“We are pleased to report our second quarter results. The
quarter reflected record net income, driven by continued organic
growth and an ongoing focus on efficiency and profitability. We
have seen meaningful customer acquisition and development
throughout the company, as well as positive movement in our margins
and continued stabilization of credit. Our bankers have focused on
core deposit growth, and generated a notable improvement in deposit
mix this quarter. We feel good about the quarter’s results, and our
team is optimistic and energized about our progress,” said Paul
Murphy, Cadence’s Chairman and Chief Executive Officer.
- Net income for the second quarter of
2017 was $29.0 million compared to $14.8 million in the second
quarter of 2016, a 95% increase, and an 11% increase compared to
first quarter of 2017 net income of $26.1 million.
- On a per-share basis, net income was
$0.35 per diluted common share for the second quarter of 2017,
compared to $0.20 in the second quarter a year earlier and $0.35 in
the first quarter of 2017. Earnings per share for the period ending
June 30, 2017 reflect increases in net income offset by the $0.03
dilutive effect of the common stock offering in the second quarter
of 2017.
- Annualized returns on average assets,
common equity and tangible common equity(1) for the second quarter
of 2017 were 1.19%, 9.29% and 12.63%, respectively, as compared to
0.65%, 5.47% and 7.90%, respectively, for the second quarter of
2016, and 1.10%, 9.71% and 13.96%, respectively, for the first
quarter of 2017.
- Net interest margin increased 39 basis
points to 3.71% in the second quarter of 2017 from 3.32% for the
second quarter of 2016, and increased 25 basis points from 3.46% in
the first quarter of 2017.
- Total assets were $9.8 billion at June
30, 2017, an increase of $589.8 million, or 6%, as compared to $9.2
billion as of June 30, 2016, and up $90.6 million, or 1%, from $9.7
billion as of March 31, 2017.
- Loans were $7.7 billion at June 30,
2017, an increase of $554.6 million, or 8%, as compared to $7.2
billion at June 30, 2016, and up $155.1 million, or 2%, from $7.6
billion as of March 31, 2017.
- Core deposits (total deposits excluding
brokered) of $7.2 billion at June 30, 2017 grew $813.7 million, or
13%, from June 30, 2016, and were $410.1 million higher, or 6%,
from March 31, 2017.
Period End Balance Sheet:
Cadence continued to enjoy solid growth, completing the second
quarter of 2017 with total assets of $9.8 billion, an increase of
$589.8 million, or 6.4%, from June 30, 2016, and an increase of
$90.6 million, or 0.9%, from March 31, 2017.
Loans at June 30, 2017 were $7.7 billion, an increase of $554.6
million, or 7.7%, compared with $7.2 billion at June 30, 2016,
reflecting growth primarily in our commercial and residential loan
portfolios. Linked quarter loans increased $155.1 million, or 2.1%,
from $7.6 billion at March 31, 2017, reflecting growth in
specialized, general commercial & industrial, and consumer
mortgage lending. Organic loan production as well as our pipeline
remain robust, with payoffs and paydowns impacting net growth in
the quarter.
Cadence’s energy lending portfolio continued to demonstrate
improving credit quality, with balances totaling $902.3 million, or
11.7%, of total loans at June 30, 2017, as compared to $903.9
million, or 11.9%, of total loans at March 31, 2017. At June 30,
2017, Midstream continued to make up the largest component of
energy loans at 54.7%, followed by Exploration and Production at
35.7% and Energy Services at 9.6%.
Core deposits were $7.2 billion at June 30, 2017, an increase of
12.8%, or $813.7 million, compared to June 30, 2016, and an
increase of 6.1%, or $410.2 million, compared to March 31, 2017.
The increases in core deposits were a result of expansion of
commercial deposit relationships and treasury management services
impacting noninterest bearing and interest bearing deposits, as
well as retail time deposit growth. As of June 30, 2017, brokered
deposits totaled $0.7 billion (9.4% of total deposits) as compared
to June 30, 2016 at $1.3 billion (16.9% of total deposits) and
March 31, 2017 at $1.1 billion (13.6% of total deposits). Total
deposits at June 30, 2017 were $7.9 billion, an increase of $257.7
million, or 3.4%, compared with $7.7 billion at June 30, 2016,
reflecting the growth in core deposits offset by $556.0 million, or
42.8%, reduction in brokered deposits. Linked quarter total
deposits increased $88.7 million, or 1.1%, from $7.8 billion at
March 31, 2017, due primarily to the core deposit growth supporting
proactive reductions in brokered deposits during the quarter, with
brokered deposits declining $321.5 million, or 30.2%, linked
quarter. Wholesale funds to total assets of 9.4% at June 30, 2017
improved meaningfully during the quarter as compared to 14.1% and
14.7% at June 30, 2016 and March 31, 2017, respectively.
On April 13, 2017, we executed on our initial public offering,
issuing 8.6 million shares with net proceeds adding $155.7 million
to tangible common equity during the quarter, and increasing
average diluted shares to 82.0 million for the second quarter of
2017, as compared to 75.3 million and 75.7 million in the second
quarter of 2016 and first quarter of 2017, respectively.
Results of Operations for the
Quarter:
Net income for the second quarter of 2017 was $29.0 million, up
95.2% from net income of $14.8 million in the second quarter of
2016, and up 10.9% from net income of $26.1 million in the first
quarter of 2017. The year-over-year net income improvement was
driven by continued earning asset and revenue growth, margin
improvement, flat expenses, and improved credit costs. The increase
in net income on a linked quarter basis was due primarily to
organic growth, a favorable impact of the recent short-term rate
increases on our net interest margin, and favorable recovery
results in acquired-credit-impaired loans. Pre-tax, pre-provision
earnings(1) were $49.2 million for the second quarter of 2017 as
compared to $44.5 million in the first quarter of 2017. On a
per-share basis, net income was $0.35 per diluted common share for
the second quarter of 2017, compared to $0.20 a year earlier and
$0.35 for the linked quarter. Earnings per share for the period
ending June 30, 2017 reflect increases in net income offset by the
$0.03 dilutive effect of the common stock offering in the second
quarter of 2017. The second quarter of 2017 annualized returns on
average assets, common equity and tangible common equity(1) were
1.19%, 9.29% and 12.63%, respectively, as compared to 0.65%, 5.47%
and 7.90%, respectively, for the second quarter of 2016, and 1.10%,
9.71% and 13.96% for the first quarter of 2017.
Net interest margin for the second quarter of 2017 was 3.71% as
compared to 3.32% for the second quarter of 2016 and 3.46% for the
first quarter of 2017. The increase resulted from deposit costs
lagging the change in earning asset yields due to short-term rate
increases during the periods, the impact of decreased
interest-sensitive brokered deposits and increased free-funding
sources during the periods as well as increased loan yields in both
the originated and acquired loan portfolios. Earning asset yields
for the second quarter of 2017 were 4.45%, up from 3.97% in the
second quarter of 2016 and 4.13% in the first quarter of 2017.
Total cost of deposits for the second quarter of 2017 was 59 basis
points versus 46 basis points in the prior year’s quarter and 49
basis points in the linked quarter. Total cost of funds for the
second quarter of 2017 was 81 basis points versus 69 basis points
in the prior year’s quarter and 71 basis points in the linked
quarter.
Net interest income for the second quarter of 2017 was $82.4
million as compared to $69.3 million during the same period in
2016, an increase of $13.1 million, or 19.0%. Linked quarter, net
interest income increased $7.6 million, or 10.2%, from $74.8
million in the first quarter of 2017. The increases were driven by
both solid loan growth during the periods and meaningful increases
in the yield on loans, with loan yields increasing to 4.74% for the
second quarter of 2017 versus 4.24% for the second quarter of 2016
and 4.34% for the first quarter of 2017. Yield on loans, excluding
acquired-impaired loans, were 4.36%, 3.93% and 4.14% for the second
quarter of 2017, second quarter of 2016 and first quarter of 2017,
respectively, demonstrating the interest-sensitivity inherent in
the loan portfolio. Interest income on loans, excluding
acquired-impaired loans, was $79.9 million for the second quarter
of 2017, an increase of $13.4 million, or 20.3%, from the second
quarter of 2016, and an increase of $6.0 million or 8.2% from the
first quarter of 2017. Total accretion for acquired credit-impaired
loans was $10.6 million in the second quarter of 2017, up $1.3
million from the second quarter of 2016 and up $3.6 million from
the first quarter of 2017. The increased accretion in the second
quarter of 2017 was due to accelerated timing of certain payoffs
and paydowns in acquired loans.
Noninterest income for the second quarter of 2017 was $23.0
million as compared to $23.1 million during the same period in
2016, a decrease of $0.1 million, or 0.5%. The year-over-year
change included an increase in service fees and revenue to $22.1
million at June 30, 2017 versus $20.0 million for June 30, 2016
reflecting broad based business line growth during the year,
partially offset by lower securities gains and other revenues in
the second quarter of 2017. Linked quarter, noninterest income
decreased $1.1 million or 4.6% from $24.1 million for the first
quarter of 2017. The quarter’s change included growth in mortgage
banking fees, offset primarily by the impact of first quarter 2017
seasonally higher trust and insurance revenues in the second
quarter of 2017. Assets under management grew $187.5 million, or
3.5%, during the quarter to $5.6 billion.
Noninterest expense for the second quarter of 2017 was $56.1
million as compared to $55.9 million during the same period in
2016, an increase of $0.2 million, or 0.5%. Salaries and employee
benefits expense of $34.7 million in the second quarter of 2017
increased $1.6 million, or 5.0%, compared to the second quarter of
2016, including a $1.0 million increase in certain long-term
incentive plan costs related to the increase in our common stock
value associated with our becoming a public company. These costs
were offset by lower FDIC insurance assessments, lower intangible
asset scheduled amortization and other expenses as a result of
targeted expense management efforts. Linked quarter, noninterest
expenses increased $1.8 million, or 3.3%, from $54.3 million for
the first quarter of 2017, including the $1.0 million in
incremental incentive compensation expense associated with the
second quarter valuation increase of Cadence Bancorporation
associated with its IPO.
The efficiency ratio(1) for the second quarter of 2017 was
53.27%, an improvement relative to both the second quarter of 2016
and first quarter of 2017 results of 60.49% and 54.95%,
respectively, reflecting ongoing focus on efficiency and revenue
growth.
Asset Quality:
Nonperforming assets (NPAs) declined during the quarter,
totaling $141.4 million, or 1.8%, of total loans, OREO and other
NPAs at June 30, 2017, down from $171.0 million, or 2.3%, at March
31, 2017, and down from $195.5 million, or 2.7%, at June 30, 2016.
The decline as compared to the prior year is due primarily to
resolutions, paydowns and general improvement of energy credits. At
June 30, 2017, $109.4 million, or 77.4%, of the nonperforming
assets (“NPAs”) related to the energy portfolio, down from $135.0
million at March 31, 2017. Additionally, of the $93.0 million in
energy nonperforming loans included in total nonperforming assets
at June 30, 2017, over 90% were paying in accordance with
contractual terms.
The allowance for credit losses (“ACL”) was $93.2 million, or
1.21% of total loans, at June 30, 2017, as compared to $87.1
million, or 1.22% of total loans, at June 30, 2016 and $88.3
million, or 1.17% of total loans, at March 31, 2017. At June 30,
2017, the allowance included reserves for the energy portfolio of
3.15% as compared to 2.80% at June 30, 2016 and 3.44% at March 31,
2017.
“With the momentum we have achieved year-to-date, we look
forward to and are positive about the outlook for Cadence,” stated
Mr. Murphy.
Supplementary Financial Tables:
Supplementary Financial Tables are included in this release
following the customary disclosure information.
Second Quarter 2017 Earnings Conference
Call:
Cadence Bancorporation executive management will host a
conference call to discuss second quarter 2017 results on Thursday,
July 27, 2017, at 10.00 a.m. CT / 11:00 a.m. ET. Slides to be
presented by management on the conference call can be viewed by
visiting www.cadencebank.com, clicking through the following links:
“Investor Relations”, “Events & Presentations” and “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: 4925342
For those unable to participate in the live presentation, a
replay will be available through August 10, 2017. 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:
10110449 End Date: August 10, 2017
Webcast Access:
A webcast of the conference call as well as the slides to be
presented by management can be viewed by visiting
www.cadencebank.com, clicking through the following links:
“Investor Relations”, “Events & Presentations” and “Event
Calendar”.
About Cadence Bancorporation
Cadence Bancorporation (NYSE:CADE) is a $9.8 billion in assets
regional bank holding company headquartered in Houston, Texas.
Through its affiliates, Cadence operates 65 locations in Alabama,
Florida, 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, commercial real
estate, foreign exchange, wealth management, investment and trust
services, financial planning, retirement plan management, business
and 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 55,000 ATMs. The Cadence team of
1,200 associates is committed to exceeding customer expectations
and helping their clients succeed financially. Cadence Bank, N.A.,
Cadence Insurance, and Linscomb & Williams are direct or
indirect 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-1 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 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).
(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.
Table 1 - Selected Financial
Data
As of and for the Three Months Ended (In
thousands, except per share data)
June 30,2017
March 31,2017
December 31,2016
September 30,2016
June 30,2016
Statement of Operations Data: Interest
income $ 99,375 $ 89,619 $ 87,068 $ 84,654 $ 82,921 Interest
expense 16,991 14,861 14,570 14,228
13,672 Net interest income 82,384 74,758 72,498 70,426
69,249 Provision for credit losses 6,701 5,786
(5,222 ) 29,627 14,471 Net interest income after
provision 75,683 68,972 77,720 40,799 54,778 Noninterest income -
service fees and revenue 22,144 22,489 20,605 20,878 20,048 - other
noninterest income 845 1,616 1,755 1,913 3,058 Noninterest expense
56,134 54,321 55,394 54,876
55,868 Income before income taxes 42,538 38,756 44,686 8,714 22,016
Income tax expense 13,570 12,639 15,701
2,107 7,175 Net income $ 28,968 $ 26,117 $ 28,985 $ 6,607 $
14,841
Period-End Balance Sheet Data:
Investment securities,
available-for-sale
$ 1,079,935 $ 1,116,280 $ 1,139,347 $ 1,031,319 $ 980,526 Total
loans, net of unearned income 7,716,621 7,561,472 7,432,711
7,207,313 7,162,027 Allowance for credit losses 93,215 88,304
82,268 91,169 87,147 Total assets 9,811,557 9,720,937 9,530,888
9,444,010 9,221,807 Total deposits 7,930,383 7,841,710 8,016,749
7,917,289 7,672,657 Noninterest-bearing deposits 1,857,809
1,871,514 1,840,955 1,642,480 1,668,179 Interest-bearing deposits
6,072,574 5,970,196 6,175,794 6,274,809 6,004,478 Borrowings and
subordinated debentures 499,265 682,567 331,712 332,787 334,192
Total shareholders’ equity 1,304,054 1,105,976 1,080,498 1,111,783
1,116,076
Average Balance Sheet Data:
Investment securities,
available-for-sale
$ 1,099,307 $ 1,125,174 $ 1,060,821 $ 1,110,836 977,597 Total
loans, net of unearned income 7,650,048 7,551,173 7,375,446
7,225,365 7,180,357 Allowance for credit losses 90,366 82,258
95,042 93,132 91,211 Total assets 9,786,355 9,670,593 9,596,574
9,400,145 9,167,153 Total deposits 7,940,421 8,025,068 8,425,326
7,843,582 7,496,120 Noninterest-bearing deposits 1,845,447
1,857,657 1,784,422 1,697,633 1,655,761 Interest-bearing deposits
6,094,974 6,167,411 6,640,904 6,145,949 5,840,359 Borrowings and
subordinated debentures 510,373 474,976 500,045 368,192 512,837
Total shareholders’ equity 1,251,217 1,090,905 1,094,182 1,118,603
1,092,034
Table 1 (Continued) - Selected
Financial Data
As of and for the Three Months Ended (In
thousands, except per share data)
June 30,2017
March 31,2017
December 31,2016
September 30,2016
June 30,2016
Per Share Data:(3) Earnings Basic $ 0.35 $ 0.35 $
0.39 $ 0.09 $ 0.20 Diluted 0.35 0.35 0.38 0.09 0.20 Book value per
common share 15.59 14.75 14.41 14.82 14.88 Tangible book value (1)
11.64 10.33 9.97 10.37 10.40
Weighted average common shares
outstanding
Basic 81,918,956 75,000,000 75,000,000 75,000,000 75,000,000
Diluted 81,951,795 75,672,750 75,402,525 75,258,375 75,258,375
Performance Ratios: Return on average common equity (2) 9.29
% 9.71 % 10.54 % 2.35 % 5.47 %
Return on average tangible common equity
(1) (2)
12.63 13.96 15.16 3.36 7.90 Return on average assets (2) 1.19 1.10
1.20 0.28 0.65 Net interest margin (2) 3.71 3.46 3.31 3.27 3.32
Efficiency ratio (1) 53.27 54.95 58.40 58.87 60.49
Asset Quality
Ratios:
Total nonperforming assets ("NPAs") to
total loans and OREO and other NPAs
1.82 % 2.25 % 2.22 % 2.52 % 2.72 %
Total nonperforming loans to total
loans
1.36 1.77 1.73 2.13 2.26 Total ACL to total loans 1.21 1.17 1.11
1.26 1.22
ACL to total nonperforming loans
("NPLs")
88.81 65.80 63.80 59.34 53.84 Net charge-offs to average loans (2)
0.09 (0.01 ) 0.20 1.41 1.01
Capital Ratios: Total
shareholders’ equity to assets 13.29 % 11.38 % 11.34 % 11.77 %
12.10 %
Tangible common equity to tangible assets
(1)
10.27 8.25 8.13 8.54 8.78
Common equity tier 1 (CET1)
(transitional)
10.92 8.99 8.84 8.82 8.69 Tier 1 leverage capital 11.00 9.10 8.89
8.73 8.90 Tier 1 risk-based capital 11.31 9.36 9.19 9.17 9.00 Total
risk-based capital 13.41 11.43 11.22 11.38 11.10 (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) -
75,000,000 of our outstanding shares are owned by our
parent-holding company Cadence Bancorp LLC
Table 2 - Average
Balances/Yield/Rates
Three Months Ended June 30, 2017
2016 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 $ 7,348,932 $ 79,904
4.36 % $ 6,793,328 $ 66,444 3.93 % ACI portfolio 301,116
10,525 14.02 387,029 9,231 9.59
Total loans 7,650,048 90,429 4.74 7,180,357 75,675 4.24 Investment
securities Taxable 688,464 4,178 2.43 729,213 4,169 2.30 Tax-exempt
(2) 410,843 5,208 5.08 248,384
3,003 4.86
Total investment securities 1,099,307 9,386 3.42 977,597 7,172 2.95
Federal funds sold and short-term
investments
312,287 688 0.88 302,508 493 0.66 Other investments 50,064
695 5.57 49,070 632 5.18 Total
interest-earning assets 9,111,706 101,198 4.45 8,509,532 83,972
3.97
Noninterest-earning assets: Cash and due from banks
59,220 50,196 Premises and equipment 65,392 69,920 Accrued interest
and other assets 640,403 628,716 Allowance for credit losses
(90,366 ) (91,211 ) Total assets $ 9,786,355 $ 9,167,153
LIABILITIES AND STOCKHOLDERS' EQUITY Interest-bearing
liabilities: Demand deposits $ 4,232,497 $ 6,354 0.60 % $
3,913,639 $ 4,086 0.42 % Savings deposits 186,307 119 0.26 179,079
105 0.24 Time deposits 1,676,170 5,298 1.27
1,747,641 4,360 1.00 Total
interest-bearing deposits 6,094,974 11,771 0.77 5,840,359 8,551
0.59 Other borrowings 375,681 2,896 3.09 378,919 2,842 3.02
Subordinated debentures 134,692 2,324 6.92
133,918 2,279 6.84 Total
interest-bearing liabilities 6,605,347 16,991 1.03 6,353,196 13,672
0.87
Noninterest-bearing liabilities: Demand deposits
1,845,447 1,655,761 Accrued interest and other liabilities
84,344 66,162 Total liabilities 8,535,138 8,075,119
Stockholders' equity 1,251,217
1,092,034 Total liabilities and stockholders' equity $ 9,786,355
$ 9,167,153 Net interest income/net interest spread 84,207
3.42 % 70,300 3.10 % Net yield on earning assets/net
interest margin 3.71 % 3.32 %
Taxable equivalent
adjustment: Investment securities (1,823 ) (1,051
) Net interest income $ 82,384 $ 69,249
(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 35%.
Table 3 – Loan Interest Income
Detail
For the Three Months Ended, (In
thousands)
June 30, 2017
March 31, 2017
December 31, 2016
September 30, 2016
June 30, 2016
Loan Interest Income Detail Interest income on loans,
excluding ACI loans $ 79,904 $ 73,869 $ 71,237 $ 68,411 $ 66,444
Scheduled accretion for the period 6,075 6,331 6,845 7,296 8,028
Recovery income for the period 4,450 610 968
1,360 1,203 Accretion on acquired credit impaired
(ACI) loans 10,525 6,941 7,813 8,656
9,231 Loan interest income $ 90,429 $ 80,810 $ 79,050 $
77,067 $ 75,675 Loan yield, excluding ACI loans 4.36 % 4.14
% 4.03 % 3.96 % 3.93 % ACI loan yield 14.02 8.89
9.21 9.67 9.59 Total loan yield 4.74 %
4.34 % 4.26 % 4.24 % 4.24 %
For the Six Months Ended June 30,
For the Years Ended December 31, (In thousands)
2017 2016 2016
2015 Loan Interest Income Detail Interest income on
loans, excluding ACI loans $ 153,773 $ 129,336 $ 268,984 $ 216,422
Scheduled accretion for the period 12,406 16,728 30,870 46,042
Recovery income for the period 5,060 3,372
5,699 9,970 Total accretion income on purchased loans (ACI
loans) 17,466 20,100 36,569 56,012 Loan
interest income $ 171,239 $ 149,436 $ 305,553 $ 272,434 Loan
yield, excluding ACI loans 4.25 % 3.90 % 3.95 % 3.63 % ACI loan
yield 11.41 10.04 9.75 10.49 Total loan
yield 4.54 % 4.25 % 4.25 % 4.20 %
Table 4 - Allowance for Credit
Losses
For the Three Months Ended (In thousands)
June 30, 2017
March 31, 2017
December 31, 2016
September 30, 2016
June 30, 2016
Balance at beginning of period $ 88,304 $ 82,268 $ 91,169 $
87,147 $ 90,751 Charge-offs (2,879 ) (551 ) (3,922 ) (26,868 )
(18,206 ) Recoveries 1,089 801 243
1,263 131
Net (charge-offs) recoveries (1,790
) 250 (3,679 ) (25,605 ) (18,075 )
Provision for (reversal of) credit losses 6,701 5,786
(5,222 ) 29,627 14,471
Balance at end of
period $ 93,215 $ 88,304 $ 82,268 $ 91,169 $ 87,147
Table 5 -Noninterest Income
Three Months Ended (In thousands)
June 30, 2017
March 31, 2017
December 31, 2016
September 30, 2016
June 30, 2016
Noninterest Income Investment advisory revenue $ 5,061 $
4,916 $ 4,821 $ 4,733 $ 4,653 Trust services revenue 4,584 5,231
4,109 3,959 3,971 Service charges on deposit accounts 3,784 3,815
3,614 3,555 3,270 Credit-related fees 2,741 2,747 2,875 2,689 2,507
Insurance revenue 1,828 2,130 1,577 1,863 1,953 Bankcard fees 1,862
1,812 1,813 1,823 1,777 Mortgage banking revenue 1,213 866 1,019
1,459 1,101 Other service fees earned 1,071 972
777 797 816
Total service fees and
revenue 22,144 22,489 20,605 20,878
20,048 Securities (losses) gains, net (244 ) 81 1,267
1,386 1,019 Other 1,089 1,535 488 527
2,039
Total other noninterest income 845
1,616 1,755 1,913 3,058
Total
noninterest income (GAAP) 22,989 24,105 22,360 22,791 23,106
Less: Securities (losses) gains (244 ) 81
1,267 1,386 1,019
Adjusted noninterest
operating revenue (Non-GAAP measure) $ 23,233 $ 24,024 $ 21,093
$ 21,405 $ 22,087
Table 6 -Noninterest Expense
Three Months Ended (In thousands)
June 30, 2017
March 31, 2017
December 31, 2016
September 30, 2016
June 30, 2016
Noninterest Expenses Salaries and employee benefits $ 34,682
$ 34,267 $ 28,139 $ 31,086 $ 33,033 Premises and equipment 7,180
6,693 7,475 7,130 6,626 Intangible asset amortization 1,190 1,241
1,555 1,607 1,659 Net cost of operation of other real estate owned
427 296 1,117 1,126 107 Data processing 1,702 1,696 1,767 1,530
1,594 Special asset expenses 469 140 670 477 392 Consulting and
professional fees 1,502 1,139 2,288 2,040 1,092 Loan related
expenses 757 280 1,236 985 744 FDIC insurance 954 1,493 1,517 1,912
2,292 Communications 675 655 741 535 721 Advertising and public
relations 499 345 344 303 338 Legal expenses 508 432 662 337 978
Branch closure expenses 47 46 47 52 75 Other 5,542
5,598 7,836 5,756 6,217
Total noninterest
expenses $ 56,134 $ 54,321 $ 55,394 $ 54,876 $ 55,868
Table 7 - Reconciliation of Non-GAAP
Financial Measures
As of and for the Three Months Ended (In
thousands)
June 30, 2017
March 31, 2017
December 31, 2016
September 30, 2016
June 30, 2016
Efficiency ratio Noninterest expenses (numerator) $ 56,134 $
54,321 $ 55,394 $ 54,876 $ 55,868 Net interest income $ 82,384 $
74,758 $ 72,498 $ 70,426 $ 69,249 Noninterest income 22,989
24,105 22,360 22,791 23,106 Operating
revenue (denominator) $ 105,373 $ 98,863 $ 94,858 $ 93,217 $ 92,355
Efficiency ratio 53.27 % 54.95 % 58.40 %
58.87 % 60.49 %
Adjusted noninterest expenses and
operating revenue Noninterest expense $ 56,134 $ 54,321 $
55,394 $ 54,876 $ 55,868 Less: Branch closure expenses 47
46 47 52 75 Adjusted noninterest
expenses $ 56,087 $ 54,275 $ 55,347 $ 54,824 $ 55,793 Net interest
income $ 82,384 $ 74,758 $ 72,498 $ 70,426 $ 69,249 Noninterest
income 22,989 24,105 22,360 22,791 23,106 Less: Securities (losses)
gains, net (244 ) 81 1,267 1,386
1,019 Adjusted operating revenue $ 105,617 $ 98,782 $ 93,591 $
91,831 $ 91,336
Tangible common equity ratio Shareholders’
equity $ 1,304,054 $ 1,105,976 $ 1,080,498 $ 1,111,783 $ 1,116,076
Less: Goodwill and other intangible assets, net (330,261 )
(331,450 ) (332,691 ) (334,246 )
(335,852 ) Tangible common shareholders’ equity 973,793
774,526 747,807 777,537 780,224 Total
assets 9,811,557 9,720,937 9,530,888 9,444,010 9,221,807 Less:
Goodwill and other intangible assets, net (330,261 )
(331,450 ) (332,691 ) (334,246 ) (335,852 )
Tangible assets $ 9,481,296 $ 9,389,487 $ 9,198,197 $ 9,109,764 $
8,885,955 Tangible common equity ratio 10.27 % 8.25 %
8.13 % 8.54 % 8.78 %
Tangible book value
per share Shareholders’ equity $ 1,304,054 $ 1,105,976 $
1,080,498 $ 1,111,783 $ 1,116,076 Less: Goodwill and other
intangible assets, net (330,261 ) (331,450 )
(332,691 ) (334,246 ) (335,852 ) Tangible common
shareholders’ equity $ 973,793 $ 774,526 $ 747,807 $ 777,537 $
780,224 Common shares issued 83,625,000 75,000,000
75,000,000 75,000,000 75,000,000 Tangible book
value per share $ 11.64 $ 10.33 $ 9.97 $ 10.37 $ 10.40
Return on
average tangible common equity Average common equity $
1,251,217 $ 1,090,905 $ 1,094,182 $ 1,118,603 $ 1,092,034 Less:
Average intangible assets (330,977 ) (332,199 )
(333,640 ) (335,215 ) (336,856 ) Average
tangible common shareholders’ equity $ 920,240 $ 758,706 $ 760,542
$ 783,388 $ 755,178 Net income $ 28,968 $ 26,117 $ 28,985 $ 6,607 $
14,841 Return on average tangible common equity 12.63 %
13.96 % 15.16 % 3.36 % 7.90 %
Pre-tax, pre-provision net earnings Income before taxes $
42,538 $ 38,756 $ 44,686 $ 8,714 $ 22,016 Plus: Provision for
credit losses 6,701 5,786 (5,222 )
29,627 14,471 Pre-tax, pre-provision net earnings $ 49,239 $
44,542 $ 39,464 $ 38,341 $ 36,487
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Cadence BancorporationMedia contact:Danielle
Kernell, 713-871-4051danielle.kernell@cadencebank.comorInvestor
relations contact:Valerie Toalson, 713-871-4103 or
800-698-7878vtoalson@cadencebancorporation.com
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