Cadence Bancorporation (NYSE:CADE) (“Cadence”) today announced
net income for the year ended December 31, 2018 of $166.3 million,
or $1.97 per diluted common share (“per share”), compared to $102.4
million, or $1.25 per share for the year ended December 31, 2017.
Net income for the quarter ended December 31, 2018 was $32.3
million, or $0.39 per diluted common share (“per share”), compared
to $14.7 million, or $0.17 per share, in the fourth quarter of
2017, and $47.1 million, or $0.56 per share, in the third quarter
of 2018. Tangible book value per share(1) was $13.62 in the fourth
quarter of 2018, an increase of $1.29 from $12.33 per share as of
December 31, 2017 and an increase of $0.47 from $13.15 for the
third quarter 2018.
“We are very pleased to report to you another quarter of strong
organic growth and operating performance as we conclude what has
been a transformational year for Cadence,” stated Paul B. Murphy,
Jr., Chairman and Chief Executive Officer of Cadence
Bancorporation. “During 2018, our client acquisition and expansion
efforts, combined with our quality markets and bankers, resulted in
meaningful growth in assets and earnings as the balance sheet grew
16.3% to $12.7 billion, adjusted net income increased 42% to $174.8
million, net interest margin expanded four basis points, and the
adjusted efficiency ratio improved from 54.1% for 2017 to 49.6% for
2018. Importantly, we attained these results while maintaining
strong credit results, with net charge-offs of only six basis
points for the second year in a row and NPAs declining as a percent
of total loans and OREO during the year. Our execution remains
highly customer-focused while producing excellent returns for our
shareholders, most notably this year’s adjusted ROAA of 1.52%(1)
and adjusted ROTCE of 16.54%(1). During the year, our strong
performance allowed us to successfully execute on multiple
secondary offerings resulting in our stock now being 100% publicly
held, a meaningful milestone for our shareholders.
“While we are very proud of 2018, we are excited as we look
toward 2019 having closed the State Bank merger on January 1, 2019.
The closing of our fourth and most significant merger is another
meaningful step for our organization. We enthusiastically welcome
the State Bank customers and associates and look forward to serving
our customers, bankers, and communities with the same passion and
responsiveness they are accustomed to as we bring together two
great institutions.”
At December 31, 2018, State Bank had total assets of $4.9
billion, total loans of $3.4 billion, and total deposits of $4.1
billion.
Highlights:
- 2018 net income was $166.3 million, up
meaningfully from $102.4 million for 2017. Fourth quarter of 2018
net income was $32.3 million, an increase of $17.6 million compared
to fourth quarter of 2017, representing strong overall business
performance, and a decrease of $14.8 million compared to the third
quarter of 2018 due to non-routine expenses(2) and increased loan
loss provisions in the fourth quarter of 2018. Adjusted net income
was $174.8 million(1) for 2018, up from $123.3 million for 2017.
Fourth quarter of 2018 adjusted net income was $41.5 million(1), an
increase of $5.2 million compared to the fourth quarter of 2017 and
a decrease of $7.8 million compared to the third quarter of 2018
due to increased loan provisions in the fourth quarter of 2018.
- On a per-share basis, net income was
$1.97 per share for 2018 versus $1.25 for 2017; $0.39 per share for
the fourth quarter of 2018 compared to $0.17 per share for the
fourth quarter of 2017; and down from $0.56 per share for the third
quarter of 2018.
- Adjusted diluted earnings per share(1)
(“EPS”) reflects the impact of non-routine items(2). Adjusted EPS
for 2018 was $2.07 versus $1.51 for 2017. The fourth quarter
adjusted EPS of $0.50 increased $0.07 compared to the prior year’s
quarter adjusted EPS of $0.43 and decreased $0.08 compared to the
linked quarter adjusted EPS of $0.58. The change in loan provision
(recovery) between the periods reduced the fourth quarter of 2018
adjusted EPS by ($0.12), on an after-tax basis compared to the
fourth quarter of 2017 and by ($0.09) compared to the third quarter
2018.
- Full year 2018 returns on average
assets, common equity and tangible common equity(1) were 1.45%,
12.07% and 15.73% compared to full year 2017 returns of 1.02%,
8.16% and 11.08%, respectively. Annualized returns on average
assets, common equity and tangible common equity(1) for the fourth
quarter of 2018 were 1.05%, 9.08% and 11.68%, respectively,
compared to 0.55%, 4.32% and 5.71%, respectively, for the fourth
quarter of 2017, and 1.61%, 13.40% and 17.32%, respectively, for
the third quarter of 2018.
- Adjusted annualized returns on average
assets(1) and tangible common equity(1) reflect the impact of
non-routine items(2). Adjusted annualized returns on average
assets(1) and tangible common equity(1) for the full year 2018 were
1.52% and 16.54%, respectively, compared to 1.23% and 13.35%,
respectively, for 2017; for fourth quarter of 2018 were 1.34% and
14.98%, respectively, compared to 1.36% and 14.09%, respectively,
for the fourth quarter of 2017 and 1.69% and 18.12%, respectively,
for the third quarter of 2018.
- Cadence continued to demonstrate its
strong business development with loans ending the quarter at $10.1
billion as of December 31, 2018, an increase of $1.8 billion since
December 31, 2017, and an increase of $610.1 million since
September 30, 2018.
- Core deposits (total deposits excluding
brokered deposits) likewise reflected strong growth at $9.7 billion
as of December 31, 2018, up $1.5 billion from December 31, 2017,
and up $839.3 million from September 30, 2018.
- The continued balance sheet growth in
interest earning assets and relatively stable net interest margin
(“NIM”) of 3.55% resulted in $124.2 million of total operating
revenue(1) in the fourth quarter of 2018, increasing for the
twelfth consecutive quarter.
- The adjusted efficiency ratio(1), which
reflects the impact of non-routine items(2), was 49.6% for 2018 and
54.1% for 2017. The adjusted efficiency ratio was 49.0% for the
fourth quarter of 2018, compared to 55.6% and 48.4% for the fourth
quarter of 2017 and third quarter of 2018, respectively.
- Credit remains solid, with net
charge-offs of six basis points for both 2018 and 2017, and 1 basis
point in the fourth quarter of 2018.
(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.
Balance Sheet:
Total assets were $12.7 billion as of December 31, 2018, an
increase of $1.8 billion, or 16.3%, from December 31, 2017, and an
increase of $970 million, or 8.3%, from September 30, 2018.
Loans at December 31, 2018 were $10.1 billion, an
increase of $1.8 billion, or 21.8%, from December 31, 2017, and an
increase of $610.1 million, or 6.5%, from September 30, 2018.
Average loans for the fourth quarter of 2018 were $9.9 billion, an
increase of $1.7 billion, or 20.2%, from fourth quarter of 2017,
and an increase of $624.7 million, or 6.7%, from the third quarter
of 2018.
Increases in loans reflect continued organic demand primarily in
our energy, general C&I and residential portfolios compared to
prior year, and our energy sector, CRE and residential portfolios
compared to linked quarter. Growth during 2018 also included
acquired mortgage loans totaling approximately $214 million as a
complement to our CRA lending.
Total deposits at December 31, 2018 were $10.7 billion,
an increase of $1.7 billion, or 18.8%, from December 31, 2017, and
an increase of $1.2 billion, or 12.0%, from September 30, 2018.
Average total deposits for the fourth quarter of 2018 were $10.0
billion, an increase of $1.4 billion, or 16.2%, from fourth quarter
of 2017, and an increase of $548.9 million, or 5.8%, from third
quarter of 2018.
Deposit increases were driven by growth in core customer
deposits, with core deposits (total deposits excluding brokered
deposits) at $9.7 billion as of December 31, 2018, up $1.5 billion,
or 18.1%, from December 31, 2017, and up $839.3 million, or 9.5%,
from September 30, 2018. The core deposit growth reflected across
the board customer expansion as well as seasonal fourth quarter
growth. Core noninterest-bearing (“NIB”) deposits grew $211.3
million, or 9.4% since December 31, 2017, and $359.2 million, or
17.1% from the third quarter 2018. Core interest-bearing (“IB”)
deposits grew $1.3 billion, or 21.4% since December 31, 2017, and
grew $505.1 million, or 7.5% from the prior quarter. State Bank
funds on deposit with Cadence amounted to $311 million at December
31, 2018, and $96 million at September 30, 2018, allowing us to
benefit partially from State Bank’s strong liquidity position in
the fourth quarter of 2018 in advance of the merger.
Shareholders’ equity was $1.4 billion at December 31,
2018, an increase of $79.2 million from December 31, 2017, and an
increase of $23.4 million from September 30, 2018.
- Tangible common shareholders’ equity(1)
was $1.1 billion at December 31, 2018, an increase of $92.9 million
from December 31, 2017, and an increase of $24.0 million from
September 30, 2018. The fourth quarter 2018 increase resulted from
net income of $32.3 million and an increase of $24.7 million in
other comprehensive income, partially offset by dividends of $12.5
million and a repurchase of 1,127,991 common shares at an average
price of $19.51 per share, or $22.0 million during the quarter as
part of the share repurchase program announced in October
2018.
- Driven by strong earnings, tangible
book value per share(1) was $13.62 as of December 31, 2018, an
increase of $1.29 or 10.5% from $12.33 from December 31, 2017, and
an increase of $0.47 or 3.6% from $13.15 as of September 30,
2018.
(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.
Asset Quality:
Credit quality reflected continued overall credit
stability in the loan portfolio, with net charge-offs as a percent
of average loans remaining very low during the year at 0.06% for
both 2018 and 2017.
- For the quarter ended December 31,
2018, net charge-offs were $0.2 million, compared to $2.7 million
and $3.1 million for the quarters ended December 31, 2017 and
September 30, 2018, respectively.
- NPAs as a percent of total loans, OREO
and other NPAs also remained relatively stable ending the year at
0.8% compared to 0.9% and 0.7% as of December 31, 2017 and
September 30, 2018, respectively. NPAs totaled $82.4 million, $70.7
million and $62.8 million as of December 31, 2018, December 31,
2017 and September 30, 2018, respectively.
- The allowance for credit losses (“ACL”)
was $94.4 million, or 0.94% of total loans, as of December 31,
2018, as compared to $87.6 million, or 1.06% of total loans, as of
December 31, 2017, $86.2 million, or 0.91% of total loans, as of
September 30, 2018.
- Loan loss provision was $12.7 million
for 2018 compared to $9.7 million for 2017. The increase resulted
primarily from robust loan growth in 2018. Loan loss provision was
$8.4 million for the fourth quarter of 2018 as compared to
reversals of ($4.5) million in the prior year’s quarter and ($1.4)
million in the linked quarter. The fourth quarter 2018 provision
was driven by the quarter’s loan growth, increased qualitative
adjustments related to the recent volatility in oil prices and
certain economic factors and an increase in specific reserves,
partially offset by a net reduction from credit migration and
pay-offs during the quarter.
Total Revenue:
Total operating revenue(1) grew for the twelfth consecutive
quarter, with the fourth quarter of 2018 at $124.2 million, up 9.3%
from the same period in 2017 and up 1.7% from the linked quarter.
The revenue increases were primarily a result of strong loan and
deposit growth during the period combined with relatively stable
margins. For 2018, total operating revenue was $482.4 million
compared to $426.1 million for 2017.
Net interest income reflected the continued growth in our
overall business lines. Net interest income for 2018 was $387.7
million, up 19% from $326.2 million in 2017. Net interest income
for the fourth quarter of 2018 was $103.1 million, an increase of
$15.2 million, or 17.3%, from the same period in 2017, and an
increase of $5.0 million, or 5.1%, from the third quarter of 2018.
Our fully tax-equivalent NIM was relatively stable throughout 2018,
and down slightly in the fourth quarter of 2018 to 3.55% as
compared to 3.59% for the fourth quarter of 2017 and 3.58% for the
third quarter of 2018.
Earning asset yields for the fourth quarter of 2018 were 4.95%,
up 54 basis points from 4.41% in the fourth quarter of 2017, and up
15 basis points from 4.80% in the third quarter of 2018.
- Yield on loans, excluding
acquired-impaired loans, increased to 5.20% for the fourth quarter
of 2018, as compared to 4.47% and 5.08% for the fourth quarter of
2017 and third quarter of 2018, respectively. Approximately 71% of
the loan portfolio is floating at December 31, 2018.
- Total accretion for acquired-impaired
loans was $5.6 million in the fourth quarter of 2018 compared to
$8.1 million from the fourth quarter of 2017, and $5.2 million in
the third quarter of 2018. Recovery income was $0.9 million, $2.8
million and $0.4 million for the fourth quarter of 2018, fourth
quarter of 2017, third quarter of 2018, respectively.
- Total loan yields increased to 5.32%
for the fourth quarter of 2018 compared to 4.72% for the fourth
quarter of 2017 and 5.18% for the third quarter of 2018.
- Total cost of funds for the fourth
quarter of 2018 was 1.51% compared to 0.89% for the fourth quarter
of 2017 and 1.33% in the linked quarter.
- Total cost of deposits for the fourth
quarter of 2018 was 1.34% compared to 0.69% for the fourth quarter
of 2017, and 1.15% for the linked quarter.
- The current quarter’s increase in
deposit costs reflected the nine-month cumulative lag effect of the
March, June and September federal funds rate increases, consistent
with our forecasted 55% total deposit beta.
Noninterest income for 2018 was $94.6 million for 2018
resulting in a decrease of 5.2% from $99.9 million for 2017 due to
the sale of the insurance company assets and decrease in
interchange fees due to commencement of the Durbin Amendment impact
in 2018. Noninterest income for the fourth quarter of 2018 was
$21.0 million, a decrease of $4.6 million, or 18.1%, from the same
period of 2017 due to the insurance sale and Durbin impact, and a
decrease of $3.0 million, or 12.4%, from the third quarter of 2018
due to variables in non-fee income revenues and valuations.
- Total service fees and revenue for the
fourth quarter of 2018 were $21.2 million, a decrease of $1.2
million or 5.3% from the same period of 2017, and an increase of
$0.7 million or 3.5% from the third quarter of 2018. As noted, the
year over year quarterly decline in fees was driven by the decrease
of $1.5 million in insurance revenue due to the sale of the
insurance company assets in the second quarter of 2018 and to a
$0.8 million decrease in interchange fees limited due to the Durbin
Amendment, which applied to Cadence beginning in the third quarter
of 2018. These declines were partially offset by increase of $1.8
million in credit related fees due to increased capital markets
income and growth in loan originations. The linked quarter increase
resulted from an increase of $1.6 million in credit related fees
partially offset by market related declines in trust services
revenue and investment advisory revenue, as well as a small decline
in mortgage banking revenue.
Noninterest expense for 2018 was $258.3 million for 2018
compared to $233.4 million for 2017 resulting in an increase of
10.7%. Noninterest expense for the fourth quarter of 2018 was $72.7
million, an increase of $6.3 million, or 9.5%, from $66.4 million
during the same period in 2017, and an increase of $11.5 million,
or 18.7%, from $61.2 million for the third quarter of 2018.
Adjusted noninterest expenses(1), which has been adjusted to
reflect the impact of non-routine items(2), was $237.5 million for
2018 compared to $230.1 million for 2017, or an increase of 3.2%.
Adjusted noninterest expenses were $60.9 million for the fourth
quarter of 2018, down 3.6% from $63.1 million for the fourth
quarter of 2017 and up slightly from $59.0 million in the third
quarter of 2018. The changes in adjusted noninterest expenses
during the periods are largely a result of lower intangible asset
amortization and OREO costs during 2018, offset by modest increases
in operating costs due to business and balance sheet growth.
Non-routine expenses in the fourth quarter of 2018 totaled $11.8
million and included $2.0 million in State Bank merger related
expenses and $9.8 million in non-routine, specially designated
bonuses granted by the Board of Directors as a result of the
transition of Cadence’s ownership from being 100% owned by Cadence
Bancorp, LLC (“LLC”), the original top-tier holding company, to
being 100% owned by the public, significantly enhancing the
liquidity of Cadence’s stock. This transition was effected through
a succession of events beginning with Cadence’s IPO in April 2017,
followed by a series of five successful secondary offerings, and
concluding with a final distribution of stock and cash, dissolving
the LLC in December 2018. Cadence (NYSE: CADE) is the surviving,
publicly held holding company.
Non-routine expense in the fourth quarter of 2017 included $1.3
million of secondary offering expenses, and $2.0 million related to
legal expenses associated with a legacy bank matter resolved in
2018. Non-routine expense in the third quarter of 2018 included
$2.0 million in secondary offering expenses and $0.2 million in
merger expenses.
Our efficiency ratio(1) for 2018 was 53.6% compared to
54.8% for 2017. The efficiency ratio in the current quarter was
impacted by the noted non-routine expenses, with the fourth quarter
of 2018 at 58.6%, as compared to the fourth quarter of 2017 and
third quarter of 2018 ratios of 58.4% and 50.2%, respectively.
Excluding non-routine revenues and expenses, the adjusted
efficiency ratio(1) was 49.6% for 2018 and 54.1% for 2017. The
adjusted efficiency ratio was 49.0% for the fourth quarter of 2018.
This compares to an adjusted efficiency ratio of 55.6% and 48.4%
for the fourth quarter of 2017 and third quarter of 2018,
respectively.
(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.
Taxes:
The effective tax rate for the quarter ended December 31, 2018
was 24.9% as compared to 34.8% in the fourth quarter of 2017
(excluding the one-time tax charge related to tax reform) and 24.2%
in the third quarter of 2018. Our effective tax rate for 2018 was
21.3%.
Quarterly Dividend:
On January 22, 2019, the Board of Directors of Cadence declared
a quarterly cash dividend in the amount of $0.175 per share of
outstanding common stock, representing an annualized dividend of
$0.70 per share. The dividend will be paid on March 15, 2019 to
holders of record of Cadence’s Class A common stock on March 1,
2019.
Cadence Bancorp, LLC
Activity:
The LLC was dissolved in December 2018. At that time, the final
distribution of net assets to unit holders was completed.
Supplementary Financial Tables
(Unaudited):
Supplementary Financial Tables (Unaudited) are included in this
release following the customary disclosure information.
Fourth Quarter 2018 Earnings Conference
Call:
Cadence Bancorporation executive management will host a
conference call to discuss fourth quarter 2018 results on Monday,
January 28, 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: 2919757
For those unable to participate in the live presentation, a
replay will be available through February 11, 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: 10127363 End Date: February 11, 2019
Webcast Access:
A webcast of the conference call presented by management can be
viewed by visiting www.cadencebancorporation.com and selecting
“Events & Presentations” then “Event Calendar”. Slides are
available under the “Presentations” tab.
About Cadence Bancorporation
Cadence Bancorporation (NYSE: CADE), headquartered in Houston,
Texas, is a regional financial holding company with $12.7 billion
in assets as of December 31, 2018, and the recently acquired State
Bank franchise had assets as of $4.9 billion as of December 31,
2018. 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, personal and business
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 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; 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; 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; the possibility that the transaction may be more
expensive to complete than anticipated, including as a result of
unexpected factors or events; diversion of management’s attention
from ongoing business operations and opportunities; potential
adverse reactions or changes to business or employee relationships,
including those resulting from the announcement or completion of
the transaction. 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
For the Year EndedDecember
31,
(In thousands, except share and per share data)
December 31,
2018
September 30,
2018
June 30,
2018
March 31,
2018
December 31,
2017
2018 2017 Statement of Income
Data: Interest income $ 143,857 $
131,753 $ 123,963 $ 113,093 $ 108,370 $ 512,666 $ 396,867 Interest
expense 40,711 33,653 28,579 21,982
20,459 124,925 70,651 Net interest income
103,146 98,100 95,384 91,111 87,911 387,741 326,216 Provision for
credit losses 8,422 (1,365 ) 1,263
4,380 (4,475 ) 12,700 9,735 Net interest
income after provision 94,724 99,465 94,121 86,731 92,386 375,041
316,481 Noninterest income - service fees and revenue 21,217 20,490
21,395 23,904 22,405 87,008 90,052 Noninterest income - other
noninterest income (210 ) 3,486 3,277 1,079 3,251 7,630 9,822
Noninterest expense
72,697
61,231 62,435 61,939 66,371
258,301 233,356 Income before income taxes
43,034
62,210 56,358 49,775 51,671 211,378 182,999 Income tax expense
10,709 15,074 8,384 10,950
36,980 45,117 80,646 Net income $
32,325
$ 47,136 $ 47,974 $ 38,825 $ 14,691 $ 166,261 $ 102,353 Weighted
average common shares outstanding Basic 83,375,485 83,625,000
83,625,000 83,625,000 83,625,000 83,562,109 81,072,945 Diluted
83,375,485 84,660,256 84,792,657 84,674,807 84,717,005 84,375,289
81,605,015 Earnings Basic $ 0.39 $ 0.56 $ 0.57 $ 0.46 $ 0.18 $ 1.99
$ 1.26 Diluted
0.39 0.56 0.57 0.46 0.17 1.97 1.25
Period-End Balance Sheet
Data: Investment securities $ 1,187,252 $ 1,206,387 $ 1,049,710
$ 1,251,834 $ 1,262,948 $ 1,187,252 $ 1,262,948 Total loans, net of
unearned income 10,053,923 9,443,819 8,975,755 8,646,987 8,253,427
10,053,923 8,253,427 Allowance for credit losses 94,378 86,151
90,620 91,537 87,576 94,378 87,576 Total assets 12,730,285
11,759,837 11,305,528 10,999,382 10,948,926 12,730,285 10,948,926
Total deposits 10,708,689 9,558,276 9,331,055 9,048,971 9,011,515
10,708,689 9,011,515 Noninterest-bearing deposits 2,454,016
2,094,856 2,137,407 2,040,977 2,242,765 2,454,016 2,242,765
Interest-bearing deposits 8,254,673 7,463,420 7,193,648 7,007,994
6,768,750 8,254,673 6,768,750 Borrowings and subordinated
debentures 471,770 662,658 471,453 471,335 470,814 471,770 470,814
Total shareholders’ equity 1,438,274 1,414,826 1,389,956 1,357,103
1,359,056 1,438,274 1,359,056
Average Balance Sheet Data:
Investment securities $ 1,187,947 $ 1,141,704 $ 1,183,055 $
1,234,226 $ 1,228,330 $ 1,180,623 $ 1,155,819 Total loans, net of
unearned income 9,890,419 9,265,754 8,848,820 8,443,951 8,226,294
9,116,602
7,825,763 Allowance for credit losses 87,996 92,783 93,365 89,097
94,968 90,813 90,621 Total assets
12,249,819
11,585,969 11,218,432 10,922,274 10,586,245 11,498,013 10,020,036
Total deposits 10,038,180 9,489,268 9,135,359 9,012,390 8,635,473
9,421,803 8,186,781 Noninterest-bearing deposits 2,210,793
2,153,097 2,058,255 2,128,595 2,170,758
2,137,953
1,965,070 Interest-bearing deposits 7,827,387 7,336,171 7,077,104
6,883,795 6,464,715 7,283,850 6,221,711 Borrowings and subordinated
debentures
652,813
567,864 595,087 444,557 502,428 565,658 493,196 Total shareholders’
equity 1,412,643 1,395,061 1,358,770 1,342,445 1,348,867 1,377,471
1,253,861
Table 1 (Continued) - Selected
Financial Data
As of and for the Three Months Ended
For the Year EndedDecember
31,
(In thousands, except share and per share data) December
31,
2018
September 30,
2018
June 30,
2018
March 31,
2018
December 31,
2017
2018 2017 Per Share Data:(3)
Book value per common share 17.43 16.92 16.62 16.23 16.25 17.43
16.25 Tangible book value (1) 13.62 13.15 12.85 12.32 12.33 13.62
12.33 Cash dividends declared $ 0.150 $ 0.150 $ 0.125 $ 0.125 $ — $
0.55 $ — Dividend payout ratio 38.46 % 26.79 % 21.93 % 27.17 % — %
27.64 % — %
Performance Ratios: Return on average common
equity (2) 9.08 % 13.40 % 14.16 % 11.73 % 4.32 % 12.07 % 8.16 %
Return on average tangible common equity (1) (2) 11.68 17.32 18.58
15.52 5.71
15.73
11.08 Return on average assets (2) 1.05 1.61 1.72 1.44 0.55 1.45
1.02 Net interest margin (2) 3.55 3.58 3.66 3.64 3.59
3.61
3.57 Efficiency ratio (1) 58.55 50.16 52.00 53.35 58.44 53.55 54.77
Adjusted efficiency ratio (1) 48.99 48.36 50.74 50.22 55.57 49.56
54.12
Asset Quality Ratios: Total nonperforming assets
("NPAs") to total loans and OREO and other NPAs 0.81 % 0.66 % 0.63
% 0.84 % 0.85 % 0.81 % 0.85 % Total nonperforming loans to total
loans 0.74 0.50 0.44 0.60 0.58 0.74 0.58 Total ACL to total loans
0.94 0.91 1.01 1.06 1.06 0.94 1.06 ACL to total nonperforming loans
("NPLs") 127.12 182.52 230.60 175.30 183.62 127.12 183.62 Net
charge-offs to average loans (2) 0.01 0.13 0.10 0.02 0.13 0.06 0.06
Capital Ratios: Total shareholders’ equity to assets 11.3 %
12.0 % 12.3 % 12.3 % 12.4 % 11.3 % 12.4 % Tangible common equity to
tangible assets (1) 9.1 9.6 9.8 9.7 9.7 9.1 9.7 Common equity tier
1 (4) 9.8 10.4 10.5 10.4 10.6 9.8 10.6 Tier 1 leverage capital (4)
10.1 10.7 10.7 10.6 10.7 10.1 10.7 Tier 1 risk-based capital (4)
10.1 10.7 10.9 10.8 10.9 10.1 10.9 Total risk-based capital (4)
11.8 12.4 12.7 12.6 12.8 11.8 12.8 _____________________ (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 for the three
month periods. (3)
Cadence Bancorp, LLC was dissolved in the
fourth quarter of 2018 and owns zero shares of Cadence's common
shares at December 31, 2018.
(4) Current quarter regulatory capital ratios are estimates.
Table 2 - Average
Balances/Yield/Rates
For the Three Months Ended December 31,
2018 2017 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 $ 9,682,781 $ 126,972 5.20 % $ 7,961,692
$ 89,762 4.47 % ACI portfolio 207,638 5,584 10.67
264,602 8,145 12.21 Total loans 9,890,419 132,556
5.32 8,226,294 97,907 4.72 Investment securities Taxable 980,403
6,909 2.80 817,971 5,000 2.43 Tax-exempt (2) 207,544
2,202 4.21 410,359 5,047 4.88 Total investment
securities 1,187,947 9,111 3.04 1,228,330 10,047 3.25 Federal funds
sold and short-term investments 437,565 2,092 1.90 409,317 1,151
1.12 Other investments 58,388 559 3.80 51,318
1,030 7.96 Total interest-earning assets 11,574,319 144,318
4.95 9,915,259 110,135 4.41
Noninterest-earning assets: Cash
and due from banks 73,878 66,849 Premises and equipment 63,258
64,730 Accrued interest and other assets 626,360 634,375 Allowance
for credit losses (87,996 ) (94,968 ) Total assets $
12,249,819 $ 10,586,245
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing liabilities: Demand deposits $ 5,242,091 $
20,024 1.52 % $ 4,424,371 $ 7,844 0.70 % Savings deposits 174,156
163 0.37 177,413 112 0.25 Time deposits 2,411,140
13,792 2.27 1,862,931 7,129 1.52 Total
interest-bearing deposits 7,827,387 33,979 1.72 6,464,715 15,085
0.93 Other borrowings 517,051
4,266
3.27 367,373 3,021 3.26 Subordinated debentures 135,762
2,466 7.21 135,055 2,353 6.91 Total
interest-bearing liabilities 8,480,200
40,711
1.90 6,967,143 20,459 1.17
Noninterest-bearing liabilities:
Demand deposits 2,210,793 2,170,758 Accrued interest and other
liabilities 146,183 99,477 Total liabilities 10,837,176
9,237,378
Shareholders' equity 1,412,643
1,348,867 Total liabilities and shareholders' equity $ 12,249,819 $
10,586,245 Net interest income/net interest spread
103,607
3.05 % 89,676 3.24 % Net yield on earning assets/net
interest margin 3.55 % 3.59 %
Taxable equivalent
adjustment: Investment securities
(461
) (1,765 ) Net interest income $ 103,146 $ 87,911
_____________________ (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% for the three months ended December 31, 2018, and a
tax rate of 35% for the three months ended December 31, 2017.
For the Three Months
Ended
December 31, 2018
For the Three Months Ended
September 30, 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 and ANCI loans $ 9,682,781 $ 126,972 5.20 % $
9,036,566 $ 115,814 5.08 % ACI portfolio 207,638
5,584 10.67 229,188 5,243 9.08 Total loans 9,890,419
132,556 5.32 9,265,754 121,057 5.18 Investment securities Taxable
980,403 6,909 2.80 928,275 6,248 2.67 Tax-exempt (2) 207,544
2,202 4.21 213,429 2,195 4.08 Total investment
securities 1,187,947 9,111 3.04 1,141,704 8,443 2.93 Federal funds
sold and short-term investments 437,565 2,092 1.90 458,491 2,039
1.76 Other investments 58,388 559 3.80 54,762
675 4.89 Total interest-earning assets 11,574,319 144,318
4.95 10,920,711 132,214 4.80
Noninterest-earning assets:
Cash and due from banks 73,878 71,777 Premises and equipment 63,258
62,422 Accrued interest and other assets 626,360 623,842 Allowance
for credit losses (87,996 ) (92,783 ) Total assets $
12,249,819 $ 11,585,969
LIABILITIES AND STOCKHOLDERS' EQUITY
Interest-bearing liabilities: Demand deposits $ 5,242,091 $
20,024 1.52 % $ 5,175,915 $ 17,046 1.31 % Savings deposits 174,156
163 0.37 181,449 149 0.33 Time deposits 2,411,140
13,792 2.27 1,978,807 10,312 2.07 Total
interest-bearing deposits 7,827,387 33,979 1.72 7,336,171 27,507
1.49 Other borrowings 517,051
4,266
3.27 432,279 3,673 3.37 Subordinated debentures 135,762
2,466 7.21 135,585 2,473 7.24 Total
interest-bearing liabilities 8,480,200
40,711
1.90 7,904,035 33,653 1.69
Noninterest-bearing liabilities:
Demand deposits 2,210,793 2,153,097 Accrued interest and other
liabilities 146,183 133,776 Total liabilities
10,837,176 10,190,908
Stockholders' equity 1,412,643
1,395,061 Total liabilities and stockholders' equity $
12,249,819 $ 11,585,969 Net interest income/net interest spread
103,607
3.05 % 98,561 3.11 % Net yield on earning assets/net
interest margin 3.55 % 3.58 %
Taxable equivalent
adjustment: Investment securities
(461
) (461 ) Net interest income $ 103,146 $ 98,100
_____________________ (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%.
Years Ended December
31, 2018 2017
AverageBalance
Income /Expense
Yield /Rate
AverageBalance
Income /Expense
Yield /Rate
ASSETS Interest-earning assets: Loans,
net of unearned income(1) Originated and ANCI loans $
8,882,806
$ 448,084
5.04
% $ 7,535,099 $ 327,857 4.35 % ACI portfolio 233,796
22,060 9.44 290,664 31,451 10.82 Total loans
9,116,602
470,144 5.16 7,825,763 359,308 4.59 Investment securities Taxable
888,341 23,793 2.68 747,590 18,089 2.42 Tax-exempt (2)
292,282 12,077 4.13 408,229 20,554 5.03
Total investment securities 1,180,623 35,870 3.04 1,155,819 38,643
3.34 Federal funds sold and short-term investments 465,554 6,930
1.49 313,683 3,336 1.06 Other investments 54,538
2,259 4.14 49,781 2,774 5.57 Total
interest-earning assets
10,817,317
515,203 4.76 9,345,046 404,061 4.32
Noninterest-earning
assets: Cash and due from banks 79,560 60,108 Premises and
equipment 62,841 65,428 Accrued interest and other assets
629,108
640,075 Allowance for credit losses (90,813 ) (90,621
) Total assets $ 11,498,013 $ 10,020,036
LIABILITIES AND
SHAREHOLDERS' EQUITY Interest-bearing liabilities:
Demand deposits $ 4,983,113 57,795 1.16 $ 4,360,252 27,030 0.62
Savings deposits 181,194 560 0.31 181,500 456 0.25 Time deposits
2,119,543 42,093 1.99 1,679,959 22,213
1.32 Total interest-bearing deposits 7,283,850 100,448 1.38
6,221,711 49,699 0.80 Other borrowings 430,159
14,678
3.41 358,413 11,644 3.25 Subordinated debentures 135,499
9,799 7.23 134,783 9,308 6.91 Total
interest-bearing liabilities 7,849,508
124,925
1.59 6,714,907 70,651 1.05
Noninterest-bearing liabilities:
Demand deposits 2,137,953 1,965,070 Accrued interest and other
liabilities 133,081 86,198 Total liabilities
10,120,542 8,766,175
Shareholders' equity 1,377,471
1,253,861 Total liabilities and shareholders' equity $
11,498,013 $ 10,020,036 Net interest income/net interest spread
390,278
3.17 % 333,410 3.27 % Net yield on earning assets/net
interest margin
3.61
% 3.57 % Taxable equivalent adjustment: Investment
securities
(2,537
) (7,194 ) Net interest income $ 387,741 $ 326,216
(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% for
2018 and a tax rate of 35% for 2017.
Table 3 – Loan Interest Income
Detail
For the Three Months Ended,
For the Years EndedDecember
31,
(In thousands) December 31,
2018
September 30,
2018
June 30,
2018
March 31,
2018
December 31,
2017
2018 2017 Loan Interest Income Detail
Interest income on loans, excluding ACI loans $ 126,972 $ 115,814 $
108,130 $ 97,168 $ 89,762 $ 448,084 $ 327,857 Scheduled accretion
for the period 4,724 4,881 5,016 5,192 5,348 19,813 23,303 Recovery
income for the period 860 362 594 431
2,797 2,247 8,148 Accretion on acquired credit
impaired (ACI) loans 5,584 5,243 5,610
5,623 8,145 22,060 31,451 Loan interest income
$ 132,556 $ 121,057 $ 113,740 $ 102,791 $ 97,907 $ 470,144 $
359,308 Loan yield, excluding ACI loans 5.20 % 5.08 % 5.04 % 4.81 %
4.47 %
5.04
% 4.35 % ACI loan yield 10.67 9.08 9.28
8.96 12.21 9.44 10.82 Total loan yield
5.32 % 5.18 % 5.16 % 4.94 % 4.72 %
5.16 % 4.59 %
Table 4 - Allowance for Credit
Losses
For the Three Months Ended
For the Years EndedDecember
31,
(In thousands) December 31,
2018
September 30,
2018
June 30,
2018
March 31,
2018
December 31,
2017
2018 2017 Balance at beginning of period $
86,151 $ 90,620 $ 91,537 $ 87,576 $ 94,765 $ 87,576 $ 82,268
Charge-offs (318 ) (3,265 ) (3,650 ) (812 ) (2,860 ) (8,045 )
(6,871 ) Recoveries 123 161 1,470 393
146 2,147 2,444 Net charge-offs (195 )
(3,104 ) (2,180 ) (419 ) (2,714 )
(5,898 ) (4,427 ) Provision for (reversal of) credit
losses 8,422 (1,365 ) 1,263 4,380
(4,475 ) 12,700 9,735 Balance at end of period
$ 94,378 $ 86,151 $ 90,620 $ 91,537 $ 87,576 $ 94,378 $ 87,576
Table 5 -Noninterest Income
For the Three Months Ended
For the Years EndedDecember
31,
(In thousands) December 31,
2018
September 30,
2018
June 30,
2018
March 31,
2018
December 31,
2017
2018 2017 Noninterest Income
Investment advisory revenue $ 5,170 $ 5,535 $ 5,343 $
5,299 $ 5,257 $ 21,347 $ 20,517 Trust services revenue 4,182 4,449
4,114 5,015 4,836 17,760 19,264 Service charges on deposit accounts
3,856 3,813 3,803 3,960 3,753 15,432 15,272 Credit-related fees
5,191 3,549 3,807 3,577 3,372 16,124 12,166 Insurance revenue — —
417 2,259 1,470 2,677 7,378 Bankcard fees 1,073 1,078 1,915 1,884
1,833 5,951 7,310 Mortgage banking revenue 398 747 650 577 687
2,372 3,731 Other service fees earned 1,347 1,319
1,346 1,333 1,197 5,345 4,414
Total service fees and revenue 21,217 20,490
21,395 23,904 22,405 87,008
90,052 Securities gains (losses), net (54 ) 2 (1,813 ) 12 16 (1,853
) (146 ) Other (156 ) 3,484 5,090 1,067
3,235 9,483 9,968
Total other noninterest
income (210 ) 3,486 3,277 1,079
3,251 7,630 9,822
Total noninterest
income $ 21,007 $ 23,976 $ 24,672 $ 24,983 $ 25,656 $ 94,638 $
99,874
Table 6 -Noninterest Expense
For the Three Months Ended
For the Years EndedDecember
31,
(In thousands) December 31,
2018
September 30,
2018
June 30,
2018
March 31,
2018
December 31,
2017
2018 2017 Noninterest
Expenses Salaries and employee
benefits $ 43,495 $ 35,790 $ 38,268 $ 37,353 $ 35,162 $ 154,905 $
139,118 Premises and equipment 8,212 7,544 7,131 7,591 7,629 30,478
28,921 Merger related expenses 2,049 178 756
—
—
2,983
—
Intangible asset amortization 598 650 715 792 1,085 2,755 4,652 Net
cost of operation of other real estate owned 195 398 112 (52 )
1,075 653 2,251 Data processing 2,117 1,989 2,304 2,365 2,504 8,775
7,590 Consulting and professional fees 3,675 4,266 2,409 2,934
4,380 13,285 9,090 Loan related expenses 1,424 821 645 255 810
3,145 2,379 FDIC insurance 1,230 1,237 1,223 955 939 4,645 4,275
Communications 684 682 703 704 857 2,773 2,837 Advertising and
public relations 928 679 575 341 683 2,523 2,048 Legal expenses 395
242 468 2,627 2,626 3,732 4,178 Other 7,694 6,755
7,126 6,074 8,621 27,649 26,017
Total noninterest expenses $ 72,697 $ 61,231 $ 62,435 $
61,939 $ 66,371 $ 258,301 $ 233,356
Table 7 - Reconciliation of Non-GAAP
Financial Measures
As of and for the Three Months Ended
As of and for the Year
EndedDecember 31,
(In thousands, except share and per share data)
December 31,2018
September 30,2018
June 30,2018
March 31,2018
December 31,2017
2018 2017 Efficiency ratio
Noninterest expenses (numerator) $ 72,697 $ 61,231 $ 62,435 $
61,939 $ 66,371 $ 258,301 $ 233,356 Net interest income $ 103,146 $
98,100 $ 95,384 $ 91,111 $ 87,911 $ 387,741 $ 326,216 Noninterest
income 21,007 23,976 24,672 24,983
25,656 94,638 99,874 Operating revenue
(denominator) $ 124,153 $ 122,076 $ 120,056 $ 116,094 $ 113,567 $
482,379 $ 426,090 Efficiency ratio 58.55 % 50.16 %
52.00 % 53.35 % 58.44 % 53.55 %
54.77 %
Adjusted efficiency ratio Noninterest expenses $
72,697 $ 61,231 $ 62,435 $ 61,939 $ 66,371 $ 258,301 $ 233,356
Less: Merger related expenses 2,049 178 756 — — 2,983 — Less:
Secondary offerings expenses — 2,022 1,165 1,365 1,302 4,552 1,302
Less: Specially designated bonuses
9,795 — — — — 9,795 — Less: Other non-routine expenses(2) —
— 1,145 2,278 1,964 3,423
1,964 Adjusted noninterest expenses (numerator) $ 60,853 $ 59,031 $
59,369 $ 58,296 $ 63,105 $ 237,548 $ 230,090 Net interest income $
103,146 $ 98,100 $ 95,384 $ 91,111 $ 87,911 $ 387,741 $ 326,216
Noninterest income 21,007 23,976 24,672 24,983 25,656 94,638 99,874
Less: Gain on sale of insurance assets — — 4,871 — — 4,871 1,093
Less: Securities (losses) gains, net (54 ) 2
(1,813 ) 12 16 (1,853 ) (146 ) Adjusted
noninterest income 21,061 23,974 21,614
24,971 25,640 91,620 98,927 Adjusted operating
revenue (denominator) $ 124,207 $ 122,074 $ 116,998 $ 116,082 $
113,551 $ 479,361 $ 425,143 Adjusted efficiency ratio 48.99
% 48.36 % 50.74 % 50.22 % 55.57 %
49.56 % 54.12 %
Tangible common equity ratio
Shareholders’ equity $ 1,438,274 $ 1,414,826 $ 1,389,956 $
1,357,103 $ 1,359,056 $ 1,438,274 $ 1,359,056 Less: Goodwill and
other intangible assets, net (314,400 ) (314,998 )
(315,648 ) (327,247 ) (328,040 )
(314,400 ) (328,040 ) Tangible common shareholders’ equity
1,123,874 1,099,828 1,074,308 1,029,856
1,031,016 1,123,874 1,031,016 Total assets
12,730,285 11,759,837 11,305,528 10,999,382 10,948,926 12,730,285
10,948,926 Less: Goodwill and other intangible assets, net
(314,400 ) (314,998 ) (315,648 ) (327,247 )
(328,040 ) (314,400 ) (328,040 ) Tangible
assets $ 12,415,885 $ 11,444,839 $ 10,989,880 $ 10,672,135 $
10,620,886 $ 12,415,885 $ 10,620,886 Tangible common equity ratio
9.05 % 9.61 % 9.78 % 9.65 % 9.71
% 9.05 % 9.71 %
Tangible book value per share
Shareholders’ equity $ 1,438,274 $ 1,414,826 $ 1,389,956 $
1,357,103 $ 1,359,056 $ 1,438,274 $ 1,359,056 Less: Goodwill and
other intangible assets, net (314,400 ) (314,998 )
(315,648 ) (327,247 ) (328,040 )
(314,400 ) (328,040 ) Tangible common shareholders’ equity $
1,123,874 $ 1,099,828 $ 1,074,308 $ 1,029,856 $ 1,031,016 $
1,123,874 $ 1,031,016 Common shares outstanding 82,497,009
83,625,000 83,625,000 83,625,000
83,625,000 82,497,009 83,625,000 Tangible book value
per share $ 13.62 $ 13.15 $ 12.85 $ 12.32 $ 12.33 $ 13.62 $ 12.33
(1) Annualized for the three month periods. (2)
Other non-routine expenses for the second
quarter of 2018 included expenses related to the sale of the assets
of our insurance company. Non-routine expenses for the first
quarter of 2018 and fourth quarter of 2017, represent legal costs
associated with litigation related to a pre-acquisition matter of a
legacy acquired bank that has been resolved.
Table 7 (Continued) – Reconciliation of
Non-GAAP Measures
As of and for the Three Months Ended
As of and for the Year
EndedDecember 31,
(In thousands, except share and per share data)
December 31,2018
September 30,2018
June 30,2018
March 31,2018
December 31,2017
2018 2017 Return on average tangible common
equity Average common equity $ 1,412,643 $ 1,395,061 $
1,358,770 $ 1,342,445 $ 1,348,867 $ 1,377,471 $ 1,253,861 Less:
Average intangible assets (314,759 ) (315,382 )
(323,255 ) (327,727 ) (328,697 )
(320,232 ) (330,411 ) Average tangible common shareholders’
equity $ 1,097,884 $ 1,079,679 $ 1,035,515 $ 1,014,718 $ 1,020,170
$
1,057,239
$ 923,450 Net income $ 32,325 $ 47,136 $ 47,974 $ 38,825 $ 14,691 $
166,261
$ 102,353 Return on average tangible common equity(2) 11.68
% 17.32 % 18.58 % 15.52 % 5.71 %
15.73
% 11.08 %
Adjusted return on average tangible common
equity Average tangible common shareholders’ equity $ 1,097,884
$ 1,079,679 $ 1,035,515 $ 1,014,718 $ 1,020,170 $
1,057,239
$ 923,450 Net income $ 32,325 $ 47,136 $ 47,974 $ 38,825 $ 14,691 $
166,261 $ 102,353 Non-routine items: Plus: Merger related expenses
2,049 178 756 — — 2,983 — Plus: Secondary offerings expenses —
2,022 1,165 1,365 1,302 4,552 1,302 Plus: Specially designated
bonuses 9,795 — — — — 9,795 — Plus: Other non-routine expenses(2) —
— 1,145 2,278 1,964 3,423 1,964 Less: Gain on sale of insurance
assets — — 4,871 — - 4,871 1,093 Less: Securities gains (losses),
net (54 ) 2 (1,813 ) 12 16 (1,853 ) (146 ) Tax expense: Plus:
One-time tax charge related to Tax Reform — — — — 19,022 — 19,022
Less: Benefit of legacy loan bad debt deduction for tax — — 5,991 —
— 5,991 — Less: Income tax effect of tax deductible non-routine
items 2,759 34 (166 ) 529 721
3,157 376 Total non-routine items, after tax
9,139 2,164 (5,817 ) 3,102 21,551
8,587
20,965 Adjusted net income $ 41,464 $ 49,300 $ 42,157 $
41,927 $ 36,242 $
174,848
$ 123,318 Adjusted return on average tangible common equity(1)
14.98 % 18.12 % 16.33 % 16.76 %
14.09 %
16.54
% 13.35 %
Adjusted return on average assets Average
assets $ 12,249,819 $ 11,585,969 $ 11,218,432 $ 10,922,274 $
10,586,245 $ 11,498,013 $ 10,020,036 Adjusted net income $ 41,464 $
49,300 $ 42,157 $ 41,927 $ 36,242 $
174,848
$ 123,318 Adjusted return on average assets(1) 1.34 %
1.69 % 1.51 % 1.56 % 1.36 %
1.52
% 1.23 %
(1) Annualized. (2) Other non-routine expenses for the
second quarter of 2018 were $1.1 million and included expenses
related to the sale of the assets of our insurance company. This
compares to $2.3 million and $2.0 million for the first quarter of
2018 and fourth quarter of 2017, respectively, each representing
legal costs associated with litigation related to a pre-acquisition
matter of a legacy acquired bank that has been resolved.
Table 7 (Continued) – Reconciliation of
Non-GAAP Measures
As of and for the Three Months Ended
As of and for the Year
EndedDecember 31,
(In thousands, except share and per share data)
December 31,2018
September 30,2018
June 30,2018
March 31,2018
December 31,2017
2018 2017 Diluted weighted average
common shares outstanding 83,375,485 84,660,256
84,792,657 84,674,807 84,717,005
84,375,289 81,605,015 Net income allocated to common
stock $ 32,293 $ 47,080 $ 47,914 $ 38,825 $ 14,691 $ 166,064 $
102,353 Total non-routine items, after tax 9,139
2,164 (5,817 ) 3,102 21,551 8,587
20,965 Adjusted net income allocated to common stock $
41,432 $ 49,244 $ 42,097 $ 41,927 $ 36,242 $ 174,651 $ 123,318
Adjusted diluted earnings per share $ 0.50 $ 0.58 $ 0.50 $ 0.50 $
0.43 $ 2.07 $ 1.51
Adjusted pre-tax, pre-provision net
earnings Income before taxes $ 43,034 $ 62,210 $ 56,358 $
49,775 $ 51,671 $ 211,378 $ 182,999 Plus: Provision for credit
losses 8,422 (1,365 ) 1,263 4,380 (4,475 ) 12,700 9,735 Plus: Total
non-routine items before taxes 11,898 2,198 8
3,631 3,250 17,735 2,319 Adjusted
pre-tax, pre-provision net earnings $ 63,354 $ 63,043 $ 57,629 $
57,786 $ 50,446 $ 241,813 $ 195,053
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version on businesswire.com: https://www.businesswire.com/news/home/20190128005370/en/
Media contact:Danielle
Kernell713-871-4051danielle.kernell@cadencebank.com
Investor relations contact:Valerie Toalson713-871-4103 or
800-698-7878vtoalson@cadencebancorporation.com
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