Cadence Bank, a leading regional banking franchise based in Houston and Tupelo, has announced its financial results for Q3 2024, showcasing robust performance and strategic growth. The report highlights an increase in net income, stable loan growth, and a rise in total deposits, positioning the bank for continued success amidst evolving market conditions.

Net Income Rises Amid Strategic Management

Cadence Bank reported a net income available to common shareholders of $134.1 million, translating to $0.72 per diluted common share for the third quarter of 2024. Excluding non-routine items, the adjusted net income stood at $135.6 million or $0.73 per share, representing a 5.8% increase compared to the adjusted net income for Q2 2024. This increase underscores the bank’s effective cost management and operational efficiency.

The company’s pre-tax pre-provision net revenue (PPNR) remained steady at $189.9 million, consistent with the previous quarter. However, it marked a notable improvement of $44.7 million compared to Q3 2023. Year-to-date figures show an adjusted PPNR of $555.0 million, reflecting a 17.0% increase from the same period in 2023. This growth is attributed to Cadence’s disciplined management and expansion in its core banking operations.

Loan and Deposit Growth Demonstrate Resilience

The bank’s loan portfolio remained stable at $33.3 billion for the period, despite higher payoff levels. Year-to-date, Cadence Bank achieved net loan growth of $807.0 million, equivalent to a 3.3% annualized increase. The ability to maintain a flat loan portfolio amidst challenging market conditions highlights the bank’s strategic focus on managing its loan origination and paydown activities effectively.

On the deposit front, Cadence saw a substantial increase of $985.7 million, representing a 10.4% annualized growth. Notably, customer deposits, excluding brokered and public funds, surged by $1.4 billion. This includes $435.0 million from customer overnight sweep activity. Even when excluding sweep activity, deposits rose by $945.0 million, indicating an 11.4% annualized growth rate. This expansion in deposits reflects strong customer trust and a stable funding base for future growth.

Improving Net Interest Margins and Strong Credit Metrics

Cadence Bank’s net interest margin improved by four basis points, reaching 3.31%. This improvement is primarily due to the bank’s ability to stabilize deposit costs while benefiting from higher loan yields. It also reflects a positive shift in the average earning asset mix, showcasing the bank’s strategic focus on optimizing its portfolio.

The bank’s credit metrics revealed annualized net charge-offs at 0.26%, a slight improvement from the previous quarter. Cadence reported a $12.0 million provision for credit losses, resulting in a 1.38% allowance for credit losses as a percentage of total loans. This conservative approach aligns with Cadence Bank’s prudent risk management practices, ensuring stability amidst macroeconomic challenges.

Share Buybacks and Capital Strength

During the third quarter, Cadence Bank repurchased 323,395 shares at an average price of $28.79 per share. The company’s Common Equity Tier 1 (CET1) capital ratio stood at 12.3%, while the Total Capital Ratio was 14.5%, demonstrating strong regulatory capital levels. The tangible book value per common share increased to $21.68, up $1.60 compared to the previous quarter. Tangible common shareholders’ equity to tangible assets also rose to 8.28%, reflecting the bank’s solid financial health.

Expert Insights on Cadence’s Future

Financial experts suggest that Cadence Bank’s performance in Q3 2024 illustrates its resilience in managing both loan and deposit growth effectively while maintaining a strong balance sheet. Analysts note that the company’s strategic measures, such as share buybacks and maintaining high capital ratios, indicate its preparedness for potential economic shifts. Additionally, the improvement in net interest margin, coupled with consistent growth in core deposits, positions Cadence Bank favorably in the competitive regional banking landscape.

  Cadence Bank, Dan Rollins, Houston, NYSE: CADE, Q3 2024, Tupelo