“We are pleased with the positive progress we are able to report
with our third quarter results. We had a good quarter in many
respects. Credit looks good with one basis point net charge-offs
and declines in nonperforming assets. Loan and deposit growth was
solid. We can see nice linked quarter operating leverage with
improved efficiency ratio to 52.2% and returns on average tangible
common equity of 13.0% and return on average assets of 1.29%. I am
grateful to our many hard-working bankers who have been focused on
improving our results and doing a great job for clients,” said Paul
Murphy, Cadence’s Chairman and Chief Executive Officer.
Highlights:
- Net income for the third quarter of
2017 was $32.6 million, a 12% increase compared to second quarter
of 2017 net income of $29.0 million.
- On a per-share basis, net income was
$0.39 per diluted common share for the third quarter of 2017,
compared to $0.35 in the second quarter of 2017.
- Annualized returns on average assets,
common equity and tangible common equity(1) for the third quarter
of 2017 were 1.29%, 9.78% and 13.04%, respectively, as compared to
1.19%, 9.29% and 12.63%, respectively, for the second quarter of
2017.
- Total assets were $10.5 billion as of
September 30, 2017, an increase of $1.1 billion, or 11%, as
compared to $9.4 billion as of September 30, 2016.
- Loans were $8.0 billion as of September
30, 2017, an increase of $821.6 million, or 11%, as compared to
$7.2 billion at September 30, 2016.
- Core deposits (total deposits excluding
brokered) of $7.7 billion as of September 30, 2017 grew $941.8
million, or 14%, from September 30, 2016.
Period End Balance Sheet:
Cadence continued to enjoy solid growth, completing the third
quarter of 2017 with total assets of $10.5 billion, an increase of
$1,058.3 million, or 11.2%, from September 30, 2016, and an
increase of $690.7 million, or 7.0%, from June 30, 2017.
Organic loan production and pipelines remain robust. Loans at
September 30, 2017 were $8.0 billion, an increase of $821.6
million, or 11.4%, compared with $7.2 billion at September 30,
2016, reflecting growth primarily in our specialized, general
C&I and residential portfolios. Linked quarter loans increased
$312.3 million, or 4.0%, from $7.7 billion at June 30, 2017,
reflecting growth in general C&I, commercial real estate and
residential portfolios.
Cadence’s energy lending portfolio remained a consistent portion
of total loans, with balances totaling $933.0 million, or 11.6%, of
total loans at September 30, 2017, as compared to $902.3 million,
or 11.7%, of total loans at June 30, 2017. At September 30, 2017,
Midstream continued to make up the largest component of energy
loans at 59.8%, followed by Exploration and Production at 31.6% and
Energy Services at 8.6%.
Core deposits were $7.7 billion at September 30, 2017, an
increase of 14.0%, or $941.8 million, compared to September 30,
2016, and an increase of 6.8%, or $489.6 million, compared to June
30, 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 September
30, 2017, brokered deposits totaled $0.8 billion (9.7% of total
deposits) as compared to September 30, 2016 at $1.2 billion (14.9%
of total deposits) and June 30, 2017 at $0.7 billion (9.4% of total
deposits). Total deposits at September 30, 2017 were $8.5 billion,
an increase of $583.8 million, or 7.4%, compared with $7.9 billion
at September 30, 2016, reflecting the growth in core deposits
offset by $358.0 million, or 30.3%, reduction in brokered deposits.
Linked quarter total deposits increased $570.7 million, or 7.2%,
from $7.9 billion at June 30, 2017, due primarily to core deposit
growth with an increase of $144.1 million, or 19.4% in brokered
deposits during the quarter. Noninterest bearing deposits as a
percent of total deposits increased to 24.4%, representing the
fourth consecutive quarterly increase. Wholesale funds to total
assets were 10.2% at September 30, 2017 compared to 12.5% and 9.4%
at September 30, 2016 and June 30, 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 second quarter. This offering
resulted in an increase in average diluted shares to 84.0 million
for the third quarter of 2017, as compared to 75.3 million and 82.0
million in the third quarter of 2016 and second quarter of 2017,
respectively.
Results of Operations for the
Quarter:
Net income for the third quarter of 2017 was $32.6 million, up
393.1% from net income of $6.6 million in the third quarter of
2016, and up 12.5% from net income of $29.0 million in the second
quarter of 2017. The year-over-year net income improvement was
driven by earning assets and revenue growth, net interest margin
expansion, expense control and improved credit costs including
provision expense of $1.7 million for the three months ended
September 30, 2017, compared to a provision expense of $29.6
million for the same period in 2016. The increase in net income as
compared to the three months ended June 30, 2017 was due primarily
to organic balance sheet and revenue growth combined with a modest
increase in expenses and improved credit costs, including a decline
of $5.0 million in loan provisions compared to the prior quarter.
Pre-tax, pre-provision earnings(1) were $51.8 million for the third
quarter of 2017 as compared to $49.2 million in the second quarter
of 2017. On a per-share basis, net income was $0.39 per diluted
common share for the third quarter of 2017, compared to $0.09 a
year earlier and $0.35 for the linked quarter. Earnings per share
for the period ending September 30, 2017 reflects increases in net
income offset by the $0.04 dilutive effect of the common stock
offering in the second quarter of 2017. During the three months
ended September 30, 2017 annualized returns on average assets,
common equity and tangible common equity(1) were 1.29%, 9.78% and
13.04%, respectively, as compared to 0.28%, 2.35% and 3.36%,
respectively, for the third quarter of 2016, and 1.19%, 9.29% and
12.63% for the second quarter of 2017.
The effective tax rate for the quarter ended September 30, 2017
was 34.9% as compared to 24.2% in the third quarter of 2016 and
31.9% in the second quarter of 2017. The effective tax rate for the
nine months ended September 30, 2017 was 33.3% as compared to 31.4%
for the nine months ending September 30, 2016.
Our fully tax-equivalent net interest margin (“NIM”) for the
third quarter of 2017 was 3.52% as compared to 3.27% for the third
quarter of 2016 and 3.71% for the second quarter of 2017. The
increase in NIM year-over-year resulted from increases in earning
asset yields due largely to the impact of short-term rate increases
on our floating rate loans during the periods, lagging deposit cost
increases, and the impact of decreased interest-sensitive brokered
deposits and increased noninterest bearing deposits during the
periods. These year-over-year factors also favorably impacted the
margin as compared to the second quarter of 2017; however they were
more than offset by lower recovery income (excess accretion) on
acquired loans due to timing variability of accelerated payoffs and
paydowns driving such revenue (recovery income was $0.3 million in
the third quarter of 2017 as compared to $1.4 million in the third
quarter of 2016 and $4.5 million in the second quarter of 2017),
which resulted in the decline in NIM in the third quarter of 2017
compared to the prior quarter.
Earning asset yields for the third quarter of 2017 were 4.30%,
up from 3.91% in the third quarter of 2016 and down from 4.45% in
the second quarter of 2017. Yield on loans, excluding
acquired-impaired loans, were 4.41%, 3.96% and 4.36% for the third
quarter of 2017, third quarter of 2016 and second quarter of 2017,
respectively, demonstrating the interest-sensitivity inherent in
the loan portfolio. Total loan yields increased to 4.55% for the
third quarter of 2017 versus 4.24% for the third quarter of 2016.
Total cost of deposits for the third quarter of 2017 was 64 basis
points versus 47 basis points in the prior year’s quarter and 59
basis points in the linked quarter. Total cost of funds for the
third quarter of 2017 was 84 basis points versus 69 basis points in
the prior year’s quarter and 81 basis points in the linked
quarter.
Net interest income for the third quarter of 2017 was $81.2
million as compared to $70.4 million during the same period in
2016, an increase of $10.7 million, or 15.2%, driven by both strong
loan growth during the period and meaningful increases in the yield
on loans. Net interest income decreased $1.2 million, or 1.5%, from
$82.4 million in the second quarter of 2017, due to higher level of
accretion income in the second quarter of 2017 from
acquired-impaired loans. Interest income on loans, excluding
acquired-impaired loans, was $84.3 million for the third quarter of
2017, an increase of $15.9 million, or 23.3%, from the third
quarter of 2016, and an increase of $4.4 million or 5.5% from the
second quarter of 2017. Total accretion for acquired
credit-impaired loans was $5.8 million in the third quarter of
2017, down $2.8 million from the third quarter of 2016 and down
$4.7 million from the second quarter of 2017, as described above,
due to the accelerated timing of certain payoffs and paydowns in
acquired loans recognized during third quarter of 2016 and second
quarter of 2017.
Noninterest income for the third quarter of 2017 was $27.1
million as compared to $22.8 million during the same period in
2016, an increase of $4.3 million, or 19.0%. The year-over-year
change included an increase in service fees and revenue to $23.0
million at September 30, 2017 versus $20.9 million for September
30, 2016 reflecting broad based business line growth during the
year. Compared to the second quarter of 2017, noninterest income
increased $4.1 million or 18.0% from $23.0 million for the second
quarter of 2017. The third quarter of 2017 included increases in
other revenue due to net valuation increases in certain investment
assets accounted for under the equity method and a one-time $1.1
million gain on the sale of a specialty insurance unit. Assets
under management increased slightly to $5.6 billion during the
quarter.
Noninterest expense for the third quarter of 2017 was $56.5
million as compared to $54.9 million during the same period in
2016, an increase of $1.7 million, or 3.0%. Salaries and employee
benefits expense of $35.0 million in the third quarter of 2017
increased $3.9 million, or 12.6%, compared to the third quarter of
2016, including a $1.8 million increase in certain long-term
incentive plan costs related to achieving higher levels of
performance targets and the increase in our company valuation.
These costs were offset by lower FDIC insurance assessments,
intangible asset amortization and other expenses as a result of
expense management efforts. Linked quarter, noninterest expenses
increased $0.4 million, or 0.7%, from $56.1 million for the second
quarter of 2017.
The efficiency ratio(1) for the third quarter of 2017 was
52.20%, an improvement relative to both the third quarter of 2016
and second quarter of 2017 ratios of 58.87% and 53.27%,
respectively, reflecting ongoing focus on efficiency and revenue
growth. The third quarter of 2017 represents the eighth consecutive
quarter of improvements in the efficiency ratio for Cadence.
Asset Quality:
Nonperforming assets (“NPAs”) continued to decline during the
quarter, totaling $121.8 million, or 1.5%, of total loans, OREO and
other NPAs as of September 30, 2017, down from $141.4 million, or
1.8%, as of June 30, 2017, and down from $182.4 million, or 2.5%,
as of September 30, 2016. The declines are due primarily to
resolutions, paydowns and general improvement of energy credits. At
September 30, 2017, $98.2 million, or 80.6%, of the NPAs related to
the energy portfolio, down from $109.4 million at June 30, 2017.
Additionally, of the $82.0 million in energy nonperforming loans
included in total nonperforming assets as of September 30, 2017,
over 85% were paying in accordance with contractual terms.
Net-charge offs were $173 thousand during the quarter ended
September 30, 2017, as compared to $25.6 million for the three
months ended September 30, 2016 and $1.8 million for the three
months ended June 30, 2017. The allowance for credit losses (“ACL”)
was $94.8 million, or 1.18% of total loans, as of September 30,
2017, as compared to $91.2 million, or 1.26% of total loans, as of
September 30, 2016 and $93.2 million, or 1.21% of total loans, as
of June 30, 2017. At September 30, 2017, the ACL included reserves
for the energy portfolio of 2.49% as compared to 3.22% as of
September 30, 2016 and 3.15% as of June 30, 2017. Loan provisions
for the third quarter of 2017 were $1.7 million as compared to
$29.6 million in the prior year quarter and $6.7 million in the
second quarter of 2017. The declines in loan provisions resulted
primarily from the reduction in non-performing loans and related
valuation reserves, improved environmental factors in the energy
sector and lower net charge-offs. As of September 30, 2017, the ACL
also included approximately $2.0 million in reserves specifically
associated with heightened risks surrounding our certain of our
mortgage loan customers impacted by the hurricanes in the
quarter.
Two “Category 4” hurricanes moved through our geographic
footprint during the quarter. Hurricane Harvey made landfall in
Texas in late August and Hurricane Irma hit Florida in early
September. Our technology and operations in the affected areas
continued to function throughout the storms, and we were able to
re-open all but one of our 25 branches in the impacted footprint
for regular business hours within days of the storm and with
negligible repairs and costs, and all branches are now open. Based
on our outreach to and analysis of our commercial customers, most
with robust business continuity and disaster recovery plans, we
have not identified any expected losses in the commercial portfolio
to date. Based on our outreach to and analysis of our mortgage
customers in the impacted areas, and in consideration of factors
that increase the risks associated with these mortgages, we
concluded that increasing reserves by approximately $2.0 million
was appropriate as of September 30, 2017. We will continue to
closely monitor all of our impacted customers as recovery efforts
continue in the area.
Supplementary Financial Tables
(Unaudited):
Supplementary Financial Tables (Unaudited) are included in this
release following the customary disclosure information.
Third Quarter 2017 Earnings Conference
Call:
Cadence Bancorporation executive management will host a
conference call to discuss third quarter 2017 results on Wednesday,
October 25, 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.cadencebancorporation.com and selecting “Events &
Presentations” then “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: 9803175
For those unable to participate in the live presentation, a
replay will be available through November 8, 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:
10112857 End Date: November 8, 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.cadencebancorporation.com and selecting “Events &
Presentations” then “Event Calendar”.
About Cadence Bancorporation
Cadence Bancorporation (NYSE:CADE) is a $10.5 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 56,000 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) September 30,
2017
June 30,
2017
March 31,
2017
December 31,
2016
September 30,
2016
Statement of Operations Data: Interest income $ 99,503 $
99,375 $ 89,619 $ 87,068 $ 84,654 Interest expense 18,340
16,991 14,861 14,570 14,228 Net
interest income 81,163 82,384 74,758 72,498 70,426 Provision for
credit losses 1,723 6,701 5,786 (5,222
) 29,627 Net interest income after provision 79,440 75,683
68,972 77,720 40,799 Noninterest income - service fees and revenue
23,014 22,144 22,489 20,605 20,879 - other noninterest income 4,110
845 1,616 1,755 1,912 Noninterest expense 56,530
56,134 54,321 55,394 54,876 Income before
income taxes 50,034 42,538 38,756 44,686 8,714 Income tax expense
17,457 13,570 12,639 15,701
2,107 Net income $ 32,577 $ 28,968 $ 26,117 $ 28,985 $ 6,607
Period-End Balance Sheet Data: Investment securities,
available-for-sale $ 1,198,032 $ 1,079,935 $ 1,116,280 $ 1,139,347
$ 1,031,319 Total loans, net of unearned income 8,028,938 7,716,621
7,561,472 7,432,711 7,207,313 Allowance for credit losses 94,765
93,215 88,304 82,268 91,169 Total assets 10,502,261 9,811,557
9,720,937 9,530,888 9,444,010 Total deposits 8,501,102 7,930,383
7,841,710 8,016,749 7,917,289 Noninterest-bearing deposits
2,071,594 1,857,809 1,871,514 1,840,955 1,642,480 Interest-bearing
deposits 6,429,508 6,072,574 5,970,196 6,175,794 6,274,809
Borrowings and subordinated debentures 572,683 499,266 682,568
331,712 332,787 Total shareholders’ equity 1,340,848 1,304,054
1,105,976 1,080,498 1,111,783
Average Balance Sheet Data:
Investment securities, available-for-sale $ 1,169,182 $ 1,099,307 $
1,125,174 $ 1,060,821 $ 1,110,836 Total loans, net of unearned
income 7,867,794 7,650,048 7,551,173 7,375,446 7,225,365 Allowance
for credit losses 94,706 90,366 82,258 95,042 93,132 Total assets
10,024,871 9,786,355 9,670,593 9,596,574 9,400,145 Total deposits
8,139,969 7,940,421 8,025,068 7,925,281 7,843,582
Noninterest-bearing deposits 1,982,784 1,845,447 1,857,657
1,784,422 1,697,633 Interest-bearing deposits 6,157,185 6,094,974
6,167,411 6,140,859 6,145,949 Borrowings and subordinated
debentures 484,798 510,373 474,976 500,045 368,192 Total
shareholders’ equity 1,320,884 1,251,217 1,090,905 1,094,182
1,118,603
Table 1 (Continued) - Selected
Financial Data
As of and for the Three Months Ended
(In thousands, except per share data) September 30,
2017
June 30,
2017
March 31,
2017
December 31,
2016
September 30,
2016
Per Share Data:(3) Earnings Basic $ 0.39 $ 0.35 $ 0.35 $
0.39 $ 0.09 Diluted 0.39 0.35 0.35 0.38 0.09 Book value per common
share 16.03 15.59 14.75 14.41 14.82 Tangible book value (1) 12.10
11.64 10.33 9.97 10.37
Weighted average common shares
outstanding
Basic 83,625,000 81,918,956 75,000,000 75,000,000 75,000,000
Diluted 83,955,685 81,951,795 75,672,750 75,402,525 75,258,375
Performance Ratios:
Return on average common equity (2)
9.78 % 9.29 % 9.71 % 10.54 % 2.35 %
Return on average tangible common equity
(1) (2)
13.04 12.63 13.96 15.16 3.36 Return on average assets (2) 1.29 1.19
1.10 1.20 0.28 Net interest margin (2) 3.52 3.71 3.46 3.31 3.27
Efficiency ratio (1) 52.20 53.27 54.95 58.40 58.87
Asset Quality
Ratios:
Total nonperforming assets ("NPAs") to
total loans and OREO and other NPAs (4)
1.51 % 1.82 % 2.25 % 2.22 % 2.52 %
Total nonperforming loans to total loans
(4)
0.96 1.36 1.77 1.73 2.13 Total ACL to total loans 1.18 1.21 1.17
1.11 1.26
ACL to total nonperforming loans
("NPLs")
122.66 88.81 65.80 63.83 59.34
Net charge-offs to average loans (2)
0.01 0.09 (0.01 ) 0.20 1.41
Capital Ratios:
Total shareholders’ equity to assets
12.77 % 13.29 % 11.38 % 11.34 % 11.77 %
Tangible common equity to tangible assets
(1)
9.95 10.27 8.25 8.13 8.54
Common equity tier 1 (CET1)
(transitional)
10.79 10.92 8.99 8.84 8.82 Tier 1 leverage capital 11.12 11.00 9.10
8.89 8.73 Tier 1 risk-based capital 11.17 11.31 9.36 9.19 9.17
Total risk-based capital 13.18 13.41 11.43 11.22 11.38 (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 (4) - Included in our
NPAs as of September 30, 2017 is an $9.9 million nonperforming
energy credit that has been reclassified as held-for-sale (HFS) and
is being carried at lower of cost or market value ("LOCOM").
Because this credit has been reclassified to HFS it has not been
included in our investment loan portfolio ratios in order for these
ratios to be comparable to prior periods.
Table 2 - Average
Balances/Yield/Rates
Three Months Ended September 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 $ 7,587,556 $ 84,321
4.41 % $ 6,869,321 $ 68,411 3.96 % ACI portfolio 280,238
5,840 8.27 356,044 8,656 9.67 Total loans
7,867,794 90,161 4.55 7,225,365 77,067 4.24 Investment securities
Taxable 760,269 4,610 2.41 796,625 3,866 1.93 Tax-exempt (2)
408,913 5,046 4.90 314,211 3,671 4.65
Total investment securities 1,169,182 9,656 3.28 1,110,836 7,537
2.70 Federal funds sold and short-term investments 267,684 1,072
1.59 354,720 662 0.74 Other investments 49,661 380
3.04 42,896 673 6.25 Total interest-earning
assets 9,354,321 101,269 4.30 8,733,817 85,939 3.91
Noninterest-earning assets: Cash and due from banks 60,760
45,873 Premises and equipment 65,308 69,247 Accrued interest and
other assets 639,188 644,340 Allowance for credit losses
(94,706 ) (93,132 ) Total assets $ 10,024,871 $ 9,400,145
LIABILITIES AND STOCKHOLDERS' EQUITY Interest-bearing
liabilities: Demand deposits $ 4,329,086 $ 7,300 0.67 % $
4,130,126 $ 4,494 0.43 % Savings deposits 180,099 113 0.25 180,452
110 0.24 Time deposits 1,648,000 5,665 1.36
1,835,371 4,676 1.01 Total interest-bearing deposits
6,157,185 13,078 0.84 6,145,949 9,280 0.60 Other borrowings 349,925
2,926 3.32 234,072 2,670 4.54 Subordinated debentures
134,873 2,336 6.87 134,120 2,278 6.76 Total
interest-bearing liabilities 6,641,983 18,340 1.10 6,514,141 14,228
0.87
Noninterest-bearing liabilities: Demand deposits
1,982,784 1,697,633 Accrued interest and other liabilities
79,220 69,768 Total liabilities 8,703,987 8,281,542
Stockholders' equity 1,320,884 1,118,603 Total
liabilities and stockholders' equity $ 10,024,871 $ 9,400,145 Net
interest income/net interest spread 82,929 3.20 % 71,711
3.04 %
Net yield on earning assets/net interest
margin
3.52 % 3.27 %
Taxable equivalent adjustment:
Investment securities (1,766 ) (1,285 ) Net interest
income $ 81,163 $ 70,426
(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)
September 30,2017
June 30,2017
March 31,2017
December 31,2016
September 30,2016
Loan Interest Income Detail Interest income on loans,
excluding ACI loans $ 84,321 $ 79,904 $ 73,869 $ 71,237 $ 68,411
Scheduled accretion for the period 5,550 6,075 6,331 6,845 7,296
Recovery income for the period 290 4,450 610
968 1,360
Accretion on acquired credit impaired
(ACI) loans
5,840 10,525 6,941 7,813 8,656
Loan interest income $ 90,161 $ 90,429 $ 80,810 $ 79,050 $ 77,067
Loan yield, excluding ACI loans 4.41 % 4.36 % 4.14 % 4.03 %
3.96 % ACI loan yield 8.27 14.02 8.89
9.21 9.67 Total loan yield 4.55 % 4.74 %
4.34 % 4.26 % 4.24 %
For the Nine Months
EndedSeptember 30,
For the Years Ended December
31,
(In thousands) 2017 2016 2016
2015 Loan Interest Income Detail Interest
income on loans, excluding ACI loans $ 238,095 $ 197,747 $ 268,984
$ 216,422 Scheduled accretion for the period 17,955 24,024 30,870
46,042 Recovery income for the period 5,350 4,732
5,699 9,970 Total accretion income on purchased loans
(ACI loans) 23,305 28,756 36,569 56,012
Loan interest income $ 261,400 $ 226,503 $ 305,553 $ 272,434
Loan yield, excluding ACI loans 4.31 % 3.92 % 3.95 % 3.63 % ACI
loan yield 10.41 9.92 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)
September 30,2017
June 30,2017
March 31,2017
December 31,2016
September 30,2016
Balance at beginning of period $ 93,215 $ 88,304 $ 82,268 $
91,169 $ 87,147 Charge-offs (581 ) (2,879 ) (551 ) (3,922 ) (26,868
) Recoveries 408 1,089 801 243
1,263
Net (charge-offs) recoveries (173 )
(1,790 ) 250 (3,679 ) (25,605 ) Provision for
(reversal of) credit losses 1,723 6,701 5,786
(5,222 ) 29,627
Balance at end of period $
94,765 $ 93,215 $ 88,304 $ 82,268 $ 91,169
Table 5 -Noninterest Income
Three Months Ended (In thousands)
September 30,2017
June 30,2017
March 31,2017
December 31,2016
September 30,2016
Noninterest Income Investment advisory revenue
$ 5,283 $ 5,061 $ 4,916 $ 4,821 $ 4,733 Trust services revenue
4,613 4,584 5,231 4,109 3,959 Service charges on deposit accounts
3,920 3,784 3,815 3,614 3,555 Credit-related fees 3,306 2,741 2,747
2,875 2,690 Insurance revenue 1,950 1,828 2,130 1,577 1,863
Bankcard fees 1,803 1,862 1,812 1,813 1,823 Mortgage banking
revenue 965 1,213 866 1,019 1,459 Other service fees earned
1,174 1,071 972 777 797
Total
service fees and revenue 23,014 22,144
22,489 20,605 20,879 Securities (losses)
gains, net 1 (244 ) 81 1,267 1,386 Other 4,109 1,089
1,535 488 526
Total other noninterest
income 4,110 845 1,616 1,755
1,912
Total noninterest income (GAAP) 27,124 22,989 24,105
22,360 22,791
Less: Securities (losses) gains 1
(244 ) 81 1,267 1,386
Adjusted
noninterest operating revenue (Non-GAAP measure) $ 27,123 $
23,233 $ 24,024 $ 21,093 $ 21,405
Table 6 -Noninterest Expense
Three Months Ended (In thousands)
September 30,2017
June 30,2017
March 31,2017
December 31,2016
September 30,2016
Noninterest Expenses Salaries and employee benefits $ 35,007
$ 34,682 $ 34,267 $ 28,139 $ 31,086 Premises and equipment 7,419
7,180 6,693 7,475 7,130 Intangible asset amortization 1,136 1,190
1,241 1,555 1,607 Net cost of operation of other real estate owned
453 427 296 1,117 1,126 Data processing 1,688 1,702 1,696 1,767
1,530 Special asset expenses 215 469 140 670 477 Consulting and
professional fees 2,069 1,502 1,139 2,288 2,040 Loan related
expenses 532 757 280 1,236 985 FDIC insurance 889 954 1,493 1,517
1,912 Communications 650 675 655 741 535 Advertising and public
relations 521 499 345 344 303 Legal expenses 612 508 432 662 337
Branch closure expenses 50 47 46 47 52 Other 5,289
5,542 5,598 7,836 5,756
Total noninterest
expenses $ 56,530 $ 56,134 $ 54,321 $ 55,394 $ 54,876
Table 7 - Reconciliation of Non-GAAP
Financial Measures
As of and for the Three Months Ended (In
thousands)
September 30,2017
June 30,2017
March 31,2017
December 31,2016
September 30,2016
Efficiency ratio Noninterest expenses
(numerator) $ 56,530 $ 56,134 $ 54,321 $ 55,394 $ 54,876 Net
interest income $ 81,163 $ 82,384 $ 74,758 $ 72,498 $ 70,426
Noninterest income 27,124 22,989 24,105
22,360 22,791 Operating revenue (denominator) $ 108,287 $
105,373 $ 98,863 $ 94,858 $ 93,217 Efficiency ratio 52.20 %
53.27 % 54.95 % 58.40 % 58.87 %
Adjusted noninterest expenses and operating revenue
Noninterest expense $ 56,530 $ 56,134 $ 54,321 $ 55,394 $ 54,876
Less: Branch closure expenses 50 47 46
47 52 Adjusted noninterest expenses $ 56,480 $ 56,087 $
54,275 $ 55,347 $ 54,824 Net interest income $ 81,163 $ 82,384 $
74,758 $ 72,498 $ 70,426 Noninterest income 27,124 22,989 24,105
22,360 22,791 Less: Securities (losses) gains, net 1
(244 ) 81 1,267 1,386 Adjusted operating
revenue $ 108,286 $ 105,617 $ 98,782 $ 93,591 $ 91,831
Tangible
common equity ratio Shareholders’ equity $ 1,340,848 $
1,304,054 $ 1,105,976 $ 1,080,498 $ 1,111,783 Less: Goodwill and
other intangible assets, net (329,124 ) (330,261 )
(331,450 ) (332,691 ) (334,246 ) Tangible
common shareholders’ equity 1,011,724 973,793
774,526 747,807 777,537 Total assets 10,502,261
9,811,557 9,720,937 9,530,888 9,444,010 Less: Goodwill and other
intangible assets, net (329,124 ) (330,261 )
(331,450 ) (332,691 ) (334,246 ) Tangible assets $
10,173,137 $ 9,481,296 $ 9,389,487 $ 9,198,197 $ 9,109,764 Tangible
common equity ratio 9.95 % 10.27 % 8.25 %
8.13 % 8.54 %
Tangible book value per share
Shareholders’ equity $ 1,340,848 $ 1,304,054 $ 1,105,976 $
1,080,498 $ 1,111,783 Less: Goodwill and other intangible assets,
net (329,124 ) (330,261 ) (331,450 )
(332,691 ) (334,246 ) Tangible common shareholders’ equity $
1,011,724 $ 973,793 $ 774,526 $ 747,807 $ 777,537 Common shares
issued 83,625,000 83,625,000 75,000,000
75,000,000 75,000,000 Tangible book value per share $ 12.10
$ 11.64 $ 10.33 $ 9.97 $ 10.37
Return on average tangible common
equity Average common equity $ 1,320,884 $ 1,251,217 $
1,090,905 $ 1,094,182 $ 1,118,603 Less: Average intangible assets
(329,816 ) (330,977 ) (332,199 )
(333,640 ) (335,215 ) Average tangible common shareholders’
equity $ 991,068 $ 920,240 $ 758,706 $ 760,542 $ 783,388 Net income
$ 32,577 $ 28,968 $ 26,117 $ 28,985 $ 6,607 Return on average
tangible common equity 13.04 % 12.63 % 13.96 %
15.16 % 3.36 %
Pre-tax, pre-provision net
earnings Income before taxes $ 50,034 $ 42,538 $ 38,756 $
44,686 $ 8,714 Plus: Provision for credit losses 1,723
6,701 5,786 (5,222 ) 29,627 Pre-tax,
pre-provision net earnings $ 51,757 $ 49,239 $ 44,542 $ 39,464 $
38,341
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version on businesswire.com: http://www.businesswire.com/news/home/20171024006761/en/
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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