Cadence Bank: Navigating the Financial Landscape in 2024

As we step into 2024, Cadence Bank (NYSE: CADE) has been making waves in the financial sector, with a strategic focus on growth and adaptability. The bank recently announced its fourth-quarter and year-end earnings webcast schedule, set for January 22, 2025. As an investor, you might be wondering what's in store for Cadence Bank in the coming year. Let's take a closer look at the bank's recent performance and strategic moves to gain some insights.



Cadence Bank's loan portfolio composition has evolved over time, with residential mortgages becoming a significant contributor to its growth. In recent results, the loan portfolio has shifted towards residential mortgages, with less focus on C&I non-real estate loans. This shift is evident in the following data points:

* In the second quarter of 2024, Cadence Bank's loan portfolio was driven by residential mortgages, which contributed significantly to its growth.
* The bank's earnings call for the second quarter of 2024 highlighted the shift in the loan portfolio towards residential mortgages, with less focus on C&I non-real estate loans.
* The following quote from the earnings call supports this shift: "The loan portfolio is shifting towards Residential Mortgages, with less focus on C&I Non-Real Estate Loans."

These data points and quotes from the materials indicate that Cadence Bank's loan portfolio composition has evolved over time, with residential mortgages becoming a significant contributor to its growth.



Cadence Bank's strategic restructuring of its securities portfolio has significantly contributed to the evolution of its net interest margin. In the fourth quarter of 2023, the bank executed a securities portfolio restructuring, selling securities with a par value of approximately $3.1 billion and an average yield of 1.26% for an after-tax loss of $294.1 million. The bank reinvested approximately $1.0 billion of the proceeds in securities with an average yield of 5.57%, lowered brokered deposits by $645 million at an average cost of 5.47%, and expects to leverage the remaining proceeds, currently in cash balances earning 5.40%, during the first quarter of 2024. These transactions are expected to improve net interest margin and profitability going forward.

Additionally, during the first quarter of 2023, the bank restructured approximately $1.5 billion of securities at an after-tax loss of $39.5 million. These strategic moves have allowed Cadence Bank to reposition its securities portfolio, taking advantage of higher-yielding assets and reducing the cost of funding through lower brokered deposits. This has led to an improvement in the bank's net interest margin, which increased to 3.04% in the fourth quarter of 2023 from 2.98% in the third quarter of the same year. This trend is expected to continue as the bank continues to redeploy the proceeds from the securities sale into higher-yielding assets.



In conclusion, Cadence Bank's strategic focus on residential mortgages and securities portfolio restructuring has positioned the bank for growth and improved profitability in 2024. As an investor, you can expect the bank to continue adapting to changing market conditions and capitalizing on opportunities to enhance its net interest margin. Keep an eye on the bank's earnings webcast in January 2025 for more insights into its performance and strategic direction.