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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Cadence Bank | NYSE:CADE | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
-0.43 | -1.47% | 28.83 | 29.53 | 28.82 | 29.53 | 1,769,016 | 01:00:00 |
Cadence Bancorporation (NYSE:CADE) (“Cadence”) today announced net income for the quarter ended June 30, 2019 of $48.3 million, or $0.37 per diluted common share (“per share”), compared to $48.0 million or $0.57 per share for the quarter ended June 30, 2018, and $58.2 million or $0.44 per share for the quarter ended March 31, 2019. The first and second quarters of 2019 included merger related expenses of $22.0 million or $0.13 per share and $4.6 million or $0.03 per share, respectively.
“The results for second quarter of 2019 reflect continued organic loan and deposit growth and solid fundamental trends, that were unfortunately negatively impacted by higher credit costs including net charge-offs of $18.6 million and loan provisions of $28.9 million. While the credit results are certainly disappointing, there have been many positive developments this year that add further strength to our platform. As a reminder, in the first quarter of 2019, we meaningfully diversified assets and deposits with the State Bank & Trust (“State Bank”) merger and protected our interest income with the addition of a well-timed interest rate collar. This quarter, we sold non-strategic acquired loans and grew originated loans 4.0% year-to-date, reflecting an intentional moderation of growth compared to prior years. Additionally, we further lowered our use of wholesale funding and enhanced our capital base while lowering ongoing debt as we refinanced senior debt with sub-debt on attractive terms. Our tangible book value per share increased over 7% from last quarter to $14.21. The State Bank merger integration continues to progress well on all fronts, and we are encouraged by our prospects to grow this core business throughout Georgia. We continue to focus on building our quality growth throughout our regional markets, while investing in scalable infrastructure to support ongoing customer service and profitable growth. Looking forward, we believe the cumulative effect of these actions position Cadence well for future success,” stated Paul B. Murphy, Jr., Chairman and Chief Executive Officer of Cadence Bancorporation.
Adjusted Performance Metrics:
(1)
Considered a non-GAAP financial measure.
(2)
See Table 7 for a detail of non-routine income and expenses.
Balance Sheet:
We continued to generate quality loan and deposit growth throughout our footprint during the quarter, bringing total assets to $17.5 billion as of June 30, 2019, an increase of $51.1 million or 0.3%, from March 31, 2019, and an increase of $6.2 billion or 54.8%, from June 30, 2018. The year-over-year increases throughout this release are impacted by the acquisition of State Bank which added $4.8 billion in total assets on January 1, 2019, and the linked quarter increase was softened by $164 million of loan sales as well as a $70 million decline in the securities portfolio due to portfolio rebalancing during the current quarter.
Loans. Loan balances for the second quarter of 2019 reflected conservative organic growth, with period-end balances lessened by $164 million of loan sales aimed at reducing certain risk profiles.
Loans at June 30, 2019 totaled $13.6 billion as compared to $9.0 billion and $13.6 billion at June 30, 2018 and March 31, 2019, respectively. Loans increased $1.5 billion or 16.4% since June 30, 2018, excluding the impact of the loans acquired from State Bank, and were essentially unchanged from March 31, 2019. The second quarter included a sale of certain equipment finance loans acquired through the State Bank merger, reducing loans by $130 million, as well as $34 million in non-core mortgage sales. The sales resulted in a gain of $1.9 million during the quarter. Excluding the impact of these sales, total loans grew $169 million or 1.0% during the second quarter of 2019. On a year-to-date basis, originated loans grew 4.0%, as compared to 8.8% year-to-date for 2018, reflecting management’s intentional efforts to moderate loan growth in 2019. The lower loan growth also reflects intentional movement away from targeted lending sectors and profiles.
Securities. Investment securities for the second quarter of 2019 declined modestly due to routine portfolio rebalancing that realized a net gain in the current quarter of $938 million. Investment securities at June 30, 2019 were $1.7 billion as compared to $1.0 billion at June 30, 2018 and $1.9 billion at March 31, 2019.
Funding. Our funding activities reflected strong performance this quarter with meaningful core deposits growth, further decline in period-end brokered deposits and wholesale funds, and successful execution of a subordinated debt offering allowing us to lower debt and interest costs while adding to our capital base.
Deposits at June 30, 2019 totaled $14.5 billion as compared to $9.3 billion and $14.2 billion at June 30, 2018 and March 31, 2019, respectively. Excluding the impact of deposits assumed from State Bank, deposits increased by $1.1 billion or 11.4% from June 30, 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 12.0%, from June 30, 2018. The linked quarter increase included an increase of $276 million, or 2.1% in core deposits, while brokered deposits were $868 million or 6.0% of total deposits at June 30, 2019. Additionally, on July 3, 2019, $228 million in brokered deposits matured that we don’t currently anticipate replacing in the latter half of 2019.
Total borrowings were $376 million at June 30, 2019 down from $471 million at June 30, 2018 and $717 million at March 31, 2019. The linked quarter decline was largely due to lower FHLB borrowings as a result of increased core deposits. Additionally, in June 2019, we paid off $145 million of senior debt yielding 4.875% with cash and proceeds from an $85 million subordinated debt offering. The subordinated debt has a ten-year maturity, is fixed rate for five years at 4.75% and qualifies for Tier 2 capital at the holding company.
Shareholders’ equity reflected a 5.4% growth during the second quarter of 2019 driven by increases in the value of our interest rate collar based on lower interest rate expectations, as well as net earnings for the quarter. Shareholder’s equity was $2.4 billion at June 30, 2019, an increase of $1.0 billion from June 30, 2018, and an increase of $123.2 million from March 31, 2019.
Asset Quality:
Credit quality. Credit costs were elevated during the second quarter of 2019 as we experienced deterioration in certain credits resulting in charge-offs and increased loan provisions.
Total Revenue:
This quarter’s total operating revenue reflected stable underlying revenue driven by flat earning assets that, as compared to the linked quarter, was negatively impacted by timing of hedge income and lower accretion on acquired loans.
Total operating revenue(1) for the second quarter of 2019 was $192.5 million, up 60.3% from the same period in 2018 and down 3.7% from the linked quarter. On a year-to-date basis, operating revenue for the first half of 2019 was $392.5 million, up 66.1% from the same period in 2018. The year over year revenue increase reflects strong loan growth during the period as well as the impact of the State Bank acquisition.
(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.
Net interest income for the 2019 second quarter compared to the linked quarter reflected solid growth in both average loans and deposits with an expected modest increase in core deposit costs combined with a slightly softer originated loan yield (excluding hedge impacts). The margin was also impacted by timing of income related to our hedges and accretion.
Net interest income for the second quarter of 2019 was $160.8 million, an increase of $65.4 million or 68.6%, from the same period in 2018, and a decrease of $8.5 million or 5.0% from the first quarter of 2019.
The year-over-year increase in NIM reflects the merger with State Bank and the related positive impact on our funding costs, loan yields and accretion income. The NIM decline in the second quarter of 2019 as compared to the linked quarter was driven primarily by:
Average earning assets for the second quarter of 2019 were $16.3 billion, an increase of $5.8 billion from the prior year’s quarter from both organic and acquired growth, and a decline of $0.1 billion from the linked quarter due to increases in average loans offset by lower short-term investments in the current quarter.
Originated Loans and Hedge Income:
Acquired Loans:
Cost of Funds:
Noninterest income for the second quarter of 2019 was $31.7 million, an increase of $7.1 million or 28.6% from the same period of 2018 due to broader growth and the State Bank merger, and an increase of $1.1 million or 3.5% over the linked quarter.
Noninterest expense for the second quarter of 2019 declined compared to the linked quarter as merger costs materially declined during the second quarter, partially offset by an expected increase in broader operating costs associated with a larger company post-State Bank integration.
Noninterest expense for the second quarter of 2019 was $100.5 million, an increase of $38.1 million or 61.0% from $62.4 million for the same period in 2018, and a decrease of $12.9 million or 11.4% from $113.4 million for the first quarter of 2019. The linked quarter decrease resulted primarily from a decrease of $17.4 million in merger related expenses, partially offset by an increase of $4.5 million in operating expense.
The linked quarter decrease resulted from:
Adjusted noninterest expenses(1), which exclude the impact of non-routine items(2), were $96.0 million for the second quarter of 2019, up $36.6 million or 61.6% from $59.4 million for the second quarter of 2018 and up $4.5 million or 5.0% from $91.4 million for the first quarter of 2019. Non-routine expenses for the second quarter and first quarter of 2019 consisted of $4.6 million and $22.0 million, respectively, in State Bank merger related expenses. For the second quarter of 2018, non-routine expenses included $1.2 million in secondary offering expenses, $0.8 million in merger related expenses, and $1.1 million in other expenses.
Our efficiency ratio(1) for the second quarter of 2019 reflects lower operating revenue combined with increases in quarterly operating expenses. The second quarter of 2019 efficiency ratio was 52.2% compared to 52.0% for the second quarter of 2018 and 56.7% for the first quarter of 2019. 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 50.0%, 50.7%, and 45.7% for the second quarter of 2019, second quarter of 2018, and first quarter of 2019, respectively.
Taxes:
The effective tax rate for the quarter ended June 30, 2019, was 23.3% compared to 22.7% for the quarter ended March 31, 2019, and 14.9% for the quarter ended June 30, 2018. The full year 2019 effective tax rate is currently estimated as 23.1%.
(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.
Supplementary Financial Tables (Unaudited):
Supplementary financial tables (Unaudited) are included in this release following the customary disclosure information.
Second Quarter 2019 Earnings Conference Call:
Cadence Bancorporation executive management will host a conference call to discuss second quarter 2019 results on Monday, July 22, 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:
0554913
For those unable to participate in the live presentation, a replay will be available through August 5, 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:
10132912
End Date:
August 5, 2019
Webcast Access:
The call and corresponding presentation slides will be webcast live on the home page of the Company’s website: www.cadencebancorporation.com.
About Cadence Bancorporation
Cadence Bancorporation (NYSE: CADE), headquartered in Houston, Texas, is a regional financial holding company with $17.5 billion in assets as of June 30, 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, payroll and insurance services, 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).
Table 1 - Selected Financial Data
As of and for the Three Months Ended
June 30,
March 31,
December 31,
September 30,
June 30,
(In thousands, except share and per share data)
2019
2019(1)
2018
2018
2018
Statement of Income Data:
Interest income
$
217,124
$
222,185
$
143,857
$
131,753
$
123,963
Interest expense
56,337
52,896
40,711
33,653
28,579
Net interest income
160,787
169,289
103,146
98,100
95,384
Provision for credit losses
28,927
11,210
8,422
(1,365
)
1,263
Net interest income after provision
131,860
158,079
94,724
99,465
94,121
Noninterest income - service fees and revenue
27,882
27,741
21,217
20,490
21,395
Noninterest income - other noninterest income
3,840
2,923
(210
)
3,486
3,277
Noninterest expense
100,529
113,440
72,697
61,231
62,435
Income before income taxes
63,053
75,303
43,034
62,210
56,358
Income tax expense
14,707
17,102
10,709
15,074
8,384
Net income
$
48,346
$
58,201
$
32,325
$
47,136
$
47,974
Weighted average common shares outstanding
Basic
128,791,933
130,485,521
83,375,485
83,625,000
83,625,000
Diluted
129,035,553
130,549,319
83,375,485
84,660,256
84,792,657
Earnings
Basic
$
0.37
$
0.44
$
0.39
$
0.56
$
0.57
Diluted
0.37
0.44
0.39
0.56
0.57
Period-End Balance Sheet Data:
Investment securities
$
1,684,847
$
1,754,839
$
1,187,252
$
1,206,387
$
1,049,710
Total loans, net of unearned income
13,627,934
13,624,954
10,053,923
9,443,819
8,975,755
Allowance for credit losses
115,345
105,038
94,378
86,151
90,620
Total assets
17,504,005
17,452,911
12,730,285
11,759,837
11,305,528
Total deposits
14,487,821
14,199,223
10,708,689
9,558,276
9,331,055
Noninterest-bearing deposits
3,296,652
3,210,321
2,454,016
2,094,856
2,137,407
Interest-bearing deposits
11,191,169
10,988,902
8,254,673
7,463,420
7,193,648
Borrowings and subordinated debentures
376,240
717,278
471,770
662,658
471,453
Total shareholders’ equity
2,426,072
2,302,823
1,438,274
1,414,826
1,389,956
Average Balance Sheet Data:
Investment securities
$
1,716,550
$
1,748,714
$
1,187,947
$
1,141,704
$
1,183,055
Total loans, net of unearned income
13,921,873
13,798,386
9,890,419
9,265,754
8,848,820
Allowance for credit losses
106,656
97,065
87,996
92,783
93,365
Total assets
17,653,511
17,634,267
12,249,819
11,585,969
11,218,432
Total deposits
14,645,109
14,579,771
10,038,180
9,489,268
9,135,359
Noninterest-bearing deposits
3,281,383
3,334,399
2,210,793
2,153,097
2,058,255
Interest-bearing deposits
11,363,727
11,245,372
7,827,387
7,336,171
7,077,104
Borrowings and subordinated debentures
441,619
554,281
652,813
567,864
595,087
Total shareholders’ equity
2,331,855
2,241,652
1,412,643
1,395,061
1,358,770
(1)
Certain reclassifications have been made to the first quarter of 2019 to conform to second quarter presentation.
Table 1 (Continued) - Selected Financial Data
As of and for the Three Months Ended
June 30,
March 31,
December 31,
September 30,
June 30,
(In thousands, except share and per share data)
2019
2019
2018
2018
2018
Per Share Data:
Book value per common share
$
18.84
$
17.88
$
17.43
$
16.92
$
16.62
Tangible book value (1)
14.21
13.23
13.62
13.15
12.85
Cash dividends declared
0.175
0.175
0.150
0.150
0.125
Dividend payout ratio
47.30
%
39.77
%
38.46
%
26.79
%
21.93
%
Performance Ratios:
Return on average common equity (2)
8.32
%
10.53
%
9.08
%
13.40
%
14.16
%
Return on average tangible common equity (1) (2)
12.23
15.54
11.85
17.50
18.79
Return on average assets (2)
1.10
1.34
1.05
1.61
1.72
Net interest margin (2)
3.97
4.21
3.55
3.58
3.66
Efficiency ratio (1)
52.22
56.73
58.55
50.16
52.00
Adjusted efficiency ratio (1)
49.97
45.73
48.99
48.36
50.74
Asset Quality Ratios:
Total nonperforming assets ("NPAs") to total loans and OREO and other NPAs
0.85
%
0.63
%
0.81
%
0.66
%
0.63
%
Total nonperforming loans to total loans
0.80
0.57
0.74
0.50
0.44
Total ACL to total loans
0.85
0.77
0.94
0.91
1.01
ACL to total nonperforming loans ("NPLs")
106.08
135.01
127.12
182.52
230.60
Net charge-offs to average loans (2)
0.54
0.02
0.01
0.13
0.10
Capital Ratios:
Total shareholders’ equity to assets
13.9
%
13.2
%
11.3
%
12.0
%
12.3
%
Tangible common equity to tangible assets (1)
10.8
10.1
9.1
9.6
9.8
Common equity tier 1 (3)
10.7
10.4
9.8
10.4
10.5
Tier 1 leverage capital (3)
10.2
10.0
10.1
10.7
10.7
Tier 1 risk-based capital (3)
10.7
10.4
10.1
10.7
10.9
Total risk-based capital (3)
12.8
11.9
11.8
12.4
12.7
(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 June 30,
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
$
10,044,825
$
135,946
5.43
%
$
8,430,875
$
105,536
5.02
%
ANCI portfolio
3,586,344
55,266
6.18
175,378
2,594
5.93
ACI portfolio
290,704
10,799
14.90
242,567
5,610
9.28
Total loans
13,921,873
202,011
5.82
8,848,820
113,740
5.16
Investment securities
Taxable
1,500,971
10,298
2.75
838,842
5,518
2.64
Tax-exempt (2)
215,579
2,061
3.83
344,213
3,547
4.13
Total investment securities
1,716,550
12,359
2.89
1,183,055
9,065
3.07
Federal funds sold and short-term investments
597,988
2,667
1.79
452,074
1,269
1.13
Other investments
67,124
520
3.11
55,909
634
4.55
Total interest-earning assets
16,303,535
217,557
5.35
10,539,858
124,708
4.75
Noninterest-earning assets:
Cash and due from banks
111,337
80,000
Premises and equipment
128,067
62,711
Accrued interest and other assets
1,217,228
629,228
Allowance for credit losses
(106,656
)
(93,365
)
Total assets
$
17,653,511
$
11,218,432
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing liabilities:
Demand deposits
$
7,732,568
$
30,195
1.57
%
$
4,712,302
$
11,700
1.00
%
Savings deposits
251,270
245
0.39
189,567
133
0.28
Time deposits
3,379,889
20,298
2.41
2,175,235
10,497
1.94
Total interest-bearing deposits
11,363,727
50,738
1.79
7,077,104
22,330
1.27
Other borrowings
300,897
3,051
4.07
459,678
3,785
3.30
Subordinated debentures
140,722
2,548
7.26
135,409
2,464
7.30
Total interest-bearing liabilities
11,805,346
56,337
1.91
7,672,191
28,579
1.49
Noninterest-bearing liabilities:
Demand deposits
3,281,383
2,058,255
Accrued interest and other liabilities
234,927
129,216
Total liabilities
15,321,656
9,859,662
Shareholders' equity
2,331,855
1,358,770
Total liabilities and shareholders' equity
$
17,653,511
$
11,218,432
Net interest income/net interest spread
161,220
3.45
%
96,129
3.26
%
Net yield on earning assets/net interest margin
3.97
%
3.66
%
Taxable equivalent adjustment:
Investment securities
(433
)
(745
)
Net interest income
$
160,787
$
95,384
(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%.
Table 2 (Continued) - Average Balances/Yield/Rates
For the Three Months Ended
For the Three Months Ended
June 30, 2019
March 31, 2019
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
$
10,044,825
$
135,946
5.43
%
$
9,811,821
$
135,815
5.61
%
ANCI portfolio
3,586,344
55,266
6.18
3,684,905
63,587
7.00
ACI portfolio
290,704
10,799
14.90
301,660
6,349
8.54
Total loans
13,921,873
202,011
5.82
13,798,386
205,751
6.05
Investment securities
Taxable
1,500,971
10,298
2.75
1,531,514
10,796
2.86
Tax-exempt (2)
215,579
2,061
3.83
217,200
2,202
4.11
Total investment securities
1,716,550
12,359
2.89
1,748,714
12,998
3.01
Federal funds sold and short-term investments
597,988
2,667
1.79
763,601
3,281
1.74
Other investments
67,124
520
3.11
58,139
618
4.31
Total interest-earning assets
16,303,535
217,557
5.35
16,368,840
222,648
5.52
Noninterest-earning assets:
Cash and due from banks
111,337
118,833
Premises and equipment
128,067
128,990
Accrued interest and other assets
1,217,228
1,114,669
Allowance for credit losses
(106,656
)
(97,065
)
Total assets
$
17,653,511
$
17,634,267
LIABILITIES AND STOCKHOLDERS' EQUITY
Interest-bearing liabilities:
Demand deposits
$
7,732,568
$
30,195
1.57
%
$
8,011,001
$
29,259
1.48
%
Savings deposits
251,270
245
0.39
248,651
226
0.37
Time deposits
3,379,889
20,298
2.41
2,985,720
17,186
2.33
Total interest-bearing deposits
11,363,727
50,738
1.79
11,245,372
46,671
1.68
Other borrowings
300,897
3,051
4.07
418,347
3,695
3.58
Subordinated debentures
140,722
2,548
7.26
135,934
2,530
7.55
Total interest-bearing liabilities
11,805,346
56,337
1.91
11,799,653
52,896
1.82
Noninterest-bearing liabilities:
Demand deposits
3,281,383
3,334,399
Accrued interest and other liabilities
234,927
258,563
Total liabilities
15,321,656
15,392,615
Stockholders' equity
2,331,855
2,241,652
Total liabilities and stockholders' equity
$
17,653,511
$
17,634,267
Net interest income/net interest spread
161,220
3.45
%
169,752
3.70
%
Net yield on earning assets/net interest margin
3.97
%
4.21
%
Taxable equivalent adjustment:
Investment securities
(433
)
(463
)
Net interest income
$
160,787
$
169,289
(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%.
Table 3 - Loan Interest Income Detail
Year-To-Date
For the Three Months Ended,
June 30,
June 30,
March 31,
December 31,
September 30,
June 30,
(In thousands)
2019
2019
2019 (1)
2018
2018
2018
Loan Interest Income Detail
Interest income on originated loans
$
271,761
$
135,946
$
135,815
$
122,674
$
112,419
$
105,536
ANCI loans: interest income
100,204
49,095
51,109
4,571
3,219
2,405
ANCI loans: accretion
18,649
6,171
12,478
(273
)
176
189
ACI loans: scheduled accretion for the period
14,885
8,989
5,896
4,724
4,881
5,016
ACI loans: recovery income for the period
2,263
1,810
453
860
362
594
Loan interest income
$
407,762
$
202,011
$
205,751
$
132,556
$
121,057
$
113,740
Originated loan yield
5.52
%
5.43
%
5.61
%
5.20
%
5.11
%
5.02
%
ANCI loan yield without discount accretion
5.56
5.49
5.63
5.55
4.23
5.50
ANCI loan yield on discount accretion
1.03
0.69
1.37
(0.33
)
0.23
0.43
ACI loan yield without recovery income
10.14
12.40
7.93
9.81
8.65
8.44
ACI loan yield on recovery income
1.54
2.50
0.61
0.86
0.42
0.84
Total loan yield
5.93
%
5.82
%
6.05
%
5.32
%
5.18
%
5.16
%
(1)Certain reclassifications have been made to the first quarter of 2019 to conform to second quarter presentation.
Table 4 - Allowance for Credit Losses
For the Three Months Ended
June 30,
March 31,
December 31,
September 30,
June 30,
(In thousands)
2019
2019
2018
2018
2018
Balance at beginning of period
$
105,038
$
94,378
$
86,151
$
90,620
$
91,537
Charge-offs
(18,981
)
(938
)
(318
)
(3,265
)
(3,650
)
Recoveries
361
388
123
161
1,470
Net charge-offs
(18,620
)
(550
)
(195
)
(3,104
)
(2,180
)
Provision for (reversal of) credit losses
28,927
11,210
8,422
(1,365
)
1,263
Balance at end of period
$
115,345
$
105,038
$
94,378
$
86,151
$
90,620
(In thousands)
Allocation of Ending ACL
Originated loans
$
105,369
$
96,387
$
85,402
$
77,137
$
81,520
Acquired non-credit impaired loans
1,091
1,117
1,052
817
1,110
Acquired credit impaired loans
8,886
7,534
7,924
8,197
7,990
$
115,345
$
105,038
$
94,378
$
86,151
$
90,620
Table 5 - Noninterest Income
For the Three Months Ended
June 30,
March 31,
December 31,
September 30,
June 30,
(In thousands)
2019
2019(1)
2018
2018
2018
Noninterest Income
Investment advisory revenue
$
5,797
$
5,642
$
5,170
$
5,535
$
5,343
Trust services revenue
4,578
4,335
4,182
4,449
4,114
Service charges on deposit accounts
4,730
5,130
3,856
3,813
3,803
Credit-related fees
5,341
4,870
5,191
3,549
3,807
Payroll processing revenue
1,161
1,419
-
-
-
Bankcard fees
2,279
2,213
1,073
1,078
1,915
SBA income
1,415
1,449
-
-
-
Mortgage banking revenue
674
579
398
747
650
Other service fees
1,907
2,104
1,347
1,319
1,346
Total service fees and revenue
27,882
27,741
21,217
20,490
20,978
Securities (losses) gains, net
938
(12
)
(54
)
2
(1,813
)
Other
2,902
2,935
(156
)
3,484
5,507
Total other noninterest income
3,840
2,923
(210
)
3,486
3,694
Total noninterest income
$
31,722
$
30,664
$
21,007
$
23,976
$
24,672
(1)
Certain reclassifications have been made to the first quarter of 2019 to conform to second quarter presentation.
Table 6 - Noninterest Expense
For the Three Months Ended
June 30,
March 31,
December 31,
September 30,
June 30,
(In thousands)
2019
2019
2018
2018
2018
Noninterest Expenses
Salaries and employee benefits
$
53,660
$
53,471
$
43,495
$
35,790
$
38,268
Premises and equipment
11,148
10,958
8,212
7,544
7,131
Merger related expenses
4,562
22,000
2,049
178
756
Intangible asset amortization
5,888
6,073
598
650
715
Data processing
3,435
2,594
2,117
1,989
2,304
Consulting and professional fees
1,899
2,229
3,675
4,266
2,409
Loan related expenses
1,740
910
1,424
821
645
FDIC insurance
1,870
1,752
1,230
1,237
1,223
Communications
1,457
998
684
682
703
Advertising and public relations
1,104
781
928
679
575
Legal expenses
645
158
395
242
468
Other
13,122
11,516
7,889
7,153
7,238
Total noninterest expenses
$
100,529
$
113,440
$
72,697
$
61,231
$
62,435
Table 7 - Reconciliation of Non-GAAP Financial Measures
As of and for the Three Months Ended
June 30,
March 31,
December 31,
September 30,
June 30,
(In thousands, except share and per share data)
2019
2019
2018
2018
2018
Efficiency ratio
Noninterest expenses (numerator)
$
100,529
$
113,440
$
72,697
$
61,231
$
62,435
Net interest income
$
160,787
$
169,289
$
103,146
$
98,100
$
95,384
Noninterest income
31,722
30,664
21,007
23,976
24,672
Operating revenue (denominator)
$
192,509
$
199,953
$
124,153
$
122,076
$
120,056
Efficiency ratio
52.22
%
56.73
%
58.55
%
50.16
%
52.00
%
Adjusted efficiency ratio
Noninterest expenses
$
100,529
$
113,440
$
72,697
$
61,231
$
62,435
Less: Merger related expenses
4,562
22,000
2,049
178
756
Less: Secondary offerings expenses
—
—
—
2,022
1,165
Plus: Specially designated bonuses
—
—
9,795
—
—
Less: Other non-routine expenses(1)
—
—
—
—
1,145
Adjusted noninterest expenses (numerator)
$
95,967
$
91,440
$
60,853
$
59,031
$
59,369
Net interest income
$
160,787
$
169,289
$
103,146
$
98,100
$
95,384
Noninterest income
31,722
30,664
21,007
23,976
24,672
Plus: Revaluation of receivable from sale of insurance assets
2,000
—
—
—
—
Less: Gain on sale of insurance assets
—
—
—
—
4,871
Less: gain on sale of acquired commercial loans
1,514
—
—
—
—
Less: Securities (losses) gains, net
938
(12
)
(54
)
2
(1,813
)
Adjusted noninterest income
31,270
30,676
21,061
23,974
21,614
Adjusted operating revenue (denominator)
$
192,057
$
199,965
$
124,207
$
122,074
$
116,998
Adjusted efficiency ratio
49.97
%
45.73
%
48.99
%
48.36
%
50.74
%
Tangible common equity ratio
Shareholders’ equity
$
2,426,072
$
2,302,823
$
1,438,274
$
1,414,826
$
1,389,956
Less: Goodwill and other intangible assets, net
(595,605
)
(598,674
)
(314,400
)
(314,998
)
(315,648
)
Tangible common shareholders’ equity
1,830,467
1,704,149
1,123,874
1,099,828
1,074,308
Total assets
17,504,005
17,452,911
12,730,285
11,759,837
11,305,528
Less: Goodwill and other intangible assets, net
(595,605
)
(598,674
)
(314,400
)
(314,998
)
(315,648
)
Tangible assets
$
16,908,400
$
16,854,237
$
12,415,885
$
11,444,839
$
10,989,880
Tangible common equity ratio
10.83
%
10.11
%
9.05
%
9.61
%
9.78
%
Tangible book value per share
Shareholders’ equity
$
2,426,072
$
2,302,823
$
1,438,274
$
1,414,826
$
1,389,956
Less: Goodwill and other intangible assets, net
(595,605
)
(598,674
)
(314,400
)
(314,998
)
(315,648
)
Tangible common shareholders’ equity
$
1,830,467
$
1,704,149
$
1,123,874
$
1,099,828
$
1,074,308
Common shares outstanding
128,798,549
128,762,201
82,497,009
83,625,000
83,625,000
Tangible book value per share
$
14.21
$
13.23
$
13.62
$
13.15
$
12.85
(1)
Other non-routine expenses for the second quarter of 2018 included expenses related to the sale of the assets of our insurance company.
Table 7 (Continued) - Reconciliation of Non-GAAP Measures
As of and for the Three Months Ended
June 30,
March 31,
December 31,
September 30,
June 30,
(In thousands, except share and per share data)
2019
2019
2018
2018
2018
Return on average tangible common equity
Average common equity
$
2,331,855
$
2,241,652
$
1,412,643
$
1,395,061
$
1,358,770
Less: Average intangible assets
(597,772
)
(602,446
)
(314,759
)
(315,382
)
(323,255
)
Average tangible common shareholders’ equity
$
1,734,083
$
1,639,206
$
1,097,884
$
1,079,679
$
1,035,515
Net income
$
48,346
$
58,201
$
32,325
$
47,136
$
47,974
Plus: Intangible asset amortization
4,515
4,628
459
498
548
Tangible net income
$
52,861
$
62,829
$
32,784
$
47,634
$
48,522
Return on average tangible common equity(2)
12.23
%
15.54
%
11.85
%
17.50
%
18.79
%
Adjusted return on average tangible common equity
Average tangible common shareholders’ equity
$
1,734,083
$
1,639,206
$
1,097,884
$
1,079,679
$
1,035,515
Tangible net income
$
52,861
$
62,829
$
32,784
$
47,634
$
48,522
Non-routine items:
Plus: Merger related expenses
4,562
22,000
2,049
178
756
Plus: Secondary offerings expenses
—
—
—
2,022
1,165
Plus: Specially designated bonuses
—
—
9,795
—
—
Plus: Other non-routine expenses(1)
—
—
—
—
1,145
Plus: Revaluation of receivable from sale of insurance assets
2,000
—
—
—
—
Less: Gain on sale of insurance assets
—
—
—
—
4,871
Less: gain on sale of acquired commercial loans
1,514
—
—
—
—
Less: Securities gains (losses), net
938
(12
)
(54
)
2
(1,813
)
Tax expense:
Less: Benefit of legacy loan bad debt deduction for tax
—
—
—
—
5,991
Less: Income tax effect of tax deductible non-routine items
958
4,694
2,648
34
(166
)
Total non-routine items, after tax
3,152
17,318
9,250
2,164
(5,817
)
Adjusted tangible net income available to common shareholders
$
56,012
$
80,146
$
42,034
$
49,798
$
42,705
Adjusted return on average tangible common equity(2)
12.96
%
19.83
%
15.19
%
18.30
%
16.54
%
Adjusted return on average assets
Average assets
$
17,653,511
$
17,634,267
$
12,249,819
$
11,585,969
$
11,218,432
Net income
$
48,346
$
58,201
$
32,325
$
47,136
$
47,974
Return on average assets
1.10
%
1.34
%
1.05
%
1.61
%
1.72
%
Net income
$
48,346
$
58,201
$
32,325
$
47,136
$
47,974
Total non-routine items, after tax
3,152
17,318
9,250
2,164
(5,817
)
Adjusted net income
$
51,497
$
75,519
$
41,575
$
49,300
$
42,157
Adjusted return on average assets
1.17
%
1.74
%
1.35
%
1.69
%
1.51
%
Adjusted diluted earnings per share
Diluted weighted average common shares outstanding
129,035,553
130,549,319
83,375,485
84,660,256
84,792,657
Net income allocated to common stock
$
48,176
$
58,028
$
32,293
$
47,080
$
47,914
Total non-routine items, after tax
3,152
17,318
9,250
2,164
(5,817
)
Adjusted net income allocated to common stock
$
51,328
$
75,346
$
41,543
$
49,244
$
42,097
Adjusted diluted earnings per share
$
0.40
$
0.58
$
0.50
$
0.58
$
0.50
Adjusted pre-tax, pre-provision net earnings
Income before taxes
$
63,053
$
75,303
$
43,034
$
62,210
$
56,358
Plus: Provision for credit losses
28,927
11,210
8,422
(1,365
)
1,263
Plus: Total non-routine items before taxes
4,110
22,012
11,898
2,198
8
Adjusted pre-tax, pre-provision net earnings
$
96,090
$
108,525
$
63,354
$
63,043
$
57,629
(1)
Other non-routine expenses for the second quarter of 2018 included expenses related to the sale of the assets of our insurance company.
(2)Annualized.
View source version on businesswire.com: https://www.businesswire.com/news/home/20190722005295/en/
Cadence Bancorporation 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
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