Cadence Bank (CADE) Q3 Earnings call transcript Oct 22, 2024

Cadence Bank's recent third quarter earnings call highlighted a period of continued growth and stability for the financial institution, with net income reaching $134.1 million, an increase of 6% compared to the previous quarter. This growth was driven by a strong focus on deposit expansion and loan origination, despite payoff pressures and market fluctuations.

Deposit Growth and Loan Origination

The call underscored the importance of deposit growth, with core customer deposits growing by over 11% on an annualized basis, while holding deposit costs essentially flat. This growth was attributed to the bank's ability to retain and expand deposits, particularly in the face of market challenges. Loan balances were relatively flat for the quarter, with payoff pressures offsetting overall loan growth. However, management expressed optimism that new loan origination would outpace payoffs in the remainder of the year.

Net Interest Margin and Credit Quality

Cadence Bank's net interest margin continued to improve, reaching 3.31% in the third quarter, up from 3.27% in the previous quarter. This increase was attributed to the successful management of loan pricing and deposit costs. Credit quality also remained stable, with net charge-offs consistent with the previous quarter and a solid allowance for credit losses maintained at 1.38% of loans.

Expenses and Capital Management

The call also highlighted effective expense management, with adjusted expenses declining 1.5% year-over-year, despite merit increases and other expenses. Capital metrics remained strong, with a CET1 ratio of 12.3% and total capital at 14.5%. The bank also repurchased over 323,000 shares of its stock during the quarter, demonstrating confidence in its financial position.

Future Outlook and Challenges

Looking ahead, Cadence Bank expressed optimism about its future prospects, particularly in the context of robust loan pipelines and stable credit quality. However, management acknowledged challenges in the form of payoff pressures and market volatility, which could impact loan origination and deposit growth. The bank also highlighted its focus on investment in growth, teams, and technology to support its strategic objectives.

Key Takeaways

Cadence Bank's third quarter earnings call underscored a period of continued growth and stability, with a focus on deposit expansion and loan origination. While challenges remain, particularly in the form of payoff pressures and market volatility, the bank's solid financial position and strategic focus provide a strong foundation for future growth. Investors and stakeholders will be watching closely as Cadence Bank navigates these challenges and pursues its strategic objectives.