Cadence Bancorporation (NYSE: CADE) (“Cadence”) today announced
net income for the quarter ended March 31, 2021, of $106.4 million
or $0.84 per share, compared to net income of $200.6 million or
$1.57 per share for the quarter ended December 31, 2020, and a net
loss of ($399.3) million or ($3.15) per share for the quarter ended
March 31, 2020. Adjusted net income(1), excluding non-routine
income and expenses(2), was $104.7 million or $0.83 per share for
the quarter ended March 31, 2021, compared to $199.7 million or
$1.57 per share for the quarter ended December 31, 2020, and
compared to $12.5 million or $0.10 per share for the quarter ended
March 31, 2020. The fourth quarter of 2020 net income included
accelerated hedge revenue of $129.5 million ($169.2 million
pretax), and the first quarter of 2020 net loss included goodwill
impairment of $412.9 million ($443.7 million pretax).
Chairman and Chief Executive Officer of Cadence Bancorporation,
Paul B. Murphy, Jr. commented, “We are excited to report a strong
start to 2021 at Cadence. The bank extended our trend of excellent
operating results with pre-tax, pre-provision revenue (PPNR) as a
percent of assets at 1.86%. As announced last week, we are very
excited about the pending merger with BancorpSouth and it has been
well received with our bankers, clients, and communities.”
First Quarter 2021
Highlights:
First quarter 2021 highlights are as follows:
- Adjusted pre-tax pre-provision net revenue(1) (“PPNR”) remained
strong at $86.4 million or 1.86% of average assets, compared to
fourth quarter 2020 PPNR of $260.0 million (or $90.8 million
excluding the fourth quarter accelerated hedge revenue).
- The allowance for credit losses (“ACL”) incorporated a ($48.3)
million provision release compared to a $2.8 million provision in
the linked quarter reflecting meaningful improvement in current
economic forecasts resulting from a decrease in COVID-19 driven
stress. The ACL remained robust at 2.49% of total loans, down from
2.89% at December 31, 2020. Excluding Paycheck Protection Program
(“PPP”) loans, our ACL to loans ratio was 2.67% at March 31, 2021,
down from 3.12% at December 31, 2020. Our ratio of ACL to total
nonperforming loans decreased slightly to 250% from 266% at
December 31, 2020.
- Our tax equivalent net interest margin (“NIM”) was 3.22%, down
32 basis points from prior quarter. The NIM decline was driven by
increased excess liquidity due to net declines in average loan
balances combined with lower hedge income accretion. The decline
was partially mitigated by a continued decline in total deposit
costs, which decreased 5 basis points in the quarter to 0.20%.
- Our adjusted efficiency ratio(1) remained stable at 53.1%.
- Our capital ratios remained strong, with the Common Equity Tier
1 ratio increasing to 14.2% and total risk weighted capital
remaining at 14.7%.
- Annualized returns on average assets and tangible common equity
were 2.29% and 22.8%, respectively.
- Adjusted annualized returns on average assets(1) and adjusted
tangible common equity(1) were 2.25% and 22.44%, respectively.
- We purchased approximately 1.6 million shares of our common
stock during the quarter at a cost of $30.0 million. Given the
previously announced pending merger with BancorpSouth, the stock
buyback activity has been placed on hold.
Balance Sheet:
Total assets were $18.8 billion as of March 31, 2021, an
increase of $87.8 million or 0.5% from December 31, 2020, and an
increase of $1.6 billion or 9.1% from March 31, 2020. The linked
quarter increase was driven by an increase in investment
securities, partially offset by decreases in loans.
Cash and Cash Equivalents at March 31, 2021, totaled $1.9
billion as compared to $2.1 billion at December 31, 2020 and
compared to $0.6 billion at March 31, 2020. The $165.4 million
decrease in the first quarter of 2021 was driven by investment in
securities.
Loans at March 31, 2021 totaled $12.4 billion as compared
to $12.7 billion at December 31, 2020, a decrease of $353.8 million
or 2.8%. Loans decreased $1.0 billion or 7.7% from $13.4 billion at
March 31, 2020. PPP loans declined by $131.0 million in the first
quarter, with the remaining non-PPP loan decline of $222.8 million
being driven by net paydowns and payoffs partially offset by
approximately $1.0 billion in loan fundings in the quarter. Notable
linked quarter decreases, excluding PPP loans, included General
C&I, down $138 million; Energy & Production, down $23
million, and Restaurant, down $33 million. These declines were
partially offset by an increase in CRE balances largely due to
construction draws in the industrial and multifamily
categories.
Investment Securities at March 31, 2021 totaled $3.9
billion as compared to $3.3 billion at December 31, 2020 and $2.5
billion at March 31, 2020. Securities as a percent of earning
assets was 19.1%, 18.6% and 14.7% at March 31, 2021, December 31,
2020, and March 31, 2020, respectively. The increase in securities
from both the prior year and linked quarter is a result of
increased balance sheet liquidity resulting from growth in deposits
and decreases in net loans. Securities acquired during the first
quarter include primarily U.S. government agency and agency
pass-through residential mortgage-backed securities.
Total Deposits at March 31, 2021 were $16.1 billion, an
increase of $77.0 million or 0.5% from December 31, 2020 and up
$1.6 billion or 11.3% from March 31, 2020. Non-interest bearing
deposits were $5.6 billion or 34.4% of total deposits at March 31,
2021, up from $5.0 billion or 31.4% of total deposits at December
31, 2020 and $4.0 billion or 27.3% at March 31, 2020. Total cost of
deposits declined to 0.20% for the first quarter 2021, meaningfully
lower than both the fourth quarter 2020 cost of 0.25% and the first
quarter 2020 cost of 0.96%.
Total Borrowings at March 31, 2021 were $333.0 million, a
decrease of $39.7 million from $372.7 million at December 31, 2020
and $372.4 million at March 31, 2020 due to repayment of $40
million in callable sub-debt at an annual rate of 4.91%.
Shareholders’ equity was $2.1 billion at March 31, 2021,
a decrease of $28.6 million or 1.3% from December 31, 2020 and a
decrease of $21.0 million or 1.0% from March 31, 2020. The linked
quarter decrease included a decline of $86.9 million in other
comprehensive income including a $68.8 million decrease in
unrealized gains on investment securities available-for-sale, $18.9
million in cash dividends and $30.0 million in common stock
buybacks, partially offset by quarterly net income of $106.4
million.
Tangible common shareholders’ equity(1) was $2.0 billion at
March 31, 2021, down $23.6 million or 1.2% from December 31, 2020
and virtually unchanged from March 31, 2020. The linked quarter
decrease resulted from the same factors noted above.
- Total shareholders’ equity to total assets and tangible equity
to tangible assets were 11.1% and 10.6%, respectively, at March 31,
2021 compared to 11.3% and 10.7% at December 31, 2020 and 12.3% and
11.5%, respectively, at March 31, 2020.
- Tangible book value per share(1) was $15.80 as of March 31,
2021, a slight decrease of $0.03 or 0.2% from $15.83 as of December
31, 2020, and an increase of $0.15 or 1.0% from $15.65 as of March
31, 2020.
- Total shares outstanding at March 31, 2021 were 124.7
million.
Quarter end regulatory capital ratios remained robust and
increased during the quarter as follows:
3/31/2021
12/31/2020
3/31/2020
Common equity Tier 1 capital
14.2%
14.0%
11.4%
Tier 1 leverage capital
10.9%
10.9%
10.1%
Tier 1 risk-based capital
14.2%
14.0%
11.4%
Total risk-based capital
16.7%
16.7%
13.8%
Asset Quality:
Credit quality metrics during the first quarter of 2021
reflected some notable improvements including lower net-charge offs
and declines in nonperforming and criticized loan balances.
- Net charge-offs for the first quarter of 2021 were $12.1
million or 0.39% annualized of average loans compared to $21.2
million or 0.64% annualized and $32.5 million or 0.99% annualized
for the quarters ended December 31, 2020 and March 31, 2020,
respectively. The current quarter charge-offs included $10.7
million in General C&I and $2.1 million in Energy.
- Provision for credit losses was a release of ($48.3) million
for the first quarter of 2021 as compared to $2.8 million for the
fourth quarter of 2020 and $83.4 million for the first quarter of
2020. The current quarter’s release was driven by improved economic
conditions and forecasts, as well as continued improvements in
nonperforming and criticized loans. The first quarter 2021
provision release included $29.5 million release in the CRE segment
(including releases of $11.1 million in the Hospitality category),
$9.6 million release in the C&I segment (including releases of
$9.5 million in the Restaurant category) and $7.9 million release
in the Consumer segment.
- The ACL was $308.0 million or 2.49% of total loans as of March
31, 2021, as compared to $367.2 million or 2.89% of total loans as
of December 31, 2020 and $245.2 million or 1.83% of total loans as
of March 31, 2020. Excluding PPP loans, the ACL was 2.67% of total
loans at March 31, 2021, down from 3.12% at December 31, 2020.
- The ACL for our $261.4 million Hospitality-CRE portfolio
decreased to 14.8% of total loans at March 31, 2021 compared 19.5%
at December 31, 2020. The ACL for our $804.7 million Restaurant
portfolio (excluding PPP loans) decreased to 5.3% of total loans at
March 31, 2021 as compared to 6.3% at December 31, 2020.
- Total nonperforming loans (“NPL”) as a percent of total loans
were 1.00% at March 31, 2021, compared to 1.08% at December 31,
2020 and 1.19% at March 31, 2020. NPL totaled $123.4 million,
$138.0 million and $159.7 million as of March 31, 2021, December
31, 2020 and March 31, 2020, respectively. The linked quarter
decline was due primarily to payoffs, upgrades, and net
charge-offs.
- The ACL to NPL was 249.7% as of March 31, 2021, as compared to
266.1% as of December 31, 2020 and 153.6% as of March 31,
2020.
- Total criticized loans at March 31, 2021 were $816.3 million or
6.6% of total loans as compared to $871.7 million or 6.9% at
December 31, 2020 and $665.7 million or 5.0% at March 31, 2020. The
linked quarter decrease was primarily in Restaurant, Energy,
Healthcare, and Hospitality-CRE.
- COVID related loan payment deferrals totaled $97 million at
March 31, 2021, down from $179 million at December 31, 2020.
- Loans 30-89 days past due were 0.40% of total loans at March
31, 2021, compared to 0.36% at December 31, 2020 and 0.19% at March
31, 2020.
Total Revenue:
Total operating revenue(1) for the first quarter of 2021 was
$186.4 million, down $180.0 million or 49.1% from the fourth
quarter of 2020 and down $2.1 million or 1.1% from the first
quarter of 2020. The fourth quarter of 2020 included $169.2 million
in accelerated hedge revenue.
Net interest income for the first quarter of 2021 was
$142.7 million, a decrease of $14.0 million or 8.9% from the fourth
quarter of 2020 and a decrease of $10.7 million or 7.0% from the
first quarter of 2020. Compared to the linked quarter, the net
interest income decline included $5.8 million in lower hedge
income, $3.0 million due to fewer days in the quarter, $4.0 million
due primarily to lower average loan balances and other balance
sheet mix shifts, $1.0 million in lower non-PPP loan fees and $0.8
million in lower PPP loan income, partially offset by $2.0 million
in lower funding costs driven by lower rates on deposits.
Our NIM for the first quarter of 2021 was 3.22% as compared to
3.54% for the linked quarter and 3.80% for the first quarter of
2020. Excluding the impact of PPP loans, the first quarter 2021 NIM
decreased by 34 basis points to 3.24% from 3.58% in the linked
quarter, with lower average loan balances, lower hedge income and
lower loan fees attributing 20, 14 and 3 basis points of the
decline, respectively, partially offset by 5 basis points of
improvement from lower deposit costs.
- Our total funding costs continued to decline in the quarter,
down $2.0 million to 0.29% compared to 0.35% in the prior quarter.
Total deposit costs declined by 5 basis points to 0.20% for the
current quarter compared to 0.25% for the linked quarter, and total
interest-bearing liability costs declined by 8 basis points to
0.43% from 0.51% in the linked quarter. Average interest-bearing
liabilities increased by $343.2 million or 3.2% from the prior
quarter to $11.2 billion, and average noninterest-bearing deposits
increased by $110.6 million or 2.1% from the prior quarter to $5.4
billion.
- Yield on loans excluding accretion and hedge income was 3.84%
in the current quarter, down 5 basis points from 3.89% in the
linked quarter. Excluding the impact of PPP loans, this yield was
3.91% in the current quarter, down from 3.98% for the linked
quarter, with approximately 4 basis points of the 7 basis point
decline due to lower fee recognition as a result of fewer loan
payoffs in the first quarter. Average loans declined $586.9 million
or 4.4% from the prior quarter to $12.7 billion.
- PPP loans averaged $877.6 million in the first quarter at a
yield of 2.95%, down from $1,023.1 million in the linked
quarter.
- Hedge income and collar gain recognition for the first quarter
of 2021 was $14.1 million as compared to $19.9 million for the
prior quarter.
- Accretion on acquired loans totaled $5.8 million for the first
quarter of 2021 as compared to $5.9 million for the prior
quarter.
- Yield on investment securities declined to 1.69% in the current
quarter compared to 1.87% in linked quarter, with the lower yield
reflecting the impact of securities purchased in the current and
prior quarter. Average investment securities increased $244.4
million or 7.6% from the prior quarter to $3.4 billion.
- Average federal funds sold and short-term investments increased
by $668.5 million or 53.2% from the prior quarter as a result of
increased balance sheet liquidity, with yields falling to 0.15%
compared to 0.18% linked quarter.
- Total earning asset yields declined to 3.49% in the current
quarter compared to 3.85% in the linked quarter, with average
balances increasing by $326.1 million or 1.8% to $18.0
billion.
- Excess liquidity in the first quarter negatively impacted the
NIM by an estimated 24 basis points compared to 14 basis points in
the linked quarter.
Noninterest income for the first quarter of 2021 was
$43.7 million, a decrease of $166.0 million or 79.2% from the
linked quarter, and an increase of $8.6 million or 24.6% from the
same period of 2020 and. Adjusted noninterest income(1) for the
first quarter of 2021 was $41.4 million, a decrease of $167.0
million or 80.1% from the linked quarter, and an increase of $9.4
million or 29.2% from the first quarter of 2020.
- The linked quarter decrease was driven by the hedge revenue of
$169.2 million that occurred in the fourth quarter of 2020. The
first quarter of 2021 also included increases of $1.3 million, $1.1
million, and $0.9 million in earnings from limited partnerships,
SBA income and securities gains, respectively. These items were
partially offset by decreases of $0.9 million in both mortgage
banking income and in credit related fees related to volumes.
- Noninterest income as a percent of total revenue for the first
quarter of 2021 was 23.4% as compared to 57.2% for the linked
quarter and 18.6% for the first quarter of 2020.
Noninterest expense for the first quarter of 2021 was
$97.8 million, compared to $105.3 million for the linked quarter
and compared to $537.7 million for the same period of 2020. The
first quarter of 2020 included a non-cash goodwill impairment
charge of $443.7 million. Adjusted noninterest expense(1), which
excludes the impact of non-routine items(2), was $97.8 million,
down $7.3 million or 6.9% from the linked quarter and up $5.3
million or 5.7% from the first quarter of 2020. The linked quarter
decrease in noninterest expenses resulted from:
- A decrease of $2.8 million in personnel costs driven by a
decrease of $7.4 million in equity compensation and annual
incentive compensation as the prior quarter included accrual
adjustments resulting from improved company performance. This
decrease was partially mitigated by a seasonal increase of $4.2
million in payroll taxes and employee benefits.
- A decrease of $1.5 million in FDIC insurance assessment due to
decreased nonperforming and criticized assets as well as quarterly
net earnings trends.
- A decrease of $1.2 million in other noninterest expenses due to
decreased expenses related to foreclosed real estate.
Adjusted efficiency ratio(1) for the first quarter of
2021 was 53.1%, compared to the linked quarter ratio of 28.8% and
the prior year’s first quarter ratio of 49.9%. The linked quarter
adjusted ratio included the hedge non-interest income of $169.2
million which did not recur in first quarter 2021.
____________________
(1)
Considered a non-GAAP financial
measure. See Table 10 “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 10 for a detail of
non-routine income and expenses.
Taxes:
The effective tax rate for the first quarter of 2021 was 22.3%
compared to 22.4% for the linked quarter and 7.7% for the first
quarter of 2020.
Dividend:
On April 22, 2021, the board of directors of Cadence
Bancorporation declared a quarterly cash dividend in the amount of
$0.15 per share of outstanding common stock, representing an
annualized dividend of $0.60 per share. The dividend will be paid
on May 14, 2021 to holders of record of Cadence’s Class A common
stock on May 7, 2021.
Supplementary Financial Tables
(Unaudited):
Supplementary financial tables (unaudited) are included in this
release following the customary disclosure information.
First Quarter 2021 Earnings Conference
Call:
Cadence Bancorporation executive management will host a
conference call to discuss first quarter 2021 results on Thursday,
April 22, 2021, at 7:30 a.m. CT / 8:30 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 “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:
9653528
For those unable to participate in the live presentation, a
replay will be available through May 6, 2021. 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:
10153918
Webcast Access:
The call and corresponding presentation slides will be webcast
live on the home page of the Company’s website:
www.cadencebancorporation.com.
About Cadence
Bancorporation:
Cadence Bancorporation (NYSE: CADE), headquartered in Houston,
Texas, is a regional financial holding company with $18.8 billion
in total assets as of March 31, 2021. Its wholly owned subsidiary,
Cadence Bank, N.A., 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, payroll and insurance
services, 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
approximately 1,800 associates is committed to exceeding customer
expectations and helping their clients succeed financially.
Cautionary Statement Regarding Forward-Looking
Information
Certain statements in this communication may constitute
“forward-looking statements” within the meaning of the Private
Securities Litigation Reform Act of 1995, Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended with respect to
BancorpSouth Bank’s and Cadence Bancorporation’s and Cadence Bank’s
(together, “Cadence”) beliefs, plans, goals, expectations, and
estimates. Forward-looking statements are not a representation of
historical information but instead pertain to future operations,
strategies, financial results or other developments. These
forward-looking statements may be identified by their reference to
a future period or periods or by the use of forward-looking
terminology such as “anticipate,” “believe,” “could,” “continue,”
“seek,” “intend,” “estimate,” “expect,” “foresee,” “hope,”
“intend,” “may,” “might,” “plan,” “should,” “predict,” “project,”
“goal,” “outlook,” “potential,” “will,” “will result,” “will likely
result,” or “would” or future or conditional verb tenses and
variations or negatives of such terms. These forward-looking
statements include, without limitation, those relating to the
terms, timing and closing of the proposed transaction.
Cadence cautions readers not to place undue reliance on the
forward-looking statements contained in this communication, in that
actual results could differ materially from those indicated in such
forward-looking statements as a result of a variety of factors,
many of which are beyond the control of BancorpSouth Bank and
Cadence. The factors that could cause actual results to differ
materially include the following: the occurrence of any event,
change or other circumstances that could give rise to the right of
one or both of the parties to terminate the definitive merger
agreement between BancorpSouth Bank and Cadence; the outcome of any
legal proceedings that may be instituted against BancorpSouth Bank
or Cadence; the possibility that the proposed transaction will not
close when expected or at all because required regulatory,
shareholder or other approvals are not received or other conditions
to the closing are not satisfied on a timely basis or at all, or
are obtained subject to conditions that are not anticipated; the
ability of BancorpSouth Bank and Cadence to meet expectations
regarding the timing, completion and accounting and tax treatments
of the proposed transaction; the risk that any announcements
relating to the proposed transaction could have adverse effects on
the market price of the common stock of either or both parties to
the proposed transaction; the possibility that the anticipated
benefits of the proposed transaction will not be 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 BancorpSouth Bank and Cadence do business; certain
restrictions during the pendency of the proposed transaction that
may impact the parties’ ability to pursue certain business
opportunities or strategic transactions; 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; the possibility that the parties may be unable to
achieve expected synergies and operating efficiencies in the merger
within the expected timeframes or at all and to successfully
integrate Cadence’s operations and those of BancorpSouth Bank; such
integration may be more difficult, time consuming or costly than
expected; revenues following the proposed transaction may be lower
than expected; potential adverse reactions or changes to business
or employee relationships, including those resulting from the
announcement or completion of the proposed transaction;
BancorpSouth Bank and Cadence’s success in executing their
respective business plans and strategies and managing the risks
involved in the foregoing; the dilution caused by BancorpSouth
Bank’s issuance of additional shares of its capital stock in
connection with the proposed transaction; 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; 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 identity 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 extent of the
impact of the COVID-19 pandemic on us and our customers,
counterparties, employees and third-party service providers, and
the impacts to our business, financial position, results of
operations, and prospects; and other factors that may affect future
results of BancorpSouth Bank and Cadence; and the other factors
discussed in “Risk Factors” in BancorpSouth Bank’s Annual Report on
Form 10-K for the year ended December 31, 2020 and BancorpSouth
Bank’s other filings with the Federal Deposit Insurance Corporation
(the “FDIC”), which are available at https://www.fdic.gov/ and in
the “Investor Relations” section of BancorpSouth Bank’s website,
https://www.bancorpsouth.com/, under the heading “Public Filings,”
and in Cadence’s Annual Report on Form 10-K for the year ended
December 31, 2020 and in Cadence’s other filings with the U.S.
Securities and Exchange Commission (the “SEC”), which are available
at http://www.sec.gov and in the “Investor Relations” section of
Cadence’s website, https://cadencebancorporation.com/, under the
heading “SEC Filings.” BancorpSouth Bank and Cadence assume no
obligation to update the information in this communication, except
as otherwise required by law.
Additional Information and Where to Find It
This communication may be deemed to be solicitation material in
respect of the proposed transaction by BancorpSouth Bank and
Cadence. In connection with the proposed acquisition, BancorpSouth
Bank and Cadence intend to file relevant materials with the FDIC
and SEC, respectively, including the parties’ joint proxy statement
on Schedule 14A, which shall include an offering circular with
respect to the common stock of BancorpSouth Bank. STOCKHOLDERS
OF BANCORPSOUTH BANK AND CADENCE ARE URGED TO READ ALL RELEVANT
DOCUMENTS FILED WITH THE FDIC AND SEC WHEN THEY BECOME AVAILABLE,
INCLUDING THE JOINT PROXY STATEMENT/OFFERING CIRCULAR, BECAUSE THEY
WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED
TRANSACTION. Investors and security holders will be able to
obtain the documents free of charge at the FDIC’s website,
https://www.fdic.gov/, and the SEC’s website, http://www.sec.gov,
and the Cadence stockholders will receive information at an
appropriate time on how to obtain transaction-related documents
free of charge from Cadence. Such documents are not currently
available.
Participants in Solicitation
BancorpSouth Bank and its directors and executive officers, and
Cadence and its directors and executive officers, may be deemed to
be participants in the solicitation of proxies from the holders of
BancorpSouth Bank common stock and the holders of Cadence common
stock in respect of the proposed transaction. Information about the
directors and executive officers of BancorpSouth Bank is set forth
in the proxy statement for BancorpSouth Bank’s 2021 Annual Meeting
of Stockholders, which was filed with the FDIC on March 12, 2021.
Information about the directors and executive officers of Cadence
is set forth in the proxy statement for Cadence’s 2021 Annual
Meeting of Stockholders, which was filed with the SEC on March 26,
2021. Investors may obtain additional information regarding the
interest of such participants by reading the joint proxy
statement/offering circular regarding the proposed transaction when
it becomes available. Free copies of this document may be obtained
as described in the preceding paragraph.
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 revenue” 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 10).
Table 1 – Selected Financial
Data
As of and for the Three Months
Ended
(In thousands, except share and per
share data)
1Q 2021
4Q 2020
3Q 2020
2Q 2020
1Q 2020
Income Statement Data
Interest income
$
154,701
$
170,739
$
170,497
$
177,175
$
192,754
Interest expense
11,953
13,998
16,455
22,461
39,286
Net interest income
142,748
156,741
154,042
154,714
153,468
Provision (release) for credit losses
(48,262
)
2,835
32,973
158,811
83,429
Net interest income after provision
(release)
191,010
153,906
121,069
(4,097
)
70,039
Noninterest income (1)
43,696
209,745
32,591
29,950
35,069
Noninterest expense (2)
97,822
105,331
94,859
88,620
537,653
Income (loss) before income taxes
136,884
258,320
58,801
(62,767
)
(432,545
)
Income tax expense (benefit)
30,459
57,737
9,486
(6,653
)
(33,234
)
Net income (loss)
$
106,425
$
200,583
$
49,315
$
(56,114
)
$
(399,311
)
Weighted average common shares
outstanding
Basic
125,079,250
125,973,736
125,956,714
125,924,652
126,630,446
Diluted
125,621,508
126,408,959
126,094,868
125,924,652
126,630,446
Earnings (loss) per share
Basic
$
0.85
$
1.58
$
0.39
$
(0.45
)
$
(3.15
)
Diluted
0.84
1.57
0.39
(0.45
)
(3.15
)
Period-End Balance Sheet Data
Cash and cash equivalents
$
1,888,518
$
2,053,946
$
1,247,172
$
1,899,369
$
609,351
Investment securities
3,918,666
3,332,168
3,088,699
2,661,433
2,461,644
Total loans, net of unearned income
12,365,334
12,719,129
13,465,556
13,699,097
13,392,191
Allowance for credit losses
308,037
367,160
385,412
370,901
245,246
Total assets
18,800,350
18,712,567
18,404,195
18,857,753
17,237,918
Total deposits
16,129,199
16,052,245
15,786,221
16,069,282
14,489,505
Noninterest-bearing deposits
5,556,217
5,033,748
5,033,338
5,220,109
3,959,721
Interest-bearing deposits
10,572,982
11,018,497
10,752,883
10,849,173
10,529,784
Borrowings and subordinated debentures
332,984
372,669
372,446
372,222
372,440
Total shareholders’ equity
2,092,536
2,121,102
2,071,472
2,045,480
2,113,543
Average Balance Sheet Data
Investment securities
$
3,446,172
$
3,201,722
$
2,960,357
$
2,487,467
$
2,397,275
Total loans, net of unearned income
12,651,585
13,238,440
13,652,395
13,884,220
13,161,371
Allowance for credit losses
370,736
393,306
389,243
267,464
201,785
Total assets
18,837,133
18,354,046
18,248,014
18,500,600
17,694,018
Total deposits
16,200,631
15,736,884
15,628,314
15,774,787
14,574,614
Noninterest-bearing deposits
5,356,120
5,245,478
4,892,079
4,587,673
3,658,612
Interest-bearing deposits
10,844,511
10,491,406
10,736,235
11,187,115
10,916,002
Borrowings and subordinated debentures
363,046
372,920
372,304
372,547
439,698
Total shareholders’ equity
2,085,712
2,072,030
2,052,079
2,118,796
2,446,810
(1)
For 4Q 2020, includes hedge
revenue of $169.2 million, $129.5 million after tax
(2)
For 1Q 2020, includes the
non-cash goodwill impairment charge of $443.7 million, $412.9
million after-tax.
Table 1 (Continued) – Selected
Financial Data
As of and for the Three Months
Ended
(In thousands, except share and per
share data)
1Q 2021
4Q 2020
3Q 2020
2Q 2020
1Q 2020
Per Share Data:
Book value
$
16.78
$
16.84
$
16.45
$
16.24
$
16.79
Tangible book value (1)
15.80
15.83
15.40
15.15
15.65
Cash dividends declared
0.150
0.075
0.050
0.050
0.175
Dividend payout ratio
17.65
%
4.75
%
12.82
%
(11.11
)%
(5.56
)%
Performance Ratios:
Return on average common equity (2)
20.69
%
38.51
%
9.56
%
(10.65
)%
(65.64
)%
Return on average tangible common equity
(1) (2)
22.80
41.90
11.08
(10.56
)
3.86
Return on average assets (2)
2.29
4.35
1.08
(1.22
)
(9.08
)
Net interest margin (2)
3.22
3.54
3.49
3.51
3.80
Efficiency ratio (1)
52.47
28.74
50.83
47.99
285.17
Adjusted efficiency ratio (1)
53.11
28.79
49.45
47.93
49.88
Asset Quality Ratios:
Total NPA to total loans, OREO, and other
NPA
1.15
%
1.24
%
1.55
%
1.74
%
1.31
%
Total nonperforming loans ("NPL") to total
loans
1.00
1.08
1.40
1.64
1.19
Total ACL to total loans
2.49
2.89
2.86
2.71
1.83
ACL to total NPL
249.70
266.05
203.82
165.30
153.61
Net charge-offs to average loans (2)
0.39
0.64
0.58
0.94
0.99
Capital Ratios:
Total shareholders’ equity to assets
11.1
%
11.3
%
11.3
%
10.8
%
12.3
%
Tangible common equity to tangible assets
(1)
10.6
10.7
10.6
10.2
11.5
Common equity Tier 1 capital (3)
14.2
14.0
12.0
11.7
11.4
Tier 1 leverage capital (3)
10.9
10.9
9.9
9.5
10.1
Tier 1 risk-based capital (3)
14.2
14.0
12.0
11.7
11.4
Total risk-based capital (3)
16.7
16.7
14.7
14.3
13.8
(1)
Considered a non-GAAP financial
measure. See Table 10 "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)
Current quarter regulatory
capital ratios are estimates.
Table 2 – Average
Balances/Yield/Rates
For the Three Months Ended
March 31,
2021
2020
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 loans
$
10,611,240
$
113,735
4.35
%
$
10,213,846
$
129,402
5.10
%
ANCI portfolio
1,879,832
22,710
4.90
2,731,240
40,650
5.99
PCD portfolio
160,513
3,378
8.54
216,285
5,082
9.45
Total loans
12,651,585
139,824
4.48
13,161,371
175,134
5.35
Investment securities
Taxable
3,117,348
11,821
1.54
2,198,528
14,015
2.56
Tax-exempt (2)
328,824
2,576
3.18
198,747
1,807
3.66
Total investment securities
3,446,172
14,397
1.69
2,397,275
15,822
2.65
Federal funds sold and short-term
investments
1,848,748
684
0.15
628,885
1,783
1.14
Other investments
75,621
337
1.81
80,173
394
1.98
Total interest-earning assets
18,022,126
155,242
3.49
16,267,704
193,133
4.77
Noninterest-earning assets:
Cash and due from banks
346,289
250,804
Premises and equipment
124,351
127,812
Accrued interest and other assets
715,103
1,249,483
Allowance for credit losses
(370,736
)
(201,785
)
Total assets
$
18,837,133
$
17,694,018
LIABILITIES AND SHAREHOLDERS'
EQUITY
Interest-bearing liabilities:
Demand deposits
$
8,275,895
$
3,596
0.18
%
$
8,121,641
$
21,667
1.07
%
Savings deposits
353,826
108
0.12
272,444
317
0.47
Time deposits
2,214,790
4,277
0.78
2,521,917
12,744
2.03
Total interest-bearing deposits
10,844,511
7,981
0.30
10,916,002
34,728
1.28
Other borrowings
149,989
927
2.51
217,363
1,108
2.05
Subordinated debentures
213,057
3,045
5.80
222,335
3,450
6.24
Total interest-bearing liabilities
11,207,557
11,953
0.43
11,355,700
39,286
1.39
Noninterest-bearing
liabilities:
Demand deposits
5,356,120
3,658,612
Accrued interest and other liabilities
187,744
232,896
Total liabilities
16,751,421
15,247,208
Shareholders' equity
2,085,712
2,446,810
Total liabilities and shareholders'
equity
$
18,837,133
$
17,694,018
Net interest income/net interest
spread
143,289
3.06
%
153,847
3.38
%
Net yield on earning assets/net interest
margin
3.22
%
3.80
%
Taxable equivalent adjustment:
Investment securities
(541
)
(379
)
Net interest income
$
142,748
$
153,468
(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 federal
income tax rate of 21%.
Table 2 (Continued) – Average
Balances/Yield/Rates
For the Three Months
Ended
March 31, 2021
December 31, 2020
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 loans
$
10,611,240
$
113,735
4.35
%
$
10,939,304
$
125,535
4.57
%
ANCI portfolio
1,879,832
22,710
4.90
2,126,553
25,943
4.85
PCD portfolio
160,513
3,378
8.54
172,583
3,820
8.81
Total loans
12,651,585
139,824
4.48
13,238,440
155,298
4.67
Investment securities
Taxable
3,117,348
11,821
1.54
2,895,541
12,597
1.73
Tax-exempt (2)
328,824
2,576
3.18
306,181
2,427
3.15
Total investment securities
3,446,172
14,397
1.69
3,201,722
15,024
1.87
Federal funds sold and short-term
investments
1,848,748
684
0.15
1,178,973
548
0.18
Other investments
75,621
337
1.81
76,878
380
1.97
Total interest-earning assets
18,022,126
155,242
3.49
17,696,013
171,250
3.85
Noninterest-earning assets:
Cash and due from banks
346,289
216,116
Premises and equipment
124,351
125,955
Accrued interest and other assets
715,103
709,268
Allowance for credit losses
(370,736
)
(393,306
)
Total assets
$
18,837,133
$
18,354,046
LIABILITIES AND STOCKHOLDERS'
EQUITY
Interest-bearing liabilities:
Demand deposits
$
8,275,895
$
3,596
0.18
%
$
7,881,093
$
4,145
0.21
%
Savings deposits
353,826
108
0.12
336,304
127
0.15
Time deposits
2,214,790
4,277
0.78
2,274,009
5,711
1.00
Total interest-bearing deposits
10,844,511
7,981
0.30
10,491,406
9,983
0.38
Other borrowings
149,989
927
2.51
149,981
931
2.47
Subordinated debentures
213,057
3,045
5.80
222,939
3,085
5.51
Total interest-bearing liabilities
11,207,557
11,953
0.43
10,864,326
13,999
0.51
Noninterest-bearing
liabilities:
Demand deposits
5,356,120
5,245,478
Accrued interest and other liabilities
187,744
172,212
Total liabilities
16,751,421
16,282,016
Stockholders' equity
2,085,712
2,072,030
Total liabilities and stockholders'
equity
$
18,837,133
$
18,354,046
Net interest income/net interest
spread
143,289
3.06
%
157,251
3.34
%
Net yield on earning assets/net interest
margin
3.22
%
3.54
%
Taxable equivalent adjustment:
Investment securities
(541
)
(510
)
Net interest income
$
142,748
$
156,741
_____________________
(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 federal
income tax rate of 21%.
Table 3 – Loan Interest Income
Detail
For the Quarters,
(In thousands)
1Q 2021
4Q 2020
3Q 2020
2Q 2020
1Q 2020
Interest Income Detail
Originated loans
$
113,735
$
125,535
$
123,177
$
125,922
$
129,402
ANCI loans: interest income
17,832
20,507
22,850
26,264
32,940
ANCI loans: accretion
4,879
5,436
5,364
6,703
7,710
PCD loans: interest income
2,433
3,355
2,421
3,111
3,039
PCD loans: accretion
945
465
1,039
854
2,043
Total loan interest income
$
139,824
$
155,298
$
154,851
$
162,854
$
175,134
Yields
Originated loans
4.35
%
4.57
%
4.39
%
4.53
%
5.10
%
ANCI loans without discount accretion
3.85
3.84
3.96
4.20
4.85
ANCI loans discount accretion
1.05
1.01
0.93
1.08
1.14
PCD loans without discount accretion
6.15
7.73
5.11
6.30
5.65
PCD loans discount accretion
2.39
1.08
2.20
1.73
3.80
Total loan yield
4.48
%
4.67
%
4.51
%
4.72
%
5.35
%
Table 4 – Allowance for Credit
Losses (“ACL”) (1)
For the Three Months
Ended
(In thousands)
1Q 2021
4Q 2020
3Q 2020
2Q 2020
1Q 2020
Balance at beginning of period
$
367,160
$
385,412
$
370,901
$
245,246
$
119,643
Cumulative effect of the adoption of CECL
(2)
—
—
—
—
75,850
Charge-offs
(14,671
)
(23,956
)
(21,830
)
(33,452
)
(33,098
)
Recoveries
2,563
2,770
1,936
901
613
Net charge-offs
(12,108
)
(21,186
)
(19,894
)
(32,551
)
(32,485
)
Provision (release) for loan losses
(47,015
)
2,934
34,405
158,206
82,238
Balance at end of period
$
308,037
$
367,160
$
385,412
$
370,901
$
245,246
(1)
This table represents the
activity in the ACL for funded loans.
(2)
The Company adopted ASU 2016-13,
Financial Instruments – Credit Losses (“CECL”), on January 1, 2020
and recorded this cumulative effect adjustment as a result of
accounting change.
Table 5 – ACL Activity by
Segment
For the Three Months Ended
March 31, 2021
(In thousands)
Commercial and
Industrial
Commercial Real Estate
Consumer
Total Allowance for Credit
Losses
Reserve for Unfunded
Commitments (1)
Total
As of December 31, 2020
$
187,365
$
141,187
$
38,608
$
367,160
$
2,296
$
369,456
Provision (release) for credit losses
(9,594
)
(29,481
)
(7,940
)
(47,015
)
(1,247
)
(48,262
)
Charge-offs
(14,124
)
(401
)
(146
)
(14,671
)
—
(14,671
)
Recoveries
1,724
105
734
2,563
—
2,563
As of March 31, 2021
$
165,371
$
111,410
$
31,256
$
308,037
$
1,049
$
309,086
For the Three Months Ended
December 31, 2020
(In thousands)
Commercial and
Industrial
Commercial Real Estate
Consumer
Total Allowance for Credit
Losses
Reserve for Unfunded
Commitments (1)
Total
As of September 30, 2020
$
202,197
$
143,008
$
40,207
$
385,412
$
2,395
$
387,807
Provision (release) for credit losses
(2,990
)
7,372
(1,448
)
2,934
(99
)
2,835
Charge-offs
(12,870
)
(10,500
)
(586
)
(23,956
)
—
(23,956
)
Recoveries
1,028
1,307
435
2,770
—
2,770
As of December 31, 2020
$
187,365
$
141,187
$
38,608
$
367,160
$
2,296
$
369,456
(1)
The reserve for unfunded
commitments is recorded in other liabilities in the consolidated
balance sheets.
Table 6 – Criticized Loans by
Segment
As of March 31, 2021
(2)
(Amortized cost in thousands)
Special Mention
Substandard
Doubtful
Total Criticized
Commercial and industrial
General C&I
$
40,518
$
117,658
$
4,334
$
162,510
Energy
73,333
148,099
16,717
238,149
Restaurant
50,619
126,536
4,778
181,933
Healthcare
1,953
15,258
—
17,211
Total commercial and industrial
166,423
407,551
25,829
599,803
Commercial real estate
Industrial, retail, and other
25,206
39,503
—
64,709
Hospitality (1)
31,097
85,395
—
116,492
Multifamily
90
1,425
—
1,515
Office
5,699
13,774
—
19,473
Total commercial real estate
62,092
140,097
—
202,189
Consumer
Residential
—
14,286
—
14,286
Other
—
37
—
37
Total consumer
—
14,323
—
14,323
Total
$
228,515
$
561,971
$
25,829
$
816,315
(1) Hospitality balances have historically
been included in Industrial, retail, and other.
(2) Criticized loans do not include loans
held for sale of $3.6 million.
As of December 31, 2020
(2)
(Amortized cost in thousands)
Special Mention
Substandard
Doubtful
Total Criticized
Commercial and industrial
General C&I
$
61,910
$
90,896
$
12,583
$
165,389
Energy
93,708
150,810
8,115
252,633
Restaurant
55,141
133,709
6,987
195,837
Healthcare
761
29,614
—
30,375
Total commercial and industrial
211,520
405,029
27,685
644,234
Commercial real estate
Industrial, retail, and other
35,992
26,540
—
62,532
Hospitality (1)
54,449
83,460
—
137,909
Multifamily
90
198
—
288
Office
4,863
7,843
—
12,706
Total commercial real estate
95,394
118,041
—
213,435
Consumer
Residential
—
14,023
—
14,023
Other
—
4
—
4
Total consumer
—
14,027
—
14,027
Total
$
306,914
$
537,097
$
27,685
$
871,696
(1) Hospitality balances were previously
reported in Industrial, retail, and other but have been
reclassified to match current period presentation.
(2) Criticized loans do not include loans
held for sale of $0.4 million.
Table 7 – Nonperforming
Assets
As of
(In thousands)
1Q 2021 (1)
4Q 2020 (1)
3Q 2020
2Q 2020
1Q 2020
Nonperforming loans
Commercial and industrial
$
94,153
$
109,410
$
145,991
$
183,441
$
137,301
Commercial real estate
14,846
14,559
26,742
24,659
7,544
Consumer
14,364
14,033
16,364
16,284
14,808
Total nonperforming loans ("NPL")
123,363
138,002
189,097
224,384
159,653
Foreclosed OREO and other NPA
19,125
19,788
20,344
13,949
15,679
Total nonperforming assets
$
142,488
$
157,790
$
209,441
$
238,333
$
175,332
NPL as a percentage of total loans
1.00
%
1.08
%
1.40
%
1.64
%
1.19
%
NPA as a percentage of loans plus
OREO/other
1.15
%
1.24
%
1.55
%
1.74
%
1.31
%
NPA as a percentage of total assets
0.76
%
0.84
%
1.14
%
1.26
%
0.99
%
Total accruing loans 90 days or more past
due
$
1,399
$
13,880
$
7,260
$
3,123
$
1,999
(1)
Nonperforming loans do not
include nonperforming loans held for sale of $3.4 million and $0.2
million at March 31, 2021 and December 31, 2020, respectively.
Table 8 – Noninterest
Income
For the Three Months
Ended
(In thousands)
1Q 2021
4Q 2020
3Q 2020
2Q 2020
1Q 2020
Noninterest Income
Hedge revenue
$
—
$
169,248
$
—
$
—
$
—
Investment advisory revenue
7,609
7,457
6,797
6,505
5,605
Trust services revenue
5,509
4,885
4,556
4,092
4,815
Service charges on deposit accounts
6,404
6,028
5,847
4,852
6,416
Mortgage banking income
2,115
3,062
3,535
2,020
1,111
Credit-related fees
3,849
4,766
4,202
4,401
5,983
Bankcard fees
1,753
1,775
1,745
1,716
1,958
Payroll processing revenue
1,490
1,309
1,255
1,143
1,367
SBA income
3,967
2,889
3,037
1,335
1,908
Other service fees
2,209
1,751
1,450
1,528
1,912
Securities gains, net
2,259
1,353
79
2,286
2,994
Other
6,532
5,222
88
72
1,000
Total noninterest income
$
43,696
$
209,745
$
32,591
$
29,950
$
35,069
Table 9 – Noninterest
Expenses
For the Three Months
Ended
(In thousands)
1Q 2021
4Q 2020
3Q 2020
2Q 2020
1Q 2020
Noninterest Expenses
Salaries and employee benefits
$
57,070
$
59,833
$
51,734
$
47,158
$
48,807
Premises and equipment
10,374
11,036
10,716
10,634
10,808
Merger related expenses
—
—
2,105
—
1,282
Intangible asset amortization
4,986
5,164
5,299
5,472
5,592
Data processing
3,259
3,047
3,024
3,084
3,352
Software amortization
4,507
4,480
4,432
4,036
3,547
Consulting and professional fees
3,233
3,450
3,320
3,009
2,707
Loan related expenses
796
631
953
735
760
FDIC insurance
1,465
3,007
2,528
3,939
2,436
Communications
1,243
1,175
1,119
1,002
1,156
Advertising and public relations
927
956
716
920
1,464
Legal expenses
925
726
681
579
411
Other
9,037
11,826
8,232
8,052
11,636
Noninterest expenses excluding goodwill
impairment charge
97,822
105,331
94,859
88,620
93,958
Goodwill impairment charge
—
—
—
—
443,695
Total noninterest expenses
$
97,822
$
105,331
$
94,859
$
88,620
$
537,653
Table 10 – Reconciliation of
Non-GAAP Financial Measures
As of and for the Three Months
Ended
(In thousands, except share and per
share data)
1Q 2021
4Q 2020
3Q 2020
2Q 2020
1Q 2020
Efficiency ratio
Noninterest expenses (numerator)
$
97,822
$
105,331
$
94,859
$
88,620
$
537,653
Net interest income
$
142,748
$
156,741
$
154,042
$
154,714
$
153,468
Noninterest income
43,696
209,745
32,591
29,950
35,069
Operating revenue (denominator)
$
186,444
$
366,486
$
186,633
$
184,664
$
188,537
Efficiency ratio
52.47
%
28.74
%
50.83
%
47.99
%
285.17
%
Adjusted efficiency ratio
Noninterest expenses
$
97,822
$
105,331
$
94,859
$
88,620
$
537,653
Less: non-cash goodwill impairment
charge
—
—
—
—
443,695
Less: merger related expenses
—
—
2,105
—
1,282
Less: expenses related to COVID-19
pandemic
—
215
235
1,205
122
Adjusted noninterest expenses
(numerator)
$
97,822
$
105,116
$
92,519
$
87,415
$
92,554
Net interest income
$
142,748
$
156,741
$
154,042
$
154,714
$
153,468
Noninterest income
43,696
209,745
32,591
29,950
35,069
Plus: impairment charge on branch
building
—
—
538
—
—
Less: securities gains, net
2,259
1,353
79
2,286
2,994
Adjusted noninterest income
41,437
208,392
33,050
27,664
32,075
Adjusted operating revenue
(denominator)
$
184,185
$
365,133
$
187,092
$
182,378
$
185,543
Adjusted efficiency ratio
53.11
%
28.79
%
49.45
%
47.93
%
49.88
%
Tangible common equity ratio
Shareholders’ equity
$
2,092,536
$
2,121,102
$
2,071,472
$
2,045,480
$
2,113,543
Less: goodwill and other intangible
assets, net
(121,856
)
(126,841
)
(132,005
)
(137,318
)
(142,782
)
Tangible common shareholders’ equity
1,970,680
1,994,261
1,939,467
1,908,162
1,970,761
Total assets
18,800,350
18,712,567
18,404,195
18,857,753
17,237,918
Less: goodwill and other intangible
assets, net
(121,856
)
(126,841
)
(132,005
)
(137,318
)
(142,782
)
Tangible assets
$
18,678,494
$
18,585,726
$
18,272,190
$
18,720,435
$
17,095,136
Tangible common equity ratio
10.55
%
10.73
%
10.61
%
10.19
%
11.53
%
Tangible book value per share
Shareholders’ equity
$
2,092,536
$
2,121,102
$
2,071,472
$
2,045,480
$
2,113,543
Less: goodwill and other intangible
assets, net
(121,856
)
(126,841
)
(132,005
)
(137,318
)
(142,782
)
Tangible common shareholders’ equity
$
1,970,680
$
1,994,261
$
1,939,467
$
1,908,162
$
1,970,761
Common shares outstanding
124,698,518
125,978,561
125,946,793
125,930,741
125,897,827
Tangible book value per share
$
15.80
$
15.83
$
15.40
$
15.15
$
15.65
Table 10 (Continued) –
Reconciliation of Non-GAAP Measures
As of and for the Three Months
Ended
(In thousands, except share and per
share data)
1Q 2021
4Q 2020
3Q 2020
2Q 2020
1Q 2020
Return on average tangible common
equity
Average common equity
$
2,085,712
$
2,072,030
$
2,052,079
$
2,118,796
$
2,446,810
Less: average intangible assets
(125,042
)
(130,146
)
(135,491
)
(140,847
)
(584,513
)
Average tangible common shareholders’
equity
$
1,960,670
$
1,941,884
$
1,916,588
$
1,977,949
$
1,862,297
Net income (loss)
$
106,425
$
200,583
$
49,315
$
(56,114
)
$
(399,311
)
Plus: non-cash goodwill impairment charge,
net of tax
—
—
—
—
412,918
Plus: intangible asset amortization, net
of tax
3,809
3,939
4,042
4,174
4,261
Tangible net income (loss)
$
110,234
$
204,522
$
53,357
$
(51,940
)
$
17,868
Return on average tangible common
equity(1)
22.80
%
41.90
%
11.08
%
(10.56
)%
3.86
%
Adjusted return on average tangible
common equity
Average tangible common shareholders’
equity
$
1,960,670
$
1,941,884
$
1,916,588
$
1,977,949
$
1,862,297
Tangible net income (loss)
$
110,234
$
204,522
$
53,357
$
(51,940
)
$
17,868
Non-routine items:
Plus: merger related expenses
—
—
2,105
—
1,282
Plus: expenses related to COVID-19
pandemic
—
215
235
1,205
122
Plus: impairment loss on branch
building
—
—
538
—
—
Less: securities gains, net
2,259
1,353
79
2,286
2,994
Less: income tax effect of tax deductible
non-routine items
(533
)
(270
)
664
(256
)
(464
)
Total non-routine items, after tax
(1,726
)
(868
)
2,135
(825
)
(1,126
)
Adjusted tangible net income (loss)
$
108,508
$
203,654
$
55,492
$
(52,765
)
$
16,742
Adjusted return on average tangible common
equity(1)
22.44
%
41.72
%
11.52
%
(10.73
)%
3.62
%
Adjusted return on average
assets
Average assets
$
18,837,133
$
18,354,046
$
18,248,014
$
18,500,600
$
17,694,018
Net income (loss)
$
106,425
$
200,583
$
49,315
$
(56,114
)
$
(399,311
)
Return on average assets
2.29
%
4.35
%
1.08
%
(1.22
)%
(9.08
)%
Net income (loss)
$
106,425
$
200,583
$
49,315
$
(56,114
)
$
(399,311
)
Plus: non-cash goodwill impairment charge,
net of tax
—
—
—
—
412,918
Total non-routine items, after tax
(1,726
)
(868
)
2,135
(825
)
(1,126
)
Adjusted net income (loss)
$
104,699
$
199,715
$
51,450
$
(56,939
)
$
12,481
Adjusted return on average assets(1)
2.25
%
4.33
%
1.12
%
(1.24
)%
0.28
%
Adjusted diluted earnings (loss) per
share
Diluted weighted average common shares
outstanding
125,621,508
126,408,959
126,094,868
125,924,652
126,630,446
Net income (loss) allocated to common
stock
$
105,829
$
198,765
$
48,884
$
(56,114
)
$
(399,311
)
Plus: non-cash goodwill impairment, net of
tax
—
—
—
—
412,918
Total non-routine items, after tax
(1,726
)
(868
)
2,135
(825
)
(1,126
)
Adjusted net income (loss) allocated to
common stock
$
104,103
$
197,897
$
51,019
$
(56,939
)
$
12,481
Adjusted diluted earnings (loss) per
share
$
0.83
$
1.57
$
0.40
$
(0.45
)
$
0.10
Adjusted pre-tax, pre-provision net
revenue
Income (loss) before taxes
$
136,884
$
258,320
$
58,801
$
(62,767
)
$
(432,545
)
Plus: provision (reversal) for credit
losses
(48,262
)
2,835
32,973
158,811
83,429
Plus: non-cash goodwill impairment
—
—
—
—
443,695
Plus: Total non-routine items before
taxes
(2,259
)
(1,138
)
2,799
(1,081
)
(1,590
)
Adjusted pre-tax, pre-provision net
revenue
$
86,363
$
260,017
$
94,573
$
94,963
$
92,989
(1)
Annualized.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210422005540/en/
Cadence Bancorporation
Media contact: Danielle Kernell 713-871-4051
danielle.kernell@cadencebank.com
Investor relations contact: Valerie Toalson 713-871-4103
or 800-698-7878 vtoalson@cadencebancorporation.com
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