018 was due primarily to a one-time bad debt deduction related to the legacy loan portfolio. Our annualized effective tax rate for 2018 is currently expected to be approximately 21.1%.

 

Quarterly Dividend:

 

On July 20, 2018, the Board of Directors of Cadence declared a 20% increase in the quarterly cash dividend to the amount of $0.15 per share of common stock, representing an annualized dividend of $0.60 per share.  The dividend will be paid on September 17, 2018 to holders of record of the Class A common stock on September 4, 2018.

 

Supplementary Financial Tables (Unaudited):

 

Supplementary Financial Tables (Unaudited) are included in this release following the customary disclosure information.

 

Second Quarter 2018 Earnings Conference Call:

 

Cadence Bancorporation executive management will host a conference call to discuss second quarter 2018 results on Monday, July 23, 2018, at 12:00 p.m. CT / 1:00 p.m. ET.  Slides to be presented by management on the conference call can be viewed by visiting www.cadencebancorporation.com and selecting “Events & Presentations” then “Event Calendar”.    

Conference Call Access:

 

To access the conference call, please dial one of the following numbers approximately 10-15 minutes prior to the start time to allow time for registration, and use the Elite Entry Number provided below. 

Dial in (toll free):

1-888-317-6003

International dial in:

1-412-317-6061

Canada (toll free):

1-866-284-3684

Participant Elite Entry Number:

3865570

For those unable to participate in the live presentation, a replay will be available through August 6, 2018.  To access the replay, please use the following numbers:

US Toll Free:

1-877-344-7529

International Toll:

1-412-317-0088

Canada Toll Free:

1-855-669-9658

Replay Access Code:

10121734

End Date:

August 6, 2018

 


 

Webcast Access:

 

A webcast of the conference call as well as the slides to be presented by management can be viewed by visiting www.cadencebancorporation.com and selecting “Events & Presentations” then “Event Calendar”.

 

About Cadence Bancorporation

 

Cadence Bancorporation (NYSE:CADE) is an $11.3 billion in assets regional bank holding company headquartered in Houston, Texas. Through its affiliates, Cadence operates 65 locations in Alabama, Florida, Texas, Mississippi and Tennessee, and provides corporations, middle-market companies, small businesses and consumers with a full range of innovative banking and financial solutions. Services and products include commercial and business banking, treasury management, specialized lending, commercial real estate, foreign exchange, wealth management, investment and trust services, financial planning, retirement plan management, personal insurance, consumer banking, consumer loans, mortgages, home equity lines and loans, and credit cards. Clients have access to leading-edge online and mobile solutions, interactive teller machines, and 56,000 ATMs. The Cadence team of 1,200 associates is committed to exceeding customer expectations and helping their clients succeed financially. Cadence Bank, N.A., and Linscomb & Williams are subsidiaries of Cadence Bancorporation.

 

Cautionary Statement Regarding Forward-Looking Information

 

This communication contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements reflect our current views with respect to, among other things, future events and our results of operations, financial condition and financial performance. These statements are often, but not always, made through the use of words or phrases such as “may,” “should,” “could,” “predict,” “potential,” “believe,” “will likely result,” “expect,” “continue,” “will,” “anticipate,” “seek,” “estimate,” “intend,” “plan,” “projection,” “would” and “outlook,” or the negative version of those words or other comparable words of a future or forward-looking nature. These forward-looking statements are not historical facts, and are based on current expectations, estimates and projections about our industry, management’s beliefs and certain assumptions made by management, many of which, by their nature, are inherently uncertain and beyond our control. Accordingly, we caution you that any such forward-looking statements are not guarantees of future performance and are subject to risks, assumptions and uncertainties that are difficult to predict. Although we believe that the expectations reflected in these forward-looking statements are reasonable as of the date made, actual results may prove to be materially different from the results expressed or implied by the forward-looking statements.  Such factors include, without limitation, the “Risk Factors” referenced in our Registration Statement on Form S-3 filed with the Securities and Exchange Commission (SEC), other risks and uncertainties listed from time to time in our reports and documents filed with the SEC, including our Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q, and the following factors: business and economic conditions generally and in the financial services industry, nationally and within our current and future geographic market areas; economic, market, operational, liquidity, credit and interest rate risks associated with our business; lack of seasoning in our loan portfolio; deteriorating asset quality and higher loan charge-offs; the laws and regulations applicable to our business; our ability to achieve organic loan and deposit growth and the composition of such growth; increased competition in the financial services industry, nationally, regionally or locally; our ability to maintain our historical earnings trends; our ability to raise additional capital to implement our business plan; material weaknesses in our internal control over financial reporting; systems failures or interruptions involving our information technology and telecommunications systems or third-party servicers; the composition of our management team and our ability to attract and retain key personnel; the fiscal position of the U.S. federal government and the soundness of other financial institutions; the composition of our loan portfolio, including the identify of our borrowers and the concentration of loans in energy-related industries and in our specialized industries; the portion of our loan portfolio that is comprised of participations and shared national credits; and the amount of nonperforming and classified assets we hold. Cadence can give no assurance that any goal or plan or expectation set forth in forward-looking statements can be achieved and readers are cautioned not to place undue reliance on such statements. The forward-looking statements are made as of the date of this communication, and Cadence does not intend, and assumes no obligation, to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events or circumstances, except as required by applicable law.

 

About Non-GAAP Financial Measures

 

Certain of the financial measures and ratios we present, including “efficiency ratio,” “adjusted efficiency ratio,” “adjusted noninterest expenses,” “adjusted operating revenue,” “tangible common equity ratio,” “tangible book value per share” and “return on average tangible common equity” and “pre-tax, pre-provision net earnings,” are supplemental measures that are not required by, or are not presented in accordance with, U.S. generally accepted accounting principles (GAAP). We refer to these financial measures and ratios as “non-GAAP financial measures.” We consider the use of select non-GAAP financial measures and ratios to be useful for financial and operational decision making and useful in evaluating period-to-period comparisons. We believe that these non-GAAP financial measures provide meaningful supplemental information regarding our performance by excluding certain expenditures or assets that we believe are not indicative of our primary business operating results or by presenting certain metrics on a fully taxable equivalent basis. We believe that management and investors benefit from referring to these non-GAAP financial measures in assessing our performance and when planning, forecasting, analyzing and comparing past, present and future periods.

 

These non-GAAP financial measures should not be considered a substitute for financial information presented in accordance with GAAP and you should not rely on non-GAAP financial measures alone as measures of our performance. The non-GAAP financial measures we present may differ from non-GAAP financial measures used by our peers or other companies. We compensate for these limitations by providing the equivalent GAAP measures whenever we present the non-GAAP financial measures and by including a reconciliation of the impact of the components adjusted for in the non-GAAP financial measure so that both measures and the individual components may be considered when analyzing our performance.  A reconciliation of non-GAAP financial measures to the comparable GAAP financial measures is included at the end of the financial statement tables (Table 7).

 

###

 

Contact Information

Media contact:

Danielle Kernell

713-871-4051

danielle.kernell@cadencebank.com

 

Investor relations contact:

Valerie Toalson

713-871-4103 or 800-698-7878

vtoalson@cadencebancorporation.com

 

Table 1 - Selected Financial Data

 

 

 

As of and for the Three Months Ended

 

(In thousands, except share and per share data)

 

June 30,

2018

 

 

March 31,

2018

 

 

December 31,

2017

 

 

September 30,

2017

 

 

June 30,

2017

 

Statement of Income Data:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

$

123,963

 

 

$

113,093

 

 

$

108,370

 

 

$

99,503

 

 

$

99,375

 

Interest expense

 

 

28,579

 

 

 

21,982

 

 

 

20,459

 

 

 

18,340

 

 

 

16,991

 

Net interest income

 

 

95,384

 

 

 

91,111

 

 

 

87,911

 

 

 

81,163

 

 

 

82,384

 

Provision for credit losses

 

 

1,263

 

 

 

4,380

 

 

 

(4,475

)

 

 

1,723

 

 

 

6,701

 

Net interest income after provision

 

 

94,121

 

 

 

86,731

 

 

 

92,386

 

 

 

79,440

 

 

 

75,683

 

Noninterest income - service fees and revenue

 

 

21,395

 

 

 

23,904

 

 

 

22,405

 

 

 

23,014

 

 

 

22,144

 

- other noninterest income

 

 

3,277

 

 

 

1,079

 

 

 

3,251

 

 

 

4,110

 

 

 

845

 

Noninterest expense

 

 

62,435

 

 

 

61,939

 

 

 

66,371

 

 

 

56,530

 

 

 

56,134

 

Income before income taxes

 

 

56,358

 

 

 

49,775

 

 

 

51,671

 

 

 

50,034

 

 

 

42,538

 

Income tax expense

 

 

8,384

 

 

 

10,950

 

 

 

36,980

 

 

 

17,457

 

 

 

13,570

 

Net income

 

$

47,974

 

 

$

38,825

 

 

$

14,691

 

 

$

32,577

 

 

$

28,968

 

Period-End Balance Sheet Data:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investment securities

 

$

1,049,710

 

 

$

1,251,834

 

 

$

1,262,948

 

 

$

1,198,032

 

 

$

1,079,935

 

Total loans, net of unearned income

 

 

8,975,755

 

 

 

8,646,987

 

 

 

8,253,427

 

 

 

8,028,938

 

 

 

7,716,621

 

Allowance for credit losses

 

 

90,620

 

 

 

91,537

 

 

 

87,576

 

 

 

94,765

 

 

 

93,215

 

Total assets

 

 

11,305,528

 

 

 

10,999,382

 

 

 

10,948,926

 

 

 

10,502,261

 

 

 

9,811,557

 

Total deposits

 

 

9,331,055

 

 

 

9,048,971

 

 

 

9,011,515

 

 

 

8,501,102

 

 

 

7,930,383

 

Noninterest-bearing deposits

 

 

2,137,407

 

 

 

2,040,977

 

 

 

2,242,765

 

 

 

2,071,594

 

 

 

1,857,809

 

Interest-bearing deposits

 

 

7,193,648

 

 

 

7,007,994

 

 

 

6,768,750

 

 

 

6,429,508

 

 

 

6,072,574

 

Borrowings and subordinated debentures

 

 

471,453

 

 

 

471,335

 

 

 

470,814

 

 

 

572,683

 

 

 

499,266

 

Total shareholders equity

 

 

1,389,956

 

 

 

1,357,103

 

 

 

1,359,056

 

 

 

1,340,848

 

 

 

1,304,054

 

Average Balance Sheet Data:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investment securities

 

$

1,183,055

 

 

$

1,234,226

 

 

$

1,228,330

 

 

$

1,169,182

 

 

$

1,099,307

 

Total loans, net of unearned income

 

 

8,848,820

 

 

 

8,443,951

 

 

 

8,226,294

 

 

 

7,867,794

 

 

 

7,650,048

 

Allowance for credit losses

 

 

93,365

 

 

 

89,097

 

 

 

94,968

 

 

 

94,706

 

 

 

90,366

 

Total assets

 

 

11,218,432

 

 

 

10,922,274

 

 

 

10,586,245

 

 

 

10,024,871

 

 

 

9,786,355

 

Total deposits

 

 

9,135,359

 

 

 

9,012,390

 

 

 

8,635,473

 

 

 

8,139,969

 

 

 

7,940,421

 

Noninterest-bearing deposits

 

 

2,058,255

 

 

 

2,128,595

 

 

 

2,170,758

 

 

 

1,982,784

 

 

 

1,845,447

 

Interest-bearing deposits

 

 

7,077,104

 

 

 

6,883,795

 

 

 

6,464,715

 

 

 

6,157,185

 

 

 

6,094,974

 

Borrowings and subordinated debentures

 

 

595,087

 

 

 

444,557

 

 

 

502,428

 

 

 

484,798

 

 

 

510,373

 

Total shareholders equity

 

 

1,358,770

 

 

 

1,342,445

 

 

 

1,348,867

 

 

 

1,320,884

 

 

 

1,251,217

 

 

 


 

Table 1 (Continued) - Selected Financial Data

 

 

 

As of and for the Three Months Ended

 

(In thousands, except share and per share data)

 

June 30,

2018

 

 

March 31,

2018

 

 

December 31,

2017

 

 

September 30,

2017

 

 

June 30,

2017

 

Per Share Data:(3)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.57

 

 

$

0.46

 

 

$

0.18

 

 

$

0.39

 

 

$

0.35

 

Diluted

 

 

0.57

 

 

 

0.46

 

 

 

0.17

 

 

 

0.39

 

 

 

0.35

 

Book value per common share

 

 

16.62

 

 

 

16.23

 

 

 

16.25

 

 

 

16.03

 

 

 

15.59

 

Tangible book value (1)

 

 

12.85

 

 

 

12.32

 

 

 

12.33

 

 

 

12.10

 

 

 

11.64

 

Weighted average common shares outstanding

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

83,625,000

 

 

 

83,625,000

 

 

 

83,625,000

 

 

 

83,625,000

 

 

 

81,918,956

 

Diluted

 

 

84,792,657

 

 

 

84,674,807

 

 

 

84,717,005

 

 

 

83,955,685

 

 

 

81,951,795

 

Cash dividends declared

 

$

0.125

 

 

$

0.125

 

 

$

 

 

$

 

 

$

 

Dividend payout ratio

 

 

21.93

%

 

 

27.17

%

 

 

%

 

 

%

 

 

%

Performance Ratios:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Return on average common equity (2)

 

 

14.16

%

 

 

11.73

%

 

 

4.32

%

 

 

9.78

%

 

 

9.29

%

Return on average tangible common equity (1) (2)

 

 

18.58

 

 

 

15.52

 

 

 

5.71

 

 

 

13.04

 

 

 

12.63

 

Return on average assets (2)

 

 

1.72

 

 

 

1.44

 

 

 

0.55

 

 

 

1.29

 

 

 

1.19

 

Net interest margin (2)

 

 

3.66

 

 

 

3.64

 

 

 

3.59

 

 

 

3.52

 

 

 

3.71

 

Efficiency ratio (1)

 

 

52.00

 

 

 

53.35

 

 

 

58.44

 

 

 

52.20

 

 

 

53.27

 

Adjusted efficiency ratio (1)

 

 

50.74

 

 

 

50.22

 

 

 

55.57

 

 

 

52.74

 

 

 

53.15

 

Asset Quality Ratios:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total nonperforming assets ("NPAs") to total loans and OREO and other NPAs

 

 

0.63

%

 

 

0.84

%

 

 

0.85

%

 

 

1.51

%

 

 

1.82

%

Total nonperforming loans to total loans

 

 

0.44

 

 

 

0.60

 

 

 

0.58

 

 

 

0.96

 

 

 

1.36

 

Total ACL to total loans

 

 

1.01

 

 

 

1.06

 

 

 

1.06

 

 

 

1.18

 

 

 

1.21

 

ACL to total nonperforming loans ("NPLs")

 

 

230.60

 

 

 

175.30

 

 

 

183.62

 

 

 

122.66

 

 

 

88.81

 

Net charge-offs to average loans (2)

 

 

0.10

 

 

 

0.02

 

 

 

0.13

 

 

 

0.01

 

 

 

0.09

 

Capital Ratios:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total shareholders equity to assets

 

 

12.29

%

 

 

12.34

%

 

 

12.41

%

 

 

12.77

%

 

 

13.29

%

Tangible common equity to tangible assets (1)

 

 

9.78

 

 

 

9.65

 

 

 

9.71

 

 

 

9.95

 

 

 

10.27

 

Common equity tier 1 (CET1)

 

 

10.56

 

 

 

10.42

 

 

 

10.57

 

 

 

10.79

 

 

 

10.92

 

Tier 1 leverage capital

 

 

10.74

 

 

 

10.57

 

 

 

10.68

 

 

 

11.12

 

 

 

11.00

 

Tier 1 risk-based capital

 

 

10.93

 

 

 

10.79

 

 

 

10.94

 

 

 

11.17

 

 

 

11.31

 

Total risk-based capital

 

 

12.71

 

 

 

12.63

 

 

 

12.81

 

 

 

13.18

 

 

 

13.41

 

_____________________

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  1. Considered a non-GAAP financial measure. See Table 7 "Reconciliation of Non-GAAP Financial Measures" for a reconciliation of our non-GAAP measures to the most directly comparable GAAP financial measure.
  2. Annualized.
  3. As of the completion of a secondary offering on May 22, 2018, 34,175,000 of our outstanding shares are owned by our parent-holding company Cadence Bancorp, LLC.

 


 

Table 2 - Average Balances/Yield/Rates

 

 

 

For the Three Months Ended June 30,

 

 

 

 

2018

 

 

 

2017

 

 

 

 

Average

 

 

Income/

 

 

Yield/

 

 

 

Average

 

 

Income/

 

 

Yield/

 

 

(In thousands)

 

Balance

 

 

Expense

 

 

Rate

 

 

 

Balance

 

 

Expense

 

 

Rate

 

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-earning assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans, net of unearned income(1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Originated and ANCI loans

 

$

8,606,253

 

 

$

108,130

 

 

 

5.04

 

%

 

$

7,348,932

 

 

$

79,904

 

 

 

4.36

 

%

ACI portfolio

 

 

242,567

 

 

 

5,610

 

 

 

9.28

 

 

 

 

301,116

 

 

 

10,525

 

 

 

14.02

 

 

Total loans

 

 

8,848,820

 

 

 

113,740

 

 

 

5.16

 

 

 

 

7,650,048

 

 

 

90,429

 

 

 

4.74

 

 

Investment securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Taxable

 

 

838,842

 

 

 

5,518

 

 

 

2.64

 

 

 

 

688,464

 

 

 

4,178

 

 

 

2.43

 

 

Tax-exempt(2)

 

 

344,213

 

 

 

3,547

 

 

 

4.13

 

 

 

 

410,843

 

 

 

5,208

 

 

 

5.08

 

 

Total investment securities

 

 

1,183,055

 

 

 

9,065

 

 

 

3.07

 

 

 

 

1,099,307

 

 

 

9,386

 

 

 

3.42

 

 

Federal funds sold and short-term investments

 

 

452,074

 

 

 

1,269

 

 

 

1.13

 

 

 

 

312,287

 

 

 

688

 

 

 

0.88

 

 

Other investments

 

 

55,909

 

 

 

634

 

 

 

4.55

 

 

 

 

50,064

 

 

 

695

 

 

 

5.57

 

 

Total interest-earning assets

 

 

10,539,858

 

 

 

124,708

 

 

 

4.75

 

 

 

 

9,111,706

 

 

 

101,198

 

 

 

4.45

 

 

Noninterest-earning assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and due from banks

 

 

80,000

 

 

 

 

 

 

 

 

 

 

 

 

59,220

 

 

 

 

 

 

 

 

 

 

Premises and equipment

 

 

62,711

 

 

 

 

 

 

 

 

 

 

 

 

65,392

 

 

 

 

 

 

 

 

 

 

Accrued interest and other assets

 

 

629,228

 

 

 

 

 

 

 

 

 

 

 

 

640,403

 

 

 

 

 

 

 

 

 

 

Allowance for credit losses

 

 

(93,365

)

 

 

 

 

 

 

 

 

 

 

 

(90,366

)

 

 

 

 

 

 

 

 

 

Total assets

 

$

11,218,432

 

 

 

 

 

 

 

 

 

 

 

$

9,786,355

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Demand deposits

 

$

4,712,302

 

 

$

11,700

 

 

 

1.00

 

%

 

$

4,232,497

 

 

$

6,354

 

 

 

0.60

 

%

Savings deposits

 

 

189,567

 

 

 

133

 

 

 

0.28

 

 

 

 

186,307

 

 

 

119

 

 

 

0.26

 

 

Time deposits

 

 

2,175,235

 

 

 

10,497

 

 

 

1.94

 

 

 

 

1,676,170

 

 

 

5,298

 

 

 

1.27

 

 

Total interest-bearing deposits

 

 

7,077,104

 

 

 

22,330

 

 

 

1.27

 

 

 

 

6,094,974

 

 

 

11,771

 

 

 

0.77

 

 

Other borrowings

 

 

459,678

 

 

 

3,785

 

 

 

3.30

 

 

 

 

375,681

 

 

 

2,896

 

 

 

3.09

 

 

Subordinated debentures

 

 

135,409

 

 

 

2,464

 

 

 

7.30

 

 

 

 

134,692

 

 

 

2,324

 

 

 

6.92

 

 

Total interest-bearing liabilities

 

 

7,672,191

 

 

 

28,579

 

 

 

1.49

 

 

 

 

6,605,347

 

 

 

16,991

 

 

 

1.03

 

 

Noninterest-bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Demand deposits

 

 

2,058,255

 

 

 

 

 

 

 

 

 

 

 

 

1,845,447

 

 

 

 

 

 

 

 

 

 

Accrued interest and other liabilities

 

 

129,216

 

 

 

 

 

 

 

 

 

 

 

 

84,344

 

 

 

 

 

 

 

 

 

 

Total liabilities

 

 

9,859,662

 

 

 

 

 

 

 

 

 

 

 

 

8,535,138

 

 

 

 

 

 

 

 

 

 

Stockholders' equity

 

 

1,358,770

 

 

 

 

 

 

 

 

 

 

 

 

1,251,217

 

 

 

 

 

 

 

 

 

 

Total liabilities and stockholders' equity

 

$

11,218,432

 

 

 

 

 

 

 

 

 

 

 

$

9,786,355

 

 

 

 

 

 

 

 

 

 

Net interest income/net interest spread

 

 

 

 

 

 

96,129

 

 

 

3.26

 

%

 

 

 

 

 

 

84,207

 

 

 

3.42

 

%

Net yield on earning assets/net interest margin

 

 

 

 

 

 

 

 

 

 

3.66

 

%

 

 

 

 

 

 

 

 

 

 

3.71

 

%

Taxable equivalent adjustment:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investment securities

 

 

 

 

 

 

(745

)

 

 

 

 

 

 

 

 

 

 

 

(1,823

)

 

 

 

 

 

Net interest income

 

 

 

 

 

$

95,384

 

 

 

 

 

 

 

 

 

 

 

$

82,384

 

 

 

 

 

 

_____________________

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  1. Nonaccrual loans are included in loans, net of unearned income. No adjustment has been made for these loans in the calculation of yields.
  2. Interest income and yields are presented on a fully taxable equivalent basis using a tax rate of 21% for the three months ended June 30, 2018, and a tax rate of 35% for the three months ended June 30, 2017.

 

 

 

For the Three Months Ended

June 30, 2018

 

 

 

For the Three Months Ended

March 31, 2018

 

 

 

 

Average

 

 

Income/

 

 

Yield/

 

 

 

Average

 

 

Income/

 

 

Yield/

 

 

(In thousands)

 

Balance

 

 

Expense

 

 

Rate

 

 

 

Balance

 

 

Expense

 

 

Rate

 

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-earning assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans, net of unearned income(1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Originated and ANCI loans

 

$

8,606,253

 

 

$

108,130

 

 

 

5.04

 

%

 

$

8,189,448

 

 

$

97,168

 

 

 

4.81

 

%

ACI portfolio

 

 

242,567

 

 

 

5,610