Cadence Bank ((CADE)) has held its Q3 earnings call. Read on for the main highlights of the call.
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The recent earnings call for Cadence Bank was marked by an overall positive sentiment, driven by successful acquisitions and a strong financial performance. The bank reported improvements in revenue, deposits, and net interest margin, although it faced challenges in mortgage banking revenue and CRE paydowns. Despite these hurdles, the sentiment remained optimistic due to the bank’s significant achievements and strategic growth initiatives.
Successful Acquisition and Integration
Cadence Bank completed the acquisition of Industry Bank Shares on July 1, with the operational integration finalized last week. This strategic move has expanded Cadence’s footprint in Central Texas and Georgia, as Industry and First Chatham are now fully integrated into Cadence systems.
Strong Financial Performance
The bank reported an adjusted net income from continuing operations of $152.8 million, or $0.81 per share. The adjusted return on assets was 1.13% for the quarter, highlighting the bank’s strong financial performance.
Revenue and Deposit Growth
Cadence Bank experienced meaningful revenue growth, driven by balance sheet expansion and an improved net interest margin. Deposits increased by $3.4 billion, with core customer deposits contributing $3.1 billion to this growth.
Improvement in Net Interest Margin
The net interest margin improved by six basis points to 3.46%, supported by better securities yields and a reduction in overall funding costs.
Record Adjusted Pre-tax Pre-provision Net Revenue
The bank achieved a record adjusted pre-tax pre-provision net revenue of $224 million for the third quarter, marking a nearly 9% increase from the previous quarter.
Decline in Mortgage Banking Revenue
Adjusted non-interest revenue fell by $4.7 million, primarily due to seasonal declines in mortgage banking revenue and the impact of MSR fair value adjustments.
Challenges with CRE Paydowns
The quarter saw an increase in CRE paydowns, which affected new origination activity despite the bank’s overall strong performance.
Slight Decline in Tangible Book Value
The tangible book value per share decreased by $0.12 to $22.82, though this was largely offset by strong operating earnings and improvements in AOCI.
Forward-Looking Guidance
Cadence Bank’s guidance for the future remains optimistic, with key financial metrics indicating strong performance. The successful acquisition of Industry Bank Shares contributed to a $3.4 billion increase in deposits and robust loan growth. The bank expects continued modest improvement in net interest margin through the end of the year, with total adjusted revenue for the quarter reaching $517 million, up 9% from the prior quarter.
In conclusion, Cadence Bank’s earnings call highlighted a positive outlook, driven by strategic acquisitions and strong financial metrics. While challenges in mortgage banking revenue and CRE paydowns were noted, the bank’s overall performance and forward-looking guidance suggest continued growth and stability.