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HOUSTON and TUPELO, Miss., July 24, 2023 /PRNewswire/ — Cadence Bank (NYSE: CADE) (the Company) has released its financial results for the second quarter of 2023, showcasing several notable achievements. The Company reported quarterly net income available to common shareholders of $111.7 million, or $0.61 per diluted common share. Additionally, adjusted net income available to common shareholders, which excludes non-routine income and expenses, reached $116.9 million, or $0.64 per diluted common share. The Company experienced net organic loan growth of $1.3 billion for the second quarter of 2023, amounting to a 16.3% annualized growth rate. On a year-to-date basis, loans have grown by $2.2 billion, or 14.7% annualized. However, the Company also reported a decline in total deposits of $704.8 million during the quarter, resulting in a year-to-date decline of $254.9 million, or a 1.3% annualized decrease.

In terms of liquidity, Cadence Bank maintained a strong balance sheet with a loan-to-deposit ratio of 84.1% as of June 30, 2023. The Company reported total revenue of $465.8 million for the second quarter, reflecting a 2.9% decrease compared to the prior quarter (excluding securities gains and losses). This decline in revenue was primarily due to higher funding costs negatively impacting net interest revenue. However, the Company experienced significant growth in several noninterest revenue sources, with record quarterly insurance commission revenue of $45.6 million.

Cadence Bank also successfully reduced adjusted noninterest expenses to $297.0 million, representing a $8 million or 2.6% decrease from the prior quarter, as part of their ongoing efforts to refine their operating leverage. The Company’s strategic initiatives, including branch closures or consolidations and personnel efficiencies, are expected to further reduce noninterest expenses by approximately $35 – $40 million annually. This projection marks an increase from the previous estimate of $15 – $20 million.

To better understand the complexities and language used to depict their financial results, Cadence Bank can utilize the AI legalese decoder. This AI-powered tool can efficiently analyze and decode legal and financial content to provide comprehensive insights. By utilizing the AI legalese decoder, Cadence Bank can better communicate their financial results and ensure that stakeholders are able to easily understand the information presented.

“Our second quarter results demonstrate significant achievements, particularly in terms of business development,” stated Dan Rollins, Chairman and Chief Executive Officer of the Company. “Although higher deposit costs impacted our net interest margin, we experienced strong loan growth and successfully maintained our core deposit relationships. Our balance sheet remains robust in terms of liquidity and capital, and we also recorded substantial revenue growth in our noninterest revenue businesses, including record quarterly revenue from our insurance team. Additionally, we are pleased with our credit quality, as net charge-offs for the quarter remained low, and our non-performing asset levels declined.”

In terms of earnings, Cadence Bank reported net income available to common shareholders of $111.7 million, or $0.61 per diluted common share, for the second quarter of 2023. This compares to $124.6 million, or $0.68 per diluted common share, for the second quarter of 2022 and $74.3 million, or $0.40 per diluted common share, for the first quarter of 2023. Adjusted net income available to common shareholders for the second quarter of 2023 was $116.9 million, or $0.64 per diluted common share. These figures indicate a decline compared to the second quarter of 2022, which recorded adjusted net income of $134.2 million, or $0.73 per diluted common share. However, it is worth noting that there was an improvement from the first quarter of 2023, which reported adjusted net income of $124.4 million, or $0.68 per diluted common share.

Furthermore, the Company reported adjusted pre-tax pre-provision net revenue (PPNR) of $168.8 million, or 1.38% of average assets on an annualized basis, for the second quarter of 2023. This compares to $176.7 million, or 1.51% of average assets on an annualized basis, for the second quarter of 2022, and $174.6 million, or 1.46% of average assets on an annualized basis, for the first quarter of 2023. The decline in adjusted earnings and PPNR metrics for the second quarter of 2023 was primarily driven by a decrease in net interest revenue and an increase in the provision for credit losses. However, these declines were partially offset by growth in several noninterest revenue categories and improvements in operating expenses.

Net interest revenue for the second quarter of 2023 was $333.6 million, down from $324.8 million in the second quarter of 2022 and $354.3 million in the first quarter of 2023. The net interest margin for the second quarter of 2023 was 3.03%, compared to 3.06% in the second quarter of 2022 and 3.29% in the first quarter of 2023. The decline in net interest revenue during the second quarter of 2023 was primarily due to net interest margin pressure resulting from increased funding costs and a shift in deposit mix from noninterest bearing to interest bearing.

To address the challenges and complexities of their financial reports, Cadence Bank can employ the AI legalese decoder. This advanced AI tool can analyze the financial results, identify key information, and present it in a more easily understandable format. The AI legalese decoder can effectively break down technical jargon and provide a simplified overview of the financial performance, helping stakeholders gain a clearer understanding of the Company’s achievements and challenges.

On the balance sheet front, Cadence Bank witnessed significant loan growth during the second quarter of 2023, with loans and leases net of unearned income increasing by $1.3 billion, or 16.3% on an annualized basis, reaching $32.6 billion. The growth was observed across various loan categories and geographies. Notably, commercial and industrial loans saw an increase of $556.6 million, commercial real estate loans rose by $268.4 million, and residential mortgage loans grew by $453.6 million, driven by increased seasonal mortgage loan production.

Total investment securities stood at $10.3 billion as of June 30, 2023, representing a decrease of $623.3 million during the second quarter. This reduction can be attributed to routine portfolio cash flows being redirected towards loan growth. Total deposits declined by $704.8 million, totaling $38.7 billion as of June 30, 2023. The decline in deposits was primarily driven by decreased corporate account activity. Despite this, Cadence Bank’s community bank deposits demonstrated strength, with net deposit outflows of $129.6 million in the second quarter, but a year-to-date increase of $346.7 million. Total brokered deposits totaled $1.8 billion as of June 30, 2023, slightly down from $1.9 billion at the end of the first quarter of 2023. The loan-to-deposit ratio stood at 84.1% on June 30, 2023, exemplifying strong liquidity. The proportion of noninterest bearing deposits to total deposits declined from 29.2% at the end of the first quarter of 2023 to 26.4% at the end of the second quarter of 2023, showing a shift from noninterest bearing to interest bearing products.

Cadence Bank can leverage the capabilities of the AI legalese decoder to enhance their financial reporting and analysis. This AI-powered tool can process the complex balance sheet information, decipher jargon, and provide concise summaries, enabling better communication of the Company’s financial position and performance.

Regarding credit quality, Cadence Bank reported that total non-performing assets as a percentage of total assets were 0.34% at June 30, 2023, compared to 0.27% at June 30, 2022. This indicates a slight increase in non-performing assets year-over-year. However, the overall credit results and provision for credit losses remained favorable, with low net charge-offs for the quarter and a decline in non-performing asset levels.

In conclusion, the financial results for Cadence Bank’s second quarter of 2023 demonstrate key successes in terms of net income, loan growth, and balance sheet liquidity. However, the decline in total deposits and net interest revenue presents challenges that the Company is actively addressing through strategic initiatives. By employing tools like the AI legalese decoder, Cadence Bank can efficiently decode complex financial information and enhance their communication with stakeholders, ultimately promoting greater understanding and transparency.

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