Cadence Bank reports Q4 adjusted EPS 40c, consensus 53c

Net interest margin improved to 3.04% from 2.98% for the third quarter of 2023, benefiting from improving trends in funding costs, reduction in brokered deposits, and the initial repositioning of securities. “Our company made a significant amount of progress during 2023, particularly during the fourth quarter,” remarked Dan Rollins, Chairman and CEO of the Cadence Bank. “We are pleased to have completed the sale of Cadence Insurance to Gallagher at the end of November, which generated an after-tax gain of approximately $520 million. This transaction allowed us to unlock a tremendous amount of value for our shareholders, strengthen our capital position, and better position our Company for future success. We were able to utilize a portion of this capital during the fourth quarter to reposition a meaningful portion of our securities portfolio. We sold $3.1 billion in securities yielding approximately 1.26% at an after-tax loss of approximately $294 million. We are currently in the process of redeploying those proceeds into higher yielding assets.” Rollins continued, “While loan balances were flat for the fourth quarter, we produced net loan growth of $2.1 billion, or 7.1%, for the full year, and deposit balances were relatively stable both for the fourth quarter and full year. Improvement in earning asset yields and a slowing in pressure on funding costs, along with our reduction in brokered deposits and initial securities repositioning, allowed us to improve our net interest margin in the fourth quarter. We are optimistic this trend will continue into 2024. Finally, while both our net charge-offs and provision for credit losses increased in the latter part of 2023, our credit monitoring processes are assisting in the timely identification of potential issues, and our criticized and classified asset totals have remained stable since the first quarter of 2023.”