Cadence Bank (CADE) Q2 Earnings call transcript Jul 23, 2024
2min read Cadence Bank recently held its second quarter 2024 earnings call, highlighting a period of continued improvement and growth across various aspects of its business. The call, led by Dan Rollins, Chairman & CEO, and other key executives, provided valuable insights into the bank's financial health and strategic direction.
Financial Highlights
The bank reported a GAAP net income of $135.1 million for the second quarter, representing an increase of over 11% compared to the first quarter of 2024. This growth is a testament to Cadence Bank's successful execution of its business strategy and its ability to navigate market challenges effectively. The bank's adjusted net income from continuing operations stood at $127.9 million, also showing a significant increase over the previous quarter.
Loan Growth and Deposit Retention
Cadence Bank reported net loan growth of $430 million, or just over 5% annualized, which is in line with its full-year expectations. This growth is spread across its Income Producing CRE, Commercial and Industrial, and Residential Mortgage portfolios, reflecting the strength of its diversified business model. Additionally, the bank saw core customer deposits grow by $237 million or nearly 3% annualized, demonstrating its ability to retain and expand its customer base.
Credit Quality and Capital
Credit quality remained stable for the quarter, with provisions for credit losses and net charge-offs both relatively flat compared to the first quarter. This stability, coupled with improvements in non-performing, criticized, and classified loan totals, as well as near-term delinquencies, indicates a healthy credit portfolio for Cadence Bank. The bank's capital metrics also remain strong, with a CET1 ratio of 11.9% and total capital of 14.2% at June 30, 2024.
Operational Efficiency and Future Outlook
Cadence Bank reported a third consecutive quarter of improvement in its net interest margin, which stood at 3.27% for the second quarter, up 5 basis points from the first quarter. This improvement is a result of the bank's strategic focus on loan growth, improved earning asset mix, and slowed deposit cost increases. The bank also reported an adjusted efficiency ratio of 56.7% for the quarter, marking another quarter of improvement in operating efficiency.
Looking ahead, Cadence Bank is optimistic about its future prospects, with plans to continue its focus on loan growth, customer deposit retention, and operational efficiency. The bank's diversified business model, strong capital position, and strategic investments in technology and talent are expected to support its growth trajectory.
Earnings Call Insights
During the earnings call, key shareholders and investors expressed concerns about the bank's funding sources, particularly in relation to broker deposits and public funds. Cadence Bank's management team provided reassurances about its efforts to reduce reliance on non-core funding sources and focus on core customer deposits. The bank's leadership also highlighted its confidence in its ability to manage market challenges, including potential interest rate changes, and maintain a strong financial position.
In summary, Cadence Bank's second quarter earnings call underscored its continued growth and operational improvement, with a focus on loan growth, deposit retention, and credit quality. The bank's strategic initiatives and strong financial position position it well for future success, as it navigates the evolving banking landscape.