Cadence Bancorporation (NYSE: CADE) (“Cadence”) today announced
net income for the quarter ended June 30, 2021, of $101.3 million
or $0.80 per share, compared to net income of $106.4 million or
$0.84 per share for the quarter ended March 31, 2021, and to a net
loss of ($56.1) million or ($0.45) per share for the quarter ended
June 30, 2020. Adjusted net income (loss)(1), excluding non-routine
income and expenses(2), was $106.1 million or $0.84 per share for
the quarter ended June 30, 2021, compared to $104.7 million or
$0.83 per share for the quarter ended March 31, 2021, and compared
to ($56.9) million or ($0.45) per share for the quarter ended June
30, 2020.
Chairman and Chief Executive Officer of Cadence Bancorporation
Paul B. Murphy, Jr. commented, “This quarter’s results demonstrate
the strength of our profitable business model and continued
improvement in the credit environment. With the economy expanding,
our C&I focus and growth markets, combined with our strong
capital levels, position Cadence well. We look forward to further
augmenting our business model as we combine with BancorpSouth to
become a stronger, more diversified and highly competitive regional
bank.”
Second Quarter 2021
Highlights:
Second quarter 2021 highlights are as follows:
- Adjusted pre-tax pre-provision net revenue(1) (“PPNR”) remained
strong at $85.2 million or 1.83% of average assets, compared to
first quarter 2021 PPNR of $86.4 million or 1.86% of average
assets.
- The allowance for credit losses (“ACL”) reflected continued
reserve releases driven by improving credit metrics and economic
forecasts, and incorporated a ($51.9) million provision release in
the second quarter of 2021 compared to a ($48.3) million provision
release in the linked quarter. The ACL remained robust at 2.13% of
total loans. Excluding Paycheck Protection Program (“PPP”) loans,
our ACL to loans ratio was 2.17% at June 30, 2021. Our ratio of ACL
to total nonperforming loans was 202%.
- Net charge-offs were $8.7 million or 0.29% annualized of
average loans, a level consistent with our longer-term expectations
for our portfolio mix.
- Our tax equivalent net interest margin (“NIM”) was 3.10%, down
12 basis points from prior quarter. The NIM decline was primarily
driven by lower hedge income, lower accretion and earning asset mix
shifts out of higher yielding loans and into lower yielding
investment securities. The decline was partially mitigated by a
continued decline in total deposit costs, which decreased five
basis points in the quarter to 0.15%.
- We continued to deleverage the balance sheet, paying off $50
million in senior debt in the quarter in addition to the $40
million sub-debt paid off in the first quarter of this year.
- Our capital ratios remained robust, with the Common Equity Tier
1 ratio increasing to 14.7% and total risk weighted capital
increasing to 17.0%.
- Our adjusted efficiency ratio(1) remained stable at 53.9%.
- Annualized returns on average assets and tangible common equity
were 2.17% and 21.12%, respectively.
- Adjusted annualized returns on average assets(1) and adjusted
tangible common equity(1) were 2.28% and 22.08%, respectively.
Balance Sheet:
Total assets were $18.7 billion as of June 30, 2021, a decrease
of $107.7 million or 0.6% from March 31, 2021, and a decrease of
$165.1 million or 0.9% from June 30, 2020. The linked quarter
decrease was largely driven by PPP loan payoffs, partially offset
by reinvestment of those proceeds in investment securities.
Cash and Cash Equivalents at June 30, 2021, totaled $2.1
billion as compared to $1.9 billion at March 31, 2021 and June 30,
2020. The $211.6 million increase in the second quarter of 2021 was
driven by $588.8 million in PPP loan repayments.
Loans at June 30, 2021 totaled $11.6 billion as compared
to $12.4 billion at March 31, 2021, a decrease of $730.8 million or
5.9%. Loans decreased $2.1 billion or 15.1% from $13.7 billion at
June 30, 2020. PPP loans declined by $588.8 million in the second
quarter, with the remaining non-PPP loan decline of $142.0 million
being driven by net paydowns and payoffs partially offset by
approximately $1.1 billion in loan fundings in the quarter. Notable
linked quarter changes, excluding PPP loans, included a net
increase of General C&I of $42 million, and declines in
Restaurant of $56 million, Healthcare of $29 million and CRE of $92
million.
Investment Securities at June 30, 2021 totaled $4.3
billion as compared to $3.9 billion at March 31, 2021 and $2.7
billion at June 30, 2020. Securities as a percent of earning assets
was 23.9%, 21.7% and 14.6% at June 30, 2021, March 31, 2021, and
June 30, 2020, respectively. The increase in securities from both
the linked quarter and prior year is a result of increased balance
sheet liquidity. Securities acquired during the second quarter
include primarily agency pass-through residential mortgage-backed
securities.
Total Deposits at June 30, 2021 were $16.0 billion, a
decrease of $145.4 million or 0.9% from March 31, 2021 and down
$85.5 million or 0.5% from June 30, 2020. Non-interest bearing
deposits increased to $5.7 billion or 35.5% of total deposits at
June 30, 2021, up from $5.6 billion or 34.4% of total deposits at
March 31, 2021 and $5.2 billion or 32.5% at June 30, 2020. Total
cost of deposits declined to 0.15% for the second quarter of 2021,
down from both the first quarter 2021 cost of 0.20% and the second
quarter 2020 cost of 0.46%.
Total Borrowings at June 30, 2021 were $282.7 million, a
decrease of $50.3 million from $333.0 million at March 31, 2021 and
a decrease of $89.5 million from $372.2 million at June 30, 2020.
The second quarter decrease was due to repayment of $50.0 million
in senior notes that matured on June 28, 2021.
Shareholders’ equity was $2.2 billion at June 30, 2021,
an increase of $110.2 million or 5.3% from March 31, 2021 and an
increase of $157.3 million or 7.7% from June 30, 2020. The linked
quarter increase included quarterly net income of $101.3 million,
an increase of $23.8 million in other comprehensive income
including a $29.9 million increase in unrealized gains on
investment securities available-for-sale, partially offset by $18.8
million in cash dividends.
Tangible common shareholders’ equity(1) was $2.1 billion at June
30, 2021, up $115.0 million or 5.8% from March 31, 2021 and up
$177.6 million or 9.3% from June 30, 2020. The linked quarter
increase resulted from the same factors noted above.
- Total shareholders’ equity to total assets and tangible equity
to tangible assets were 11.8% and 11.2%, respectively, at June 30,
2021, compared to 11.1% and 10.6%, respectively, at March 31, 2021,
and 10.8% and 10.2%, respectively, at June 30, 2020.
- Tangible book value per share(1) was $16.72 as of June 30,
2021, an increase of $0.92 or 5.8% from $15.80 as of March 31,
2021, and an increase of $1.57 or 10.4% from $15.15 as of June 30,
2020.
- Total shares outstanding at June 30, 2021 were 124.8
million.
Quarter end regulatory capital ratios remained robust and
increased during the quarter as follows:
6/30/2021
3/31/2021
6/30/2020
Common equity Tier 1 capital
14.7%
14.2%
11.7%
Tier 1 leverage capital
11.4%
10.9%
9.5%
Tier 1 risk-based capital
14.7%
14.2%
11.7%
Total risk-based capital
17.0%
16.7%
14.3%
Asset Quality:
Credit quality metrics during the second 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 second quarter of 2021 were $8.7
million or 0.29% annualized of average loans compared to $12.1
million or 0.39% annualized and $32.6 million or 0.94% annualized
for the quarters ended March 31, 2021 and June 30, 2020,
respectively. The current quarter net charge-offs included $8.5
million in Energy.
- Provision for credit losses was a release of ($51.9) million
for the second quarter of 2021 as compared to a release of ($48.3)
million for the first quarter of 2021 and a provision expense of
$158.8 million for the second quarter of 2020. The current
quarter’s release was driven by improved economic conditions and
forecasts, as well as continued improvements in overall credit
including reductions in nonperforming and criticized loans. The
second quarter 2021 provision release included $25.3 million
release in the CRE segment (including releases of $14.2 million in
the Hospitality category), and $25.6 million release in the C&I
segment (including releases of $12.0 million in the Restaurant
category).
- The ACL was $247.7 million or 2.13% of total loans as of June
30, 2021, as compared to $308.0 million or 2.49% of total loans as
of March 31, 2021 and $370.9 million or 2.71% of total loans as of
June 30, 2020. Excluding PPP loans, the ACL was 2.17% of total
loans at June 30, 2021, down from 2.67% at March 31, 2021.
- Total nonperforming loans (“NPL”) totaled $122.5 million,
$123.4 million, and $224.4 million as of June 30, 2021, March 31,
2021, and June 30, 2020, respectively. As a percent of total loans,
NPL were 1.05% at June 30, 2021, compared to 1.00% at March 31,
2021 and 1.64% at June 30, 2020. The current quarter percentage
increase resulted from a decrease in total loans during the
quarter.
- The ACL to NPL was 202.2% as of June 30, 2021, as compared to
249.7% as of March 31, 2021 and 165.3% as of June 30, 2020.
- Total criticized loans at June 30, 2021 were $667.9 million or
5.7% of total loans, down from $816.3 million or 6.6% at March 31,
2021 and $1.0 billion or 7.4% at June 30, 2020. The linked quarter
decrease included declines of $85.0 million or 46.7% in Restaurant,
$79.0 million or 33.2% in Energy, and $23.9 million or 20.5% in
Hospitality-CRE.
- Loans 30-89 days past due were 0.36% of total loans at June 30,
2021, compared to 0.40% at March 31, 2021 and 0.19% at June 30,
2020.
Total Revenue:
Total operating revenue(1) for the second quarter of 2021 was
$185.0 million, down $1.4 million or 0.8% from the first quarter of
2021 and up $0.4 million or 0.2% from the second quarter of
2020.
Net interest income for the second quarter of 2021 was
$138.5 million, a decrease of $4.2 million or 2.9% from the first
quarter of 2021 and a decrease of $16.2 million or 10.5% from the
second quarter of 2020.
- Compared to the prior year, the net interest income decline
included $6.9 million in lower hedge income, $3.1 million in lower
accretion, and $19.0 million in lower interest income due to a mix
shift from higher yielding loans to lower yielding investment
securities and declining yields, partially offset by $13.0 million
in lower funding costs due to a 59% reduction in cost of funds,
supported by improved mix and debt payoffs.
- Compared to the linked quarter, the net interest income decline
included $3.3 million in lower hedge income, $1.3 million in lower
accretion and $1.2 million in lower PPP loan income, partially
offset by a $1.3 million increase due to number of days. Declines
in interest income of $2.8 million resulting from earning asset mix
shifts and yield declines were largely offset by $2.5 million in
decreased interest expense resulting from lower funding costs and
increases non-interest bearing liabilities.
Our NIM for the second quarter of 2021 was 3.10% as compared to
3.22% for the linked quarter and 3.51% for the second quarter of
2020. Excluding the impact of PPP loans, the second quarter 2021
NIM decreased by 15 basis points to 3.09% from 3.24% in the linked
quarter, with lower average loan balances and declines in yield,
lower hedge income and lower accretion income contributing 13, 8
and 3 basis points of the decline, respectively, partially offset
by positive impacts from lower deposit costs and improved mix,
increases in average securities balances and lower average
borrowings attributing 5, 4 and 1 basis points, respectively.
- Our total funding costs continued to decline in the quarter,
down $2.5 million to 0.23% compared to 0.29% in the prior quarter.
Total deposit costs declined by five basis points to 0.15% for the
current quarter compared to 0.20% for the linked quarter, and total
interest-bearing liability costs declined by seven basis points to
0.36% from 0.43% in the linked quarter. Average interest-bearing
liabilities decreased by $552.6 million or 4.9% from the prior
quarter to $10.7 billion, and average noninterest-bearing deposits
increased by $370.2 million or 6.9% from the prior quarter to $5.7
billion.
- Yield on loans excluding accretion and hedge income was 3.83%
in the current quarter, down one basis point from 3.84% in the
linked quarter. Excluding the impact of PPP loans, this yield was
3.86% in the current quarter, down from 3.91% for the linked
quarter. Average loans declined by $508.4 million or 4.0% from the
prior quarter to $12.1 billion.
- PPP loans averaged $619.3 million in the current quarter with a
yield of 3.34%, down from $877.6 million in the linked
quarter.
- Hedge income and collar gain recognition for the second quarter
of 2021 was $10.8 million as compared to $14.1 million for the
prior quarter.
- Accretion on acquired loans totaled $4.5 million for the second
quarter of 2021 as compared to $5.8 million for the prior
quarter.
- Yield on investment securities declined to 1.62% in the current
quarter compared to 1.69% in linked quarter, with the lower yield
reflecting the impact of securities purchased in the current and
prior quarters. Average investment securities increased by $572.4
million or 16.6% from the prior quarter to $4.0 billion.
- Total earning asset yields declined to 3.31% in the current
quarter compared to 3.49% in the linked quarter, with average
balances remaining level at $18.0 billion, but reflecting a mix
shift between loans and investment securities.
- Excess liquidity in the second quarter negatively impacted the
NIM by an estimated 23 basis points compared to 24 basis points in
the linked quarter.
Noninterest income for the second quarter of 2021 was
$46.5 million, an increase of $2.8 million or 6.4% from the linked
quarter, and an increase of $16.5 million or 55.2% from the same
period of 2020. Adjusted noninterest income(1) for the second
quarter of 2021 was $46.5 million, an increase of $5.0 million or
12.1% from the linked quarter, and an increase of $18.8 million or
68.0% from the second quarter of 2020.
- The increase from the prior year was driven by increases of
$6.6 million in earnings from alternative investments, $4.5 million
in SBA income, $2.4 million in service charges on deposits driven
by an increase of $2.3 million in account analysis service charges,
$1.7 million in investment advisory fees and $1.1 million in credit
related fees.
- The linked quarter increase was driven by increases of $1.6
million, $1.8 million, and $0.9 million in credit related fees, SBA
income and referral income, respectively. These items were
partially offset by a decrease of $2.2 million in securities
gains.
- Noninterest income as a percent of total revenue for the second
quarter of 2021 increased to 25.1% as compared to 23.4% for the
linked quarter and 16.2% for the second quarter of 2020.
Noninterest expense for the second quarter of 2021 was
$106.1 million, compared to $97.8 million for the linked quarter
and compared to $88.6 million for the same period of 2020. Adjusted
noninterest expense(1), which excludes the impact of non-routine
items(2), was $99.8 million, up $2.0 million or 2.0% from the
linked quarter and up $12.4 million or 14.2% from the second
quarter of 2020.
- The increase from the prior year was attributable to increased
incentive accruals related to improved company performance and
lower loan cost deferral due to the large number of PPP loans
generated in the prior year’s quarter.
- The linked quarter increase in noninterest expenses resulted
from:
- An increase of $6.3 million in merger related expenses which
are directly attributable to the announced merger with BancorpSouth
Bank.
- An increase of $1.5 million in personnel costs driven by an
increase of $1.2 million in salaries (largely related to annual
merit increases) and an increase of $2.4 million in equity
compensation and annual incentive compensation accruals resulting
from improved company performance. These increases were partially
mitigated by a seasonal decrease in payroll taxes and employee
benefits.
- A decrease of $1.0 million in other noninterest expenses due to
a decrease of $1.4 million in operational losses resulting from a
recovery in the current quarter.
Adjusted efficiency ratio(1) for the second quarter of
2021 was 53.9%, compared to the linked quarter ratio of 53.1% and
the prior year’s second quarter ratio of 47.9%.
Taxes:
The effective tax rate for the second quarter of 2021 was 22.6%
compared to 22.3% for the linked quarter and 10.6% for the second
quarter of 2020.
Dividend:
On July 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 August 13, 2021 to holders of record of Cadence’s Class A common
stock on August 6, 2021.
Supplementary Financial Tables
(Unaudited):
Supplementary financial tables (unaudited) are included in this
release following the customary disclosure information.
Second Quarter 2021 Earnings Conference
Call:
Cadence Bancorporation executive management will host a
conference call to discuss second quarter 2021 results on Thursday,
July 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:
2723400
For those unable to participate in the live presentation, a
replay will be available through August 5, 2021. To access the
replay, please use the following numbers:
U.S. Toll Free:
1-877-344-7529
International Toll:
1-412-317-0088
Canada Toll Free:
1-855-669-9658
Replay Access Code:
10157962
Webcast Access:
The call and corresponding presentation slides will be webcast
live on the home page of the Company’s website:
www.cadencebancorporation.com.
____________________
(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.
About Cadence
Bancorporation:
Cadence Bancorporation (NYSE: CADE), headquartered in Houston,
Texas, is a regional financial holding company with $18.7 billion
in total assets as of June 30, 2021. Its wholly owned subsidiary,
Cadence Bank, N.A., operates 99 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
Statements
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 have been or 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 Cadence’s current and future
geographic market areas; economic, market, operational, liquidity,
credit and interest rate risks associated with Cadence’s business;
deteriorating asset quality and higher loan charge-offs; the laws
and regulations applicable to Cadence’s business; Cadence’s 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; Cadence’s ability to
maintain its historical earnings trends; Cadence’s ability to raise
additional capital to implement its business plan; material
weaknesses in Cadence’s internal control over financial reporting;
systems failures or interruptions involving Cadence’s information
technology and telecommunications systems or third-party servicers;
the composition of Cadence’s management team and its 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 Cadence’s loan portfolio,
including the identity of Cadence’s borrowers and the concentration
of loans in energy-related industries and in its specialized
industries; the portion of Cadence’s loan portfolio that is
comprised of participations and shared national credits; the amount
of nonperforming and classified assets Cadence holds; the extent of
the impact of the COVID-19 pandemic on Cadence and its customers,
counterparties, employees and third-party service providers, and
the impacts to Cadence’s 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, BancorpSouth Bank’s
Quarterly Report on Form 10-Q for the quarter ended March 31, 2021
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, Cadence’s Quarterly
Report on Form 10-Q for the quarter ended March 31, 2021 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 each filed with the FDIC and the SEC on July 7,
2021, respectively, a definitive joint proxy statement on Schedule
14A, including an offering circular with respect to the common
stock of BancorpSouth Bank. STOCKHOLDERS OF BANCORPSOUTH BANK
AND CADENCE ARE URGED TO READ THE DEFINITIVE JOINT PROXY
STATEMENT/OFFERING CIRCULAR AND ALL OTHER RELEVANT DOCUMENTS FILED
WITH THE FDIC AND SEC WHEN THEY BECOME AVAILABLE, (INCLUDING ALL
AMENDMENTS AND SUPPLEMENTS THERETO), BECAUSE THEY CONTAIN IMPORTANT
INFORMATION ABOUT THE PROPOSED TRANSACTION. Investors and
security holders may obtain the documents free of charge at the
FDIC’s website, https://www.fdic.gov/,
and the SEC’s website, http://www.sec.gov,respectively.
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. Additional information regarding the interest of such
participants is set forth in the definitive joint proxy
statement/offering circular regarding the proposed transaction
filed by each of BancorpSouth Band and Cadence with the FDIC and
the SEC on July 7, 2021, respectively. 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 Cadence presents,
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). Cadence refers to
these financial measures and ratios as “non-GAAP financial
measures.” Cadence considers 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. Cadence believes that these non-GAAP financial
measures provide meaningful supplemental information regarding its
performance by excluding certain expenditures or assets that
Cadence believes are not indicative of its primary business
operating results or by presenting certain metrics on a fully
taxable equivalent basis.
Cadence believes that management and investors benefit from
referring to these non-GAAP financial measures in assessing its
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 Cadence’s performance.
The non-GAAP financial measures Cadence presents may differ from
non-GAAP financial measures used by its peers or other companies.
Cadence compensates for these limitations by providing the
equivalent GAAP measures whenever it presents 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 Cadence’s 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)
2Q 2021
1Q 2021
4Q 2020
3Q 2020
2Q 2020
Income Statement Data
Interest income
$
148,029
$
154,701
$
170,739
$
170,497
$
177,175
Interest expense
9,488
11,953
13,998
16,455
22,461
Net interest income
138,541
142,748
156,741
154,042
154,714
Provision (release) for credit losses
(51,876
)
(48,262
)
2,835
32,973
158,811
Net interest income after provision
(release)
190,417
191,010
153,906
121,069
(4,097
)
Noninterest income (1)
46,474
43,696
209,745
32,591
29,950
Noninterest expense
106,066
97,822
105,331
94,859
88,620
Income (loss) before income taxes
130,825
136,884
258,320
58,801
(62,767
)
Income tax expense (benefit)
29,516
30,459
57,737
9,486
(6,653
)
Net income (loss)
$
101,309
$
106,425
$
200,583
$
49,315
$
(56,114
)
Weighted average common shares
outstanding
Basic
124,732,617
125,079,250
125,973,736
125,956,714
125,924,652
Diluted
125,548,794
125,621,508
126,408,959
126,094,868
125,924,652
Earnings (loss) per share
Basic
$
0.81
$
0.85
$
1.58
$
0.39
$
(0.45
)
Diluted
0.80
0.84
1.57
0.39
(0.45
)
Period-End Balance Sheet Data
Cash and cash equivalents
$
2,100,099
$
1,888,518
$
2,053,946
$
1,247,172
$
1,899,369
Investment securities
4,277,448
3,918,666
3,332,168
3,088,699
2,661,433
Total loans, net of unearned income
11,634,502
12,365,334
12,719,129
13,465,556
13,699,097
Allowance for credit losses
247,732
308,037
367,160
385,412
370,901
Total assets
18,692,623
18,800,350
18,712,567
18,404,195
18,857,753
Total deposits
15,983,808
16,129,199
16,052,245
15,786,221
16,069,282
Noninterest-bearing deposits
5,670,234
5,556,217
5,033,748
5,033,338
5,220,109
Interest-bearing deposits
10,313,574
10,572,982
11,018,497
10,752,883
10,849,173
Borrowings and subordinated debentures
282,688
332,984
372,669
372,446
372,222
Total shareholders’ equity
2,202,738
2,092,536
2,121,102
2,071,472
2,045,480
Average Balance Sheet Data
Cash and cash equivalents
$
1,973,893
$
2,195,037
$
1,395,089
$
1,112,258
$
1,519,495
Investment securities
4,018,601
3,446,172
3,201,722
2,960,357
2,487,467
Total loans, net of unearned income
12,143,148
12,651,585
13,238,440
13,652,395
13,884,220
Allowance for credit losses
308,076
370,736
393,306
389,243
267,464
Total assets
18,697,625
18,837,133
18,354,046
18,248,014
18,500,600
Total deposits
16,051,226
16,200,631
15,736,884
15,628,314
15,774,787
Noninterest-bearing deposits
5,726,273
5,356,120
5,245,478
4,892,079
4,587,673
Interest-bearing deposits
10,324,953
10,844,511
10,491,406
10,736,235
11,187,115
Borrowings and subordinated debentures
329,976
363,046
372,920
372,304
372,547
Total shareholders’ equity
2,114,127
2,085,712
2,072,030
2,052,079
2,118,796
(1)
For 4Q 2020, includes hedge revenue of
$169.2 million, $129.5 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)
2Q 2021
1Q 2021
4Q 2020
3Q 2020
2Q 2020
Per Share Data:
Book value
$
17.66
$
16.78
$
16.84
$
16.45
$
16.24
Tangible book value (1)
16.72
15.80
15.83
15.40
15.15
Cash dividends declared
0.150
0.150
0.075
0.050
0.050
Dividend payout ratio
18.52
%
17.65
%
4.75
%
12.82
%
(11.11
)%
Performance Ratios:
Return on average common equity (2)
19.22
%
20.69
%
38.51
%
9.56
%
(10.65
)%
Return on average tangible common equity
(1) (2)
21.12
22.80
41.90
11.08
(10.56
)
Return on average assets (2)
2.17
2.29
4.35
1.08
(1.22
)
Net interest margin (2)
3.10
3.22
3.54
3.49
3.51
Efficiency ratio (1)
57.33
52.47
28.74
50.83
47.99
Adjusted efficiency ratio (1)
53.94
53.11
28.79
49.45
47.93
Asset Quality Ratios:
Total NPA to total loans, OREO, and other
NPA
1.20
%
1.15
%
1.24
%
1.55
%
1.74
%
Total nonperforming loans ("NPL") to total
loans
1.05
1.00
1.08
1.40
1.64
Total ACL to total loans
2.13
2.49
2.89
2.86
2.71
ACL to total NPL
202.20
249.70
266.05
203.82
165.30
Net charge-offs to average loans (2)
0.29
0.39
0.64
0.58
0.94
Capital Ratios:
Total shareholders’ equity to assets
11.8
%
11.1
%
11.3
%
11.3
%
10.8
%
Tangible common equity to tangible assets
(1)
11.2
10.6
10.7
10.6
10.2
Common equity Tier 1 capital (3)
15.5
14.2
14.0
12.0
11.7
Tier 1 leverage capital (3)
11.4
10.9
10.9
9.9
9.5
Tier 1 risk-based capital (3)
15.5
14.2
14.0
12.0
11.7
Total risk-based capital (3)
17.8
16.7
16.7
14.7
14.3
(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
June 30,
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
$
10,256,387
$
107,760
4.21
%
$
11,173,408
$
125,922
4.53
%
ANCI portfolio
1,737,494
20,660
4.77
2,512,163
32,967
5.28
PCD portfolio
149,267
2,858
7.68
198,649
3,965
8.03
Total loans
12,143,148
131,278
4.34
13,884,220
162,854
4.72
Investment securities
Taxable
3,681,937
13,551
1.48
2,269,017
12,207
2.16
Tax-exempt (2)
336,664
2,644
3.15
218,450
1,948
3.59
Total investment securities
4,018,601
16,195
1.62
2,487,467
14,155
2.29
Federal funds sold and short-term
investments
1,755,586
681
0.16
1,342,779
328
0.10
Other investments
69,873
431
2.47
77,337
247
1.28
Total interest-earning assets
17,987,208
148,585
3.31
17,791,803
177,584
4.01
Noninterest-earning assets:
Cash and due from banks
218,307
176,716
Premises and equipment
124,893
127,413
Accrued interest and other assets
675,293
672,132
Allowance for credit losses
(308,076
)
(267,464
)
Total assets
$
18,697,625
$
18,500,600
LIABILITIES AND SHAREHOLDERS'
EQUITY
Interest-bearing liabilities:
Demand deposits
$
7,933,078
$
2,952
0.15
%
$
8,368,151
$
7,511
0.36
%
Savings deposits
400,955
83
0.08
291,874
179
0.25
Time deposits
1,990,920
3,008
0.61
2,527,090
10,451
1.66
Total interest-bearing deposits
10,324,953
6,043
0.23
11,187,115
18,141
0.65
Other borrowings
146,701
924
2.53
149,973
937
2.51
Subordinated debentures
183,275
2,521
5.52
222,574
3,383
6.11
Total interest-bearing liabilities
10,654,929
9,488
0.36
11,559,662
22,461
0.78
Noninterest-bearing
liabilities:
Demand deposits
5,726,273
4,587,673
Accrued interest and other liabilities
202,296
234,469
Total liabilities
16,583,498
16,381,804
Shareholders' equity
2,114,127
2,118,796
Total liabilities and shareholders'
equity
$
18,697,625
$
18,500,600
Net interest income/net interest
spread
139,097
2.96
%
155,123
3.23
%
Net yield on earning assets/net interest
margin
3.10
%
3.51
%
Taxable equivalent adjustment:
Investment securities
(556
)
(409
)
Net interest income
$
138,541
$
154,714
_____________________
(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
June 30, 2021
March 31, 2021
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
$
10,256,387
$
107,760
4.21
%
$
10,611,240
$
113,735
4.35
%
ANCI portfolio
1,737,494
20,660
4.77
1,879,832
22,711
4.90
PCD portfolio
149,267
2,858
7.68
160,513
3,378
8.54
Total loans
12,143,148
131,278
4.34
12,651,585
139,824
4.48
Investment securities
Taxable
3,681,937
13,551
1.48
3,117,348
11,821
1.54
Tax-exempt (2)
336,664
2,644
3.15
328,824
2,576
3.18
Total investment securities
4,018,601
16,195
1.62
3,446,172
14,397
1.69
Federal funds sold and short-term
investments
1,755,586
681
0.16
1,848,748
684
0.15
Other investments
69,873
431
2.47
75,621
337
1.81
Total interest-earning assets
17,987,208
148,585
3.31
18,022,126
155,242
3.49
Noninterest-earning assets:
Cash and due from banks
218,307
346,289
Premises and equipment
124,893
124,351
Accrued interest and other assets
675,293
715,103
Allowance for credit losses
(308,076
)
(370,736
)
Total assets
$
18,697,625
$
18,837,133
LIABILITIES AND SHAREHOLDERS'
EQUITY
Interest-bearing liabilities:
Demand deposits
$
7,933,078
$
2,952
0.15
%
$
8,275,895
$
3,596
0.18
%
Savings deposits
400,955
83
0.08
353,826
108
0.12
Time deposits
1,990,920
3,008
0.61
2,214,790
4,277
0.78
Total interest-bearing deposits
10,324,953
6,043
0.23
10,844,511
7,981
0.30
Other borrowings
146,701
924
2.53
149,989
927
2.51
Subordinated debentures
183,275
2,521
5.52
213,057
3,045
5.80
Total interest-bearing liabilities
10,654,929
9,488
0.36
11,207,557
11,953
0.43
Noninterest-bearing
liabilities:
Demand deposits
5,726,273
5,356,120
Accrued interest and other liabilities
202,296
187,744
Total liabilities
16,583,498
16,751,421
Shareholders' equity
2,114,127
2,085,712
Total liabilities and shareholders'
equity
$
18,697,625
$
18,837,133
Net interest income/net interest
spread
139,097
2.96
%
143,289
3.06
%
Net yield on earning assets/net interest
margin
3.10
%
3.22
%
Taxable equivalent adjustment:
Investment securities
(556
)
(541
)
Net interest income
$
138,541
$
142,748
_____________________
(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
YTD
For the Quarters,
(In thousands)
June 30,2021
2Q 2021
1Q 2021
4Q 2020
3Q 2020
2Q 2020
Interest Income Detail
Originated loans
$
221,495
$
107,760
$
113,735
$
125,535
$
123,177
$
125,922
ANCI loans: interest income
34,502
16,670
17,832
20,507
22,850
26,264
ANCI loans: accretion
8,869
3,990
4,879
5,436
5,364
6,703
PCD loans: interest income
4,805
2,372
2,433
3,355
2,421
3,111
PCD loans: accretion
1,431
486
945
465
1,039
854
Total loan interest income
$
271,102
$
131,278
$
139,824
$
155,298
$
154,851
$
162,854
Yields
Originated loans
4.28
%
4.21
%
4.35
%
4.57
%
4.39
%
4.53
%
ANCI loans without discount accretion
3.85
3.85
3.85
3.84
3.96
4.20
ANCI loans discount accretion
0.99
0.92
1.05
1.01
0.93
1.08
PCD loans without discount accretion
6.26
6.37
6.15
7.73
5.11
6.30
PCD loans discount accretion
1.86
1.31
2.39
1.08
2.20
1.73
Total loan yield
4.41
%
4.34
%
4.48
%
4.67
%
4.51
%
4.72
%
Table 4 – Allowance for Credit
Losses (“ACL”) (1)
For the Three Months
Ended
(In thousands)
2Q 2021
1Q 2021
4Q 2020
3Q 2020
2Q 2020
Balance at beginning of period
$
308,037
$
367,160
$
385,412
$
370,901
$
245,246
Charge-offs
(11,265
)
(14,671
)
(23,956
)
(21,830
)
(33,452
)
Recoveries
2,541
2,563
2,770
1,936
901
Net charge-offs
(8,724
)
(12,108
)
(21,186
)
(19,894
)
(32,551
)
Provision (release) for loan losses
(51,581
)
(47,015
)
2,934
34,405
158,206
Balance at end of period
$
247,732
$
308,037
$
367,160
$
385,412
$
370,901
(1)
This table represents the activity in the
ACL for funded loans.
Table 5 – ACL Activity by
Segment
For the Three Months Ended
June 30, 2021
(In thousands)
Commercial and
Industrial
Commercial Real Estate
Consumer
Total Allowance for Credit
Losses
Reserve for Unfunded
Commitments (1)
Total
As of March 31, 2021
$
165,371
$
111,410
$
31,256
$
308,037
$
1,049
$
309,086
Provision (release) for credit losses
(25,601
)
(25,253
)
(727
)
(51,581
)
(295
)
(51,876
)
Charge-offs
(10,218
)
(819
)
(228
)
(11,265
)
—
(11,265
)
Recoveries
1,757
577
207
2,541
—
2,541
As of June 30, 2021
$
131,309
$
85,915
$
30,508
$
247,732
$
754
$
248,486
For the Six Months Ended June
30, 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
(35,194
)
(55,364
)
(8,038
)
(98,596
)
(1,542
)
(100,138
)
Charge-offs
(24,343
)
(1,219
)
(374
)
(25,936
)
—
(25,936
)
Recoveries
3,481
1,311
312
5,104
—
5,104
As of June 30, 2021
$
131,309
$
85,915
$
30,508
$
247,732
$
754
$
248,486
(1)
The reserve for unfunded commitments is
recorded in other liabilities in the consolidated balance
sheets.
Table 6 – Criticized Loans by
Segment
As of June 30, 2021
(1)
(Amortized cost in thousands)
Special Mention
Substandard
Doubtful
Total Criticized
Commercial and industrial
General C&I
$
88,877
$
98,360
$
10,849
$
198,086
Energy
53,829
98,157
7,141
159,127
Restaurant
33,374
59,578
4,000
96,952
Healthcare
1,782
14,862
—
16,644
Total commercial and industrial
177,862
270,957
21,990
470,809
Commercial real estate
Industrial, retail, and other
18,460
39,211
—
57,671
Hospitality
24,267
68,324
—
92,591
Multifamily
10,409
1,411
—
11,820
Office
11,034
9,142
—
20,176
Total commercial real estate
64,170
118,088
—
182,258
Consumer
Residential
—
14,803
—
14,803
Other
—
21
—
21
Total consumer
—
14,824
—
14,824
Total
$
242,032
$
403,869
$
21,990
$
667,891
(1) Criticized loans do not include loans
held for sale of $0.2 million.
As of March 31, 2021
(1)
(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
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) Criticized loans do not include loans
held for sale of $3.6 million.
Table 7 – Nonperforming
Assets
As of
(In thousands)
2Q 2021
1Q 2021
4Q 2020
3Q 2020
2Q 2020
Nonperforming loans (1)
Commercial and industrial
$
92,257
$
94,153
$
109,410
$
145,991
$
183,441
Commercial real estate
14,557
14,846
14,559
26,742
24,659
Consumer
15,703
14,364
14,033
16,364
16,284
Total nonperforming loans ("NPL")
122,517
123,363
138,002
189,097
224,384
Foreclosed OREO and other NPA
17,613
19,125
19,788
20,344
13,949
Total nonperforming assets
$
140,130
$
142,488
$
157,790
$
209,441
$
238,333
NPL as a percentage of total loans
1.05
%
1.00
%
1.08
%
1.40
%
1.64
%
NPA as a percentage of loans plus
OREO/other
1.20
%
1.15
%
1.24
%
1.55
%
1.74
%
NPA as a percentage of total assets
0.75
%
0.76
%
0.84
%
1.14
%
1.26
%
Total accruing loans 90 days or more past
due
$
988
$
1,399
$
13,880
$
7,260
$
3,123
(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)
2Q 2021
1Q 2021
4Q 2020
3Q 2020
2Q 2020
Noninterest Income
Hedge revenue
$
—
$
—
$
169,248
$
—
$
—
Investment advisory revenue
8,222
7,609
7,457
6,797
6,505
Trust services revenue
4,888
5,509
4,885
4,556
4,092
Service charges on deposit accounts
7,228
6,404
6,028
5,847
4,852
Mortgage banking income
1,587
2,115
3,062
3,535
2,020
Credit-related fees
5,477
3,849
4,766
4,202
4,401
Bankcard fees
1,919
1,753
1,775
1,745
1,716
Payroll processing revenue
1,258
1,490
1,309
1,255
1,143
SBA income
5,810
3,967
2,889
3,037
1,335
Other service fees
1,963
2,209
1,751
1,450
1,528
Securities gains, net
11
2,259
1,353
79
2,286
Other
8,111
6,532
5,222
88
72
Total noninterest income
$
46,474
$
43,696
$
209,745
$
32,591
$
29,950
Table 9 – Noninterest
Expenses
For the Three Months
Ended
(In thousands)
2Q 2021
1Q 2021
4Q 2020
3Q 2020
2Q 2020
Noninterest Expenses
Salaries and employee benefits
$
58,619
$
57,070
$
59,833
$
51,734
$
47,158
Premises and equipment
10,709
10,374
11,036
10,716
10,634
Merger related expenses
6,267
—
—
2,105
—
Intangible asset amortization
4,836
4,986
5,164
5,299
5,472
Data processing
3,179
3,259
3,047
3,024
3,084
Software amortization
4,950
4,507
4,480
4,432
4,036
Consulting and professional fees
3,736
3,233
3,450
3,320
3,009
Loan related expenses
754
796
631
953
735
FDIC insurance
1,656
1,465
3,007
2,528
3,939
Communications
1,281
1,243
1,175
1,119
1,002
Advertising and public relations
1,487
927
956
716
920
Legal expenses
594
925
726
681
579
Other
7,998
9,037
11,826
8,232
8,052
Total noninterest expenses
$
106,066
$
97,822
$
105,331
$
94,859
$
88,620
Table 10 – Reconciliation of
Non-GAAP Financial Measures
As of and for the Three Months
Ended
(In thousands, except share and per
share data)
2Q 2021
1Q 2021
4Q 2020
3Q 2020
2Q 2020
Efficiency ratio
Noninterest expenses (numerator)
$
106,066
$
97,822
$
105,331
$
94,859
$
88,620
Net interest income
$
138,541
$
142,748
$
156,741
$
154,042
$
154,714
Noninterest income
46,474
43,696
209,745
32,591
29,950
Operating revenue (denominator)
$
185,015
$
186,444
$
366,486
$
186,633
$
184,664
Efficiency ratio
57.33
%
52.47
%
28.74
%
50.83
%
47.99
%
Adjusted efficiency ratio
Noninterest expenses
$
106,066
$
97,822
$
105,331
$
94,859
$
88,620
Less: merger related expenses
6,267
—
—
2,105
—
Less: expenses related to COVID-19
pandemic
—
—
215
235
1,205
Adjusted noninterest expenses
(numerator)
$
99,799
$
97,822
$
105,116
$
92,519
$
87,415
Net interest income
$
138,541
$
142,748
$
156,741
$
154,042
$
154,714
Noninterest income
46,474
43,696
209,745
32,591
29,950
Plus: impairment charge on branch
building
—
—
—
538
—
Less: securities gains, net
11
2,259
1,353
79
2,286
Adjusted noninterest income
46,463
41,437
208,392
33,050
27,664
Adjusted operating revenue
(denominator)
$
185,004
$
184,185
$
365,133
$
187,092
$
182,378
Adjusted efficiency ratio
53.94
%
53.11
%
28.79
%
49.45
%
47.93
%
Tangible common equity ratio
Shareholders’ equity
$
2,202,738
$
2,092,536
$
2,121,102
$
2,071,472
$
2,045,480
Less: goodwill and other intangible
assets, net
(117,020
)
(121,856
)
(126,841
)
(132,005
)
(137,318
)
Tangible common shareholders’ equity
2,085,718
1,970,680
1,994,261
1,939,467
1,908,162
Total assets
18,692,623
18,800,350
18,712,567
18,404,195
18,857,753
Less: goodwill and other intangible
assets, net
(117,020
)
(121,856
)
(126,841
)
(132,005
)
(137,318
)
Tangible assets
$
18,575,603
$
18,678,494
$
18,585,726
$
18,272,190
$
18,720,435
Tangible common equity ratio
11.23
%
10.55
%
10.73
%
10.61
%
10.19
%
Tangible book value per share
Shareholders’ equity
$
2,202,738
$
2,092,536
$
2,121,102
$
2,071,472
$
2,045,480
Less: goodwill and other intangible
assets, net
(117,020
)
(121,856
)
(126,841
)
(132,005
)
(137,318
)
Tangible common shareholders’ equity
$
2,085,718
$
1,970,680
$
1,994,261
$
1,939,467
$
1,908,162
Common shares outstanding
124,752,738
124,698,518
125,978,561
125,946,793
125,930,741
Tangible book value per share
$
16.72
$
15.80
$
15.83
$
15.40
$
15.15
Table 10 (Continued) –
Reconciliation of Non-GAAP Measures
As of and for the Three Months
Ended
(In thousands, except share and per
share data)
2Q 2021
1Q 2021
4Q 2020
3Q 2020
2Q 2020
Return on average tangible common
equity
Average common equity
$
2,114,127
$
2,085,712
$
2,072,030
$
2,052,079
$
2,118,796
Less: average intangible assets
(120,125
)
(125,042
)
(130,146
)
(135,491
)
(140,847
)
Average tangible common shareholders’
equity
$
1,994,002
$
1,960,670
$
1,941,884
$
1,916,588
$
1,977,949
Net income (loss)
$
101,309
$
106,425
$
200,583
$
49,315
$
(56,114
)
Plus: intangible asset amortization, net
of tax
3,694
3,809
3,939
4,042
4,174
Tangible net income (loss)
$
105,003
$
110,234
$
204,522
$
53,357
$
(51,940
)
Return on average tangible common
equity(1)
21.12
%
22.80
%
41.90
%
11.08
%
(10.56
)%
Adjusted return on average tangible
common equity
Average tangible common shareholders’
equity
$
1,994,002
$
1,960,670
$
1,941,884
$
1,916,588
$
1,977,949
Tangible net income (loss)
$
105,003
$
110,234
$
204,522
$
53,357
$
(51,940
)
Non-routine items:
Plus: merger related expenses
6,267
—
—
2,105
—
Plus: expenses related to COVID-19
pandemic
—
—
215
235
1,205
Plus: impairment loss on branch
building
—
—
—
538
—
Less: securities gains, net
11
2,259
1,353
79
2,286
Less: income tax effect of tax deductible
non-routine items
1,477
(533
)
(270
)
664
(256
)
Total non-routine items, after tax
4,779
(1,726
)
(868
)
2,135
(825
)
Adjusted tangible net income (loss)
$
109,782
$
108,508
$
203,654
$
55,492
$
(52,765
)
Adjusted return on average tangible common
equity(1)
22.08
%
22.44
%
41.72
%
11.52
%
(10.73
)%
Adjusted return on average
assets
Average assets
$
18,697,625
$
18,837,133
$
18,354,046
$
18,248,014
$
18,500,600
Net income (loss)
$
101,309
$
106,425
$
200,583
$
49,315
$
(56,114
)
Return on average assets
2.17
%
2.29
%
4.35
%
1.08
%
(1.22
)%
Net income (loss)
$
101,309
$
106,425
$
200,583
$
49,315
$
(56,114
)
Total non-routine items, after tax
4,779
(1,726
)
(868
)
2,135
(825
)
Adjusted net income (loss)
$
106,088
$
104,699
$
199,715
$
51,450
$
(56,939
)
Adjusted return on average assets(1)
2.28
%
2.25
%
4.33
%
1.12
%
(1.24
)%
Adjusted diluted earnings (loss) per
share
Diluted weighted average common shares
outstanding
125,548,794
125,621,508
126,408,959
126,094,868
125,924,652
Net income (loss) allocated to common
stock
$
100,575
$
105,829
$
198,765
$
48,884
$
(56,114
)
Total non-routine items, after tax
4,779
(1,726
)
(868
)
2,135
(825
)
Adjusted net income (loss) allocated to
common stock
$
105,354
$
104,103
$
197,897
$
51,019
$
(56,939
)
Adjusted diluted earnings (loss) per
share
$
0.84
$
0.83
$
1.57
$
0.40
$
(0.45
)
Adjusted pre-tax, pre-provision net
revenue
Income (loss) before taxes
$
130,825
$
136,884
$
258,320
$
58,801
$
(62,767
)
Plus: provision (reversal) for credit
losses
(51,876
)
(48,262
)
2,835
32,973
158,811
Plus: Total non-routine items before
taxes
6,256
(2,259
)
(1,138
)
2,799
(1,081
)
Adjusted pre-tax, pre-provision net
revenue
$
85,205
$
86,363
$
260,017
$
94,573
$
94,963
(1)
Annualized.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210722005483/en/
Cadence Bancorporation
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danielle.kernell@cadencebank.com Investor relations contact:
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