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Cadence Bancorporation Reports First Quarter 2019 Financial Results

HOUSTON, TEXAS (April 29, 2019) – Cadence Bancorporation (NYSE:CADE) (“Cadence”) today announced net income for the quarter ended March 31, 2019 of $58.2 million, or $0.44 per diluted common share (“per share”), compared to $32.3 million, or $0.39 per share for the quarter ended December 31, 2018, and $38.8 million or $0.46 per share for the quarter ended March 31, 2018. The first quarter of 2019 included merger related expenses of $22.0 million or $0.13 per diluted common share.

 

“This has been an active and exciting quarter for Cadence. We finalized our merger with State Bank on January 1 and completed the systems and branding conversions during the quarter. I am pleased with our expanded footprint and the diversity it brings to our business model. We have seen numerous examples of great leadership from our bankers in Georgia, which we believe will lead to growing business opportunities throughout that market. It is nice to report a strong start to the year with better earnings than expected. On an adjusted basis, we earned $0.57 cents per share(1) which is a 19.7% adjusted return on tangible common equity(1); 1.72% adjusted return on assets(1); and a 45.7% adjusted efficiency ratio(1). Our credit metrics are positive also. We charged-off $550,000 or 2 basis points (annualized) for the quarter. Nonperforming assets declined to 0.63% at March 31 from 0.81% at fiscal year-end. Overall, it is a good start to the year,” stated Paul B. Murphy, Jr., Chairman and Chief Executive Officer of Cadence Bancorporation.

 

Highlights:

  • Adjusted net income(1), excluding non-routine income and expenses(2) primarily related to the merger, was $75.0 million for the first quarter of 2019, an increase of $33.0 million or 79% compared to the first quarter of 2018 and an increase of $33.5 million or 81% compared to the fourth quarter of 2018.
  • Adjusted EPS(1) for the first quarter of 2019 of $0.57 increased $0.07 compared to adjusted EPS for both the prior year and linked quarters of $0.50.
  • Annualized returns on average assets, and tangible common equity(1) for the first quarter of 2019 were 1.34% and 15.54%, respectively, compared to 1.44% and 15.76%, respectively, for the first quarter of 2018, and 1.05% and 11.85%, respectively, for the fourth quarter of 2018.
    • Adjusted annualized returns on average assets(1) and adjusted tangible common equity(1) for the first quarter of 2019 were 1.72% and 19.69%, respectively, compared to 1.56% and 17.00%, respectively, for the first quarter of 2018 and 1.34% and 15.15%, respectively, for the fourth quarter of 2018.
  • First quarter of 2019 efficiency ratio was 56.7% and the adjusted efficiency ratio(1) was 45.7%, resulting from strong revenue growth coupled with expense management.
  • Nonperforming assets (‘NPAs’) as a percent of total loans, OREO and other NPAs declined to 0.63% at March 31, 2019 compared to 0.84% and 0.81% at March 31, 2018 and December 31, 2018, respectively. Net charge-offs for the first quarter of 2019 were $550 thousand or 2 basis points on an annualized basis.

 

Balance Sheet:

Total assets were $17.5 billion as of March 31, 2019, an increase of $4.7 billion, or 37.1%, from December 31, 2018, and an increase of $6.5 billion, or 58.7%, from March 31, 2018.

 

Merger with State Bank Financial Corporation (“State Bank”). Effective January 1, 2019, State Bank merged into Cadence, with Cadence issuing 49.2 million shares to State Bank shareholders resulting in a total purchase price of $826 million. This merger added the additional assets and liabilities as shown in the table below, which included goodwill of $173.3 million, core deposit intangibles of $111.9 million or 3.28% of core deposits, an unfunded loan commitment mark of $26.8 million. The loan fair value adjustments totaled $99.0 million, made up of a credit risk adjustment of $71.2 million or 2.1% of total loans, and a market risk adjustment of $27.8 million. Note that the loan and unfunded commitment marks accrete into revenue and the core deposit intangible amortizes into expense over time as described in the footnotes below. The estimated fair values will be subject to refinement as additional information relative to the closing date fair values becomes available through the measurement period for a maximum of one year from consummation.

 

 

(Dollars in thousands)

 

As Recorded by

State Bank

 

 

Reversal of Legacy State Bank Amounts

 

 

Fair Value Adjustments

 

 

As Recorded by Cadence

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

414,342

 

 

$

-

 

 

$

-

 

 

$

414,342

 

Investment securities available-for-sale

 

 

668,517

 

 

 

-

 

 

 

(652

)

 

 

667,865

 

Loans, net

 

 

3,487,618

 

 

 

83,908

 

 

 

(99,001

)

A

 

3,472,525

 

Premises and equipment, net

 

 

55,151

 

 

 

-

 

 

 

10,495

 

 

 

65,646

 

Cash surrender value of life insurance

 

 

69,252

 

 

 

-

 

 

 

-

 

 

 

69,252

 

Intangible assets

 

 

92,918

 

 

 

(92,918

)

 

 

117,038

 

B

 

117,038

 

Other assets

 

 

63,612

 

 

 

(2,342

)

 

 

(18,024

)

 

 

43,246

 

Total assets acquired

 

$

4,851,410

 

 

$

(11,352

)

 

$

9,856

 

 

$

4,849,914

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

$

4,100,340

 

 

$

-

 

 

$

(3,675

)

 

$

4,096,665

 

Short term borrowings

 

 

23,899

 

 

 

-

 

 

 

-

 

 

 

23,899

 

Other liabilities

 

 

49,105

 

 

 

-

 

 

 

27,173

 

C

 

76,278

 

Total liabilities assumed

 

 

4,173,344

 

 

 

-

 

 

 

23,498

 

 

 

4,196,842

 

Net identifiable assets acquired over liabilities assumed

 

 

678,066

 

 

 

(11,352

)

 

$

(13,642

)

 

$

653,072

 

Goodwill

 

 

 

 

 

 

 

 

 

 

173,308

 

D

 

173,308

 

Net assets acquired over liabilities assumed

 

$

678,066

 

 

$

(11,352

)

 

$

159,666

 

 

$

826,380

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(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)See Table 7 for a detail of non-routine income and expenses.

 

 

 

Fair Value Adjustments:

 

  1. Represents the mark on the total balance of loans, which is comprised of a $20.3 million mark to the book balance on acquired credit impaired (“ACI”) loans and a $78.6 million mark on acquired non-credit impaired (“ANCI”) loans. Based on the expected cash flows, the ACI loans have an accretable difference of $43 million and will accrete into interest income over the expected life of the loan or pool of loans over approximately seven years. The $78.6 million mark on ANCI loans will accrete into interest income using either the effective yield or the straight-line method over the contractual lives of the loans, or approximately seven years.
  2. Represents a core deposit intangible (“CDI”) of $111.9 million and a customer list intangible of $5.1 million. The CDI and customer list intangible amortize into interest expense and noninterest expense, respectively, using an accelerated method over a ten-year period.
  3. Primarily represents $26.8 million as the fair value of unfunded loan commitments. The fair value for revolving lines and undrawn lines amortize using the straight-line method over the life of the loan, or approximately 48 months. The fair value of multi-advance loans amortizes using the effective yield method over the life of the loan, or approximately 29 months. Amortization of both of these adjustments do not begin until some or all the unfunded amount becomes funded.
  4. Represents excess of purchase price over the combined fair value adjustments.

Loans. Loans at March 31, 2019 totaled $13.6 billion as compared to $8.6 billion and $10.1 billion at March 31, 2018 and December 31, 2018, respectively. Excluding the impact of the loans acquired from State Bank, loans increased $1.6 billion or 18.6% since March 31, 2018, and $245.9 million, or 2.4% from January 1, 2019 to March 31, 2019. These increases reflect continued organic demand.

 

Total deposits. Deposits at March 31, 2019 totaled $14.2 billion as compared to $9.0 billion and $10.7 billion at March 31, 2018 and December 31, 2018, respectively. Excluding the impact of deposits assumed from State Bank, deposits increased by $1.1 billion or 9.8% from March 31, 2018 and decreased by $606.1 million or 5.7% from December 31, 2018. The year-over- year deposit increase was driven by growth in core customer deposits (total deposits excluding brokered deposits) of $1.0 billion, or 12.4%, from March 31, 2018. The linked quarter decrease included a decline of core deposits of $424.4 million, or 3.2%, from December 31, 2018, which included $311.8 million that State Bank had on deposit at Cadence as noninterest-bearing deposits at December 31, 2018 that were eliminated out of deposits, as well as cyclical deposit declines typical in the first quarter of the year.

 

Shareholders’ equity was $2.3 billion at March 31, 2019, an increase of $945.6 million from March 31, 2018, and an increase of $864.5 million from December 31, 2018.

 

  • Tangible common shareholders’ equity(1) was $1.7 billion at March 31, 2019, an increase of $670.5 million from March 31, 2018, and an increase of $576.5 million from December 31, 2018.The first quarter 2019 increase resulted from common stock issued of $826.1 million in the State Bank merger (net of issuance costs), net income of $58.2 million and an increase of $60.8 million in other comprehensive income which resulted from increased fair values of derivatives and of securities. These items were partially offset by an increase of $284.3 million in intangible assets, dividends of $22.7 million and the repurchase of 3.0 million common shares at an average price of $19.60 per share, or $58.8 million during the quarter as part of the share repurchase program announced in October 2018.
  • Tangible book value per share(1) was $13.23 as of March 31, 2019, an increase of $0.91 from $12.32 as of March 31, 2018, and a decrease of $0.39 or from $13.62 as of December 31, 2018.
  • Total outstanding shares in the quarter increased to 128.8 million shares due to the issuance of 49.2 million shares in connection with the State Bank merger, partially offset by the repurchase of 3.0 million shares during the quarter.

 

Asset Quality:

 

Credit quality reflected continued overall credit stability in the loan portfolio. For the quarter ended March 31, 2019, net charge-offs were $0.6 million or 2 basis points on an annualized basis, compared to $0.4 million or 2 basis points and $0.2 million or 1 basis point for the quarters ended March 31, 2018 and December 31, 2018, respectively.

  • NPAs totaled $86.0 million, $72.7 million and $82.4 million as of March 31, 2019, March 31, 2018 and December 31, 2018, respectively. NPAs as a percent of total loans, OREO and other NPAs declined to 0.63% at March 31, 2019 compared to 0.84% and 0.81% at March 31, 2018 and December 31, 2018, respectively.
  • The allowance for credit losses (“ACL”) was $105.0 million, or 0.77% of total loans, as of March 31, 2019, as compared to $91.5 million, or 1.06% of total loans, as of March 31, 2018, $94.4 million, or 0.94% of total loans, as of December 31, 2018. The decline in the percentage of the ACL to total loans is due to recording the State Bank $3.5 billion loan portfolio at fair value, which results in no ACL recorded for those loans upon merger.
  • Loan loss provision was $11.2 million for the first quarter of 2019 compared to $4.4 million in the prior year’s quarter and $8.4 million in the linked quarter. The first quarter 2019 provision was driven by the quarter’s net loan growth and an increase in specific reserves for certain credits.

 

Total Revenue:

 

Total operating revenue(1) for the first quarter of 2019 was $200.0 million, up 72.2% from the same period in 2018 and up 61.1% from the linked quarter. The revenue increases reflect strong loan growth during the period as well as the impact of the State Bank acquisition.

 

Net interest income for the first quarter of 2019 was $169.3 million, an increase of $78.2 million or 85.8%, from the same period in 2018, and an increase of $66.1 million or 64.1%, from the fourth quarter of 2018. Our fully tax-equivalent NIM was up significantly in the first quarter of 2019 to 4.21% as compared to 3.64% for the first quarter of 2018 and 3.55% for the fourth quarter of 2018.

 

Earning asset yields for the first quarter of 2019 were 5.52%, up 101 basis points from 4.51% in the first quarter of 2018, and up 57 basis points from 4.95% in the fourth quarter of 2018. The current quarter’s increase in earning asset yields reflects the impact of the State Bank assets including purchase accounting accretion, combined with an increase in originated earning asset yields during the first quarter of 2019.

 

  • Yield on originated loans increased to 5.46% for the first quarter of 2019, as compared to 4.79% and 5.20% for the first quarter of 2018 and fourth quarter of 2018, respectively.
  • Approximately 69% of the total loan portfolio is floating at March 31, 2019.On February 28, 2019, Cadence entered into a $4.0 billion notional interest rate collar with a five-year term designed to reduce the impact of interest rate sensitivity of this portfolio. The yield on originated loans was impacted 1 basis point, (2) basis points and (9) basis points for the first quarter of 2019, first quarter of 2018 and fourth quarter of 2018, respectively, by the effect of our interest rate derivatives.
  • Total accretion for ANCI loans was $12.5 million in the first quarter of 2019 compared to $0.2 million for the first quarter of 2018 and ($0.3) million for the fourth quarter of 2018. The first quarter 2019 accretion is predominantly related to loans acquired from State Bank.
  • Total accretion for ACI loans was $6.3 million in the first quarter of 2019 compared to $5.6 million from the first quarter of 2018 and $5.6 million in the fourth quarter of 2018. The first quarter 2019 accretion includes $1.3 million related to loans acquired from State Bank.
  • Total cost of funds for the first quarter of 2019 was 1.42% compared to 0.94% for the first quarter of 2018 and 1.51% in the linked quarter.
    • Total cost of deposits for the first quarter of 2019 was 1.30% compared to 0.75% for the first quarter of 2018, and 1.34% for the linked quarter.
    • The current quarter’s decrease in deposit costs reflected the impact of the State Bank deposits, partially offset by an approximate 12 bp increase in legacy deposit costs during the first quarter of 2019.

 

Noninterest income for the first quarter of 2019 was $30.7 million, an increase of $5.7 million or 22.7%, from the same period of 2018, and an increase of $9.7 million, or 46.0%, from the fourth quarter of 2018. Total service fees and revenue for the first quarter of 2019 were $27.9 million, an increase of $4.0 million or 16.9% from the same period of 2018, and an increase of $6.7 million or 31.7% from the fourth quarter of 2018. The year over year increase in fees was driven by:

 

  • Increase of $1.1 million in service charges on deposits due primarily to the increase in number of deposit accounts.
  • Increase of $1.3 million in credit related fees related to loan growth and leading loan transactions.
  • New revenue sources of payroll processing and insurance ($1.9 million) and SBA income ($1.4 million) which resulted from the State Bank merger.
  • Decrease of other service fees of $1.7 million due primarily to reduction in insurance revenue due to the sale of insurance company assets in the second quarter of 2018.

 

The linked quarter increase resulted primarily from:

 

  • Increase of $1.3 million in service charges on deposits due to the increase in the number of deposit accounts, primarily from the State Bank merger.
  • Increase of $1.1 million in bankcard fees which resulted from additional customers from the State Bank merger.
  • Previously mentioned new revenue sources of payroll processing and insurance of $1.9 million and SBA income of $1.4 million.

 

Other noninterest income increased by $1.6 million from the first quarter of 2018 and by $2.9 million from the linked quarter. These increases resulted primarily from increases in BOLI income and earnings from limited partnerships, combined with stable net profits interest valuation in the first quarter of 2019, as compared to writedowns in the comparative quarters.

 

Noninterest expense for the first quarter of 2019 was $113.4 million, an increase of $51.5 million or 83.1% from $61.9 million for the same period in 2018, and an increase of $40.7 million or 56.0% from $72.7 million for the fourth quarter of 2018. The increase resulted primarily from:

 

  • Merger related expenses of $22.0 million related to the State Bank merger
  • Increase of $16.1 million and $10.0 million for the prior year period and linked quarter, respectively, in salaries and benefits due primarily to increased numbers of employees.
  • Increase of $5.3 million and $5.5 million for the prior year period and linked quarter, respectively, in intangible asset amortization due to the amortization of the State Bank core deposit intangible asset.
  • Increase of $5.5 million and $3.6 million for the prior year period and linked quarter, respectively, in other noninterest expenses due to business growth and the State Bank merger.

 

Adjusted noninterest expenses(1), which exclude the impact of non-routine items(2), were $91.4 million for the first quarter of 2019, up $33.1 million or 56.9% from $58.3 million for the first quarter of 2018 and up $30.6 million or 50.3% from $60.9 million for the fourth quarter of 2018. Non-routine expenses in the first quarter of 2019 comprised $22.0 million in State Bank merger related expenses. For the fourth quarter of 2018, non-routine expenses included $9.8 million in compensation expense and $2.0 million in merger related expenses. For the first quarter of 2018, non-routine expenses included $1.4 million in secondary offering expenses and $2.3 million in legacy acquired bank litigation costs.

 

Our efficiency ratio(1) for the first quarter of 2019 was 56.7% compared to 53.4% for the first quarter of 2018 and 58.6% for the fourth quarter of 2018. The efficiency ratio in all quarters was impacted by the noted non-routine expenses. Excluding non-routine revenues and expenses, the adjusted efficiency ratio(1) was 45.7%, 50.2%, and 49.0% for the first quarter of 2019, first quarter of 2018, and fourth quarter of 2018, respectively. The first quarter of 2019 adjusted efficiency ratio is reflective of efficiencies already gained through the State Bank merger, combined with strong revenue growth.

 

(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)See Table 7 for a detail of non-routine income and expenses.

 

Taxes:

 

The effective tax rate for the quarter ended March 31, 2019, was 22.7% compared to 24.9% for the quarter ended December 31, 2018, and 22.0% for the quarter ended March 31, 2018.

 

Supplementary Financial Tables (Unaudited):

 

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

 

First Quarter 2019 Earnings Conference Call:

 

Cadence Bancorporation executive management will host a conference call to discuss first quarter 2019 results on Monday, April 29, 2019, 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 “Presentations”.

 

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:

2919550

 

For those unable to participate in the live presentation, a replay will be available through May 13, 2019. 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:

10130277

End Date:

May 13, 2019

 

Webcast Access:

 

A webcast of the conference call presented by management can be viewed by visiting www.cadencebancorporation.com and selecting “Events & Presentations” then “Event Calendar”. Slides are available under the “Presentations” tab.

 

 

About Cadence Bancorporation

 

Cadence Bancorporation (NYSE: CADE), headquartered in Houston, Texas, is a regional financial holding company with $17.4 billion in assets as of March 31, 2019. Cadence operates 98 branch locations in Alabama, Florida, Georgia, Mississippi, Tennessee and Texas, 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, asset-based lending, commercial real estate, SBA lending, foreign exchange, wealth management, investment and trust services, financial planning, retirement plan management, business 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 more than 55,000 ATMs. The Cadence team of 1,800 associates is committed to exceeding customer expectations and helping their clients succeed financially.

 

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 (the “SEC”) on May 21, 2018, and our Registration Statement on Form S-4 filed with the SEC on July 20, 2018, 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; 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 identity 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; the amount of nonperforming and classified assets we hold;  the possibility that the anticipated benefits of the merger with State Bank are not realized when expected or at all, including as a result of the impact of, or problems arising from, the integration of the two companies or as a result of the strength of the economy and competitive factors in the areas where Cadence and State Bank do business. 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”, “adjusted return on average tangible common equity”. “adjusted return on average assets”, “adjusted diluted earnings per share” 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

 

 

 

(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)See Table 7 for a detail of non-routine income and expenses.

 

 

Table 1 - Selected Financial Data

 

 

 

As of and for the Three Months Ended

 

(In thousands, except share and per share data)

 

March 31,

2019

 

 

December 31,

2018

 

 

September 30,

2018

 

 

June 30,

2018

 

 

March 31,

2018

 

Statement of Income Data:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

$

222,185

 

 

$

143,857

 

 

$

131,753

 

 

$

123,963

 

 

$

113,093

 

Interest expense

 

 

52,896

 

 

 

40,711

 

 

 

33,653

 

 

 

28,579

 

 

 

21,982

 

Net interest income

 

 

169,289

 

 

 

103,146

 

 

 

98,100

 

 

 

95,384

 

 

 

91,111

 

Provision for credit losses

 

 

11,210

 

 

 

8,422

 

 

 

(1,365

)

 

 

1,263

 

 

 

4,380

 

Net interest income after provision

 

 

158,079

 

 

 

94,724

 

 

 

99,465

 

 

 

94,121

 

 

 

86,731

 

Noninterest income - service fees and revenue

 

 

27,939

 

 

 

21,217

 

 

 

20,490

 

 

 

21,395

 

 

 

23,904

 

Noninterest income - other noninterest income

 

 

2,725

 

 

 

(210

)

 

 

3,486

 

 

 

3,277

 

 

 

1,079

 

Noninterest expense

 

 

113,440

 

 

 

72,697

 

 

 

61,231

 

 

 

62,435

 

 

 

61,939

 

Income before income taxes

 

 

75,303

 

 

 

43,034

 

 

 

62,210

 

 

 

56,358

 

 

 

49,775

 

Income tax expense

 

 

17,102

 

 

 

10,709

 

 

 

15,074

 

 

 

8,384

 

 

 

10,950

 

Net income

 

$

58,201

 

 

$

32,325

 

 

$

47,136

 

 

$

47,974

 

 

$

38,825

 

Weighted average common shares outstanding

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

130,485,521

 

 

 

83,375,485

 

 

 

83,625,000

 

 

 

83,625,000

 

 

 

83,625,000

 

Diluted

 

 

130,549,319

 

 

 

83,375,485

 

 

 

84,660,256

 

 

 

84,792,657

 

 

 

84,674,807

 

Earnings

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.44

 

 

$

0.39

 

 

$

0.56

 

 

$

0.57

 

 

$

0.46

 

Diluted

 

 

0.44

 

 

 

0.39

 

 

 

0.56

 

 

 

0.57

 

 

 

0.46

 

Period-End Balance Sheet Data:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investment securities

 

$

1,754,839

 

 

$

1,187,252

 

 

$

1,206,387

 

 

$

1,049,710

 

 

$

1,251,834

 

Total loans, net of unearned income

 

 

13,624,954

 

 

 

10,053,923

 

 

 

9,443,819

 

 

 

8,975,755

 

 

 

8,646,987

 

Allowance for credit losses

 

 

105,038

 

 

 

94,378

 

 

 

86,151

 

 

 

90,620

 

 

 

91,537

 

Total assets

 

 

17,452,911

 

 

 

12,730,285

 

 

 

11,759,837

 

 

 

11,305,528

 

 

 

10,999,382

 

Total deposits

 

 

14,199,223

 

 

 

10,708,689

 

 

 

9,558,276

 

 

 

9,331,055

 

 

 

9,048,971

 

Noninterest-bearing deposits

 

 

3,210,321

 

 

 

2,454,016

 

 

 

2,094,856

 

 

 

2,137,407

 

 

 

2,040,977

 

Interest-bearing deposits

 

 

10,988,902

 

 

 

8,254,673

 

 

 

7,463,420

 

 

 

7,193,648

 

 

 

7,007,994

 

Borrowings and subordinated debentures

 

 

717,278

 

 

 

471,770

 

 

 

662,658

 

 

 

471,453

 

 

 

471,335

 

Total shareholders equity

 

 

2,302,823

 

 

 

1,438,274

 

 

 

1,414,826

 

 

 

1,389,956

 

 

 

1,357,103

 

Average Balance Sheet Data:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investment securities

 

$

1,748,714

 

 

$

1,187,947

 

 

$

1,141,704

 

 

$

1,183,055

 

 

$

1,234,226

 

Total loans, net of unearned income

 

 

13,798,386

 

 

 

9,890,419

 

 

 

9,265,754

 

 

 

8,848,820

 

 

 

8,443,951

 

Allowance for credit losses

 

 

97,065

 

 

 

87,996

 

 

 

92,783

 

 

 

93,365

 

 

 

89,097

 

Total assets

 

 

17,634,267

 

 

 

12,249,819

 

 

 

11,585,969

 

 

 

11,218,432

 

 

 

10,922,275

 

Total deposits

 

 

14,579,771

 

 

 

10,038,180

 

 

 

9,489,268

 

 

 

9,135,359

 

 

 

9,012,390

 

Noninterest-bearing deposits

 

 

3,334,399

 

 

 

2,210,793

 

 

 

2,153,097

 

 

 

2,058,255

 

 

 

2,128,595

 

Interest-bearing deposits

 

 

11,245,372

 

 

 

7,827,387

 

 

 

7,336,171

 

 

 

7,077,104

 

 

 

6,883,795

 

Borrowings and subordinated debentures

 

 

554,281

 

 

 

652,813

 

 

 

567,864

 

 

 

595,087

 

 

 

444,556

 

Total shareholders equity

 

 

2,241,652

 

 

 

1,412,643

 

 

 

1,395,061

 

 

 

1,358,770

 

 

 

1,342,445

 


 

 

 

Table 1 (Continued) - Selected Financial Data

 

 

 

As of and for the Three Months Ended

 

(In thousands, except share and per share data)

 

March 31,

2019

 

 

December 31,

2018

 

 

September 30,

2018

 

 

June 30,

2018

 

 

March 31,

2018

 

Per Share Data:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Book value per common share

 

$

17.88

 

 

$

17.43

 

 

$

16.92

 

 

$

16.62

 

 

$

16.23

 

Tangible book value (1)

 

 

13.23

 

 

 

13.62

 

 

 

13.15

 

 

 

12.85

 

 

 

12.32

 

Cash dividends declared

 

 

0.175

 

 

 

0.150

 

 

 

0.150

 

 

 

0.125

 

 

 

0.125

 

Dividend payout ratio

 

 

39.77

%

 

 

38.46

%

 

 

26.79

%

 

 

21.93

%

 

 

27.17

%

Performance Ratios:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Return on average common equity (2)

 

 

10.53

%

 

 

9.08

%

 

 

13.40

%

 

 

14.16

%

 

 

11.73

%

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

 

 

15.54

 

 

 

11.85

 

 

 

17.50

 

 

 

18.79

 

 

 

15.76

 

Return on average assets (2)

 

 

1.34

 

 

 

1.05

 

 

 

1.61

 

 

 

1.72

 

 

 

1.44

 

Net interest margin (2)

 

 

4.21

 

 

 

3.55

 

 

 

3.58

 

 

 

3.66

 

 

 

3.64

 

Efficiency ratio (1)

 

 

56.73

 

 

 

58.55

 

 

 

50.16

 

 

 

52.00

 

 

 

53.35

 

Adjusted efficiency ratio (1)

 

 

45.73

 

 

 

48.99

 

 

 

48.36

 

 

 

50.74

 

 

 

50.22

 

Asset Quality Ratios:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

0.63

%

 

 

0.81

%

 

 

0.66

%

 

 

0.63

%

 

 

0.84

%

Total nonperforming loans to total loans

 

 

0.57

 

 

 

0.74

 

 

 

0.50

 

 

 

0.44

 

 

 

0.60

 

Total ACL to total loans

 

 

0.77

 

 

 

0.94

 

 

 

0.91

 

 

 

1.01

 

 

 

1.06

 

ACL to total nonperforming loans ("NPLs")

 

 

135.01

 

 

 

127.12

 

 

 

182.52

 

 

 

230.60

 

 

 

175.30

 

Net charge-offs to average loans (2)

 

 

0.02

 

 

 

0.01

 

 

 

0.13

 

 

 

0.10

 

 

 

0.02

 

Capital Ratios:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total shareholders equity to assets

 

 

13.2

%

 

 

11.3

%

 

 

12.0

%

 

 

12.3

%

 

 

12.3

%

Tangible common equity to tangible assets (1)

 

 

10.1

 

 

 

9.1

 

 

 

9.6

 

 

 

9.8

 

 

 

9.7

 

Common equity tier 1 (3)

 

 

10.4

 

 

 

9.8

 

 

 

10.4

 

 

 

10.5

 

 

 

10.4

 

Tier 1 leverage capital (3)

 

 

10.0

 

 

 

10.1

 

 

 

10.7

 

 

 

10.7

 

 

 

10.6

 

Tier 1 risk-based capital (3)

 

 

10.4

 

 

 

10.1

 

 

 

10.7

 

 

 

10.9

 

 

 

10.8

 

Total risk-based capital (3)

 

 

11.9

 

 

 

11.8

 

 

 

12.4

 

 

 

12.7

 

 

 

12.6

 

_____________________

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  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. Current quarter regulatory capital ratios are estimates.

 


 

 

 

Table 2 - Average Balances/Yield/Rates

 

 

 

For the Three Months Ended March 31,

 

 

 

 

2019

 

 

 

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 loans

 

$

9,811,821

 

 

$

132,065

 

 

 

5.46

 

%

 

$

7,993,461

 

 

$

94,378

 

 

 

4.79

 

%

ANCI portfolio

 

 

3,684,905

 

 

 

67,337

 

 

 

7.41

 

 

 

 

196,017

 

 

 

2,790

 

 

 

5.77

 

 

ACI portfolio

 

 

301,660

 

 

 

6,349

 

 

 

8.54

 

 

 

 

254,503

 

 

 

5,623

 

 

 

8.96

 

 

Total loans

 

 

13,798,386

 

 

 

205,751

 

 

 

6.05

 

 

 

 

8,443,981

 

 

 

102,791

 

 

 

4.94

 

 

Investment securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Taxable

 

 

1,531,514

 

 

 

10,796

 

 

 

2.86

 

 

 

 

827,227

 

 

 

5,118

 

 

 

2.51

 

 

Tax-exempt (2)

 

 

217,200

 

 

 

2,202

 

 

 

4.11

 

 

 

 

406,999

 

 

 

4,134

 

 

 

4.12

 

 

Total investment securities

 

 

1,748,714

 

 

 

12,998

 

 

 

3.01

 

 

 

 

1,234,226

 

 

 

9,252

 

 

 

3.04

 

 

Federal funds sold and short-term investments

 

 

763,601

 

 

 

3,281

 

 

 

1.74

 

 

 

 

515,017

 

 

 

1,529

 

 

 

1.20

 

 

Other investments

 

 

58,139

 

 

 

618

 

 

 

4.31

 

 

 

 

48,986

 

 

 

389

 

 

 

3.22

 

 

Total interest-earning assets

 

 

16,368,840

 

 

 

222,648

 

 

 

5.52

 

 

 

 

10,242,210

 

 

 

113,961

 

 

 

4.51

 

 

Noninterest-earning assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and due from banks

 

 

118,833

 

 

 

 

 

 

 

 

 

 

 

 

92,878

 

 

 

 

 

 

 

 

 

 

Premises and equipment

 

 

128,990

 

 

 

 

 

 

 

 

 

 

 

 

62,973

 

 

 

 

 

 

 

 

 

 

Accrued interest and other assets

 

 

1,114,669

 

 

 

 

 

 

 

 

 

 

 

 

613,311

 

 

 

 

 

 

 

 

 

 

Allowance for credit losses

 

 

(97,065

)

 

 

 

 

 

 

 

 

 

 

 

(89,097

)

 

 

 

 

 

 

 

 

 

Total assets

 

$

17,634,267

 

 

 

 

 

 

 

 

 

 

 

$

10,922,275

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS' EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Demand deposits

 

$

8,011,001

 

 

$

29,259

 

 

 

1.48

 

%

 

$

4,795,114

 

 

$

9,025

 

 

 

0.76

 

%

Savings deposits

 

 

248,651

 

 

 

226

 

 

 

0.37

 

 

 

 

179,662

 

 

 

114

 

 

 

0.26

 

 

Time deposits

 

 

2,985,720

 

 

 

17,186

 

 

 

2.33

 

 

 

 

1,909,019

 

 

 

7,491

 

 

 

1.59

 

 

Total interest-bearing deposits

 

 

11,245,372

 

 

 

46,671

 

 

 

1.68

 

 

 

 

6,883,795

 

 

 

16,630

 

 

 

0.98

 

 

Other borrowings

 

 

418,347

 

 

 

3,695

 

 

 

3.58

 

 

 

 

309,323

 

 

 

2,956

 

 

 

3.88

 

 

Subordinated debentures

 

 

135,934

 

 

 

2,530

 

 

 

7.55

 

 

 

 

135,233

 

 

 

2,396

 

 

 

7.19

 

 

Total interest-bearing liabilities

 

 

11,799,653

 

 

 

52,896

 

 

 

1.82

 

 

 

 

7,328,351

 

 

 

21,982

 

 

 

1.22

 

 

Noninterest-bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Demand deposits

 

 

3,334,399

 

 

 

 

 

 

 

 

 

 

 

 

2,128,595

 

 

 

 

 

 

 

 

 

 

Accrued interest and other liabilities

 

 

258,563

 

 

 

 

 

 

 

 

 

 

 

 

122,884

 

 

 

 

 

 

 

 

 

 

Total liabilities

 

 

15,392,615

 

 

 

 

 

 

 

 

 

 

 

 

9,579,830

 

 

 

 

 

 

 

 

 

 

Shareholders' equity

 

 

2,241,652

 

 

 

 

 

 

 

 

 

 

 

 

1,342,445

 

 

 

 

 

 

 

 

 

 

Total liabilities and shareholders' equity

 

$

17,634,267

 

 

 

 

 

 

 

 

 

 

 

$

10,922,275

 

 

 

 

 

 

 

 

 

 

Net interest income/net interest spread

 

 

 

 

 

 

169,752

 

 

 

3.70

 

%

 

 

 

 

 

 

91,979

 

 

 

3.29

 

%

Net yield on earning assets/net interest margin

 

 

 

 

 

 

 

 

 

 

4.21

 

%

 

 

 

 

 

 

 

 

 

 

3.64

 

%

Taxable equivalent adjustment: