Cadence Bank's Q2 2025 Earnings Call: Unpacking Contradictions in Loan and Deposit Growth Expectations

Loan Growth Expectations, Deposit Growth Expectations, Loan Growth and Paydown Activity, Deposit Growth and Strategy, Loan Growth and Origination are the key contradictions discussed in Cadence Bank's latest 2025Q2 earnings call.



Balanced Sheet Growth and Revenue Increase:
- Cadence Bank reported pretax pre-provision net revenue of $206 million, up 8% from the prior quarter, driven by balance sheet growth and strong fee income performance.
- This increase was primarily due to organic loan growth of $1.1 billion, contributing to a12.6% annualized growth rate, along with the addition of $400 million in loans from the First Chatham acquisition.

Net Interest Income and Margin:
- Average loans increased by over $800 million, and period-end loans grew by $1.4 billion, with an11% contribution from acquisitions.
- The net interest margin (NIM) declined by 6 basis points to 3.40%, but adjusted noninterest income rose by $13 million or 15%, indicating enhanced revenue streams from multiple sources.

Customer Deposit Growth and Efficiency:
- Organic core customer deposits increased at a4.4% annualized rate, with a notable rise in noninterest-bearing deposits to 22.6% of total deposits.
- The adjusted efficiency ratio improved by 90 basis points to 56.7%, reflecting strong operating leverage and cost management.

Credit Quality and Provisioning:
- Net charge-offs were 24 basis points annualized, consistent with expectations, and nonperforming loans decreased by $5 million.
- The loan provision was $31 million, reflecting day 1 provisions from acquisitions and growth demands, with allowance for credit loss coverage remaining flat at 1.34%.