Whether it's through stocks, bonds, ETFs, or other types of securities, all investors love seeing their portfolios score big returns. However, when you're an income investor, your primary focus is generating consistent cash flow from each of your liquid investments.Cash flow can come from bond interest, interest from other types of investments, and of course, dividends. A dividend is the distribution of a company's earnings paid out to shareholders; it's often viewed by its dividend yield, a metric that mea ...

It has been around eight months since I first covered Southern lender Cadence Bank (NYSE: CADE ). Looking back, my bullish case for Cadence really rested on its lending margin potential, as this bank simplyI like to take a long term, buy-and-hold approach to investing, with a bias toward stocks that can sustainably post high quality earnings. Mostly found in the dividend and income section. Blog about various US/Canadian stocks at 'The Compound Investor', and predominantly UK names on 'The UK Income Investo ...

Core Viewpoint - Cadence Bank has signed a definitive merger agreement with Industry Bancshares, Inc., which will enhance Cadence's presence in Texas and expand its customer base in growing markets [1][2][5] Group 1: Merger Details - The merger will involve Cadence Bank paying between $20 million and $60 million in cash for all outstanding common stock of Industry Bancshares, based on its equity capital at the closing of the transaction [3] - The merger is expected to close in the second half of 2025, subject to regulatory and shareholder approvals, as well as other customary closing conditions [5] Group 2: Financial Overview - As of March 31, 2025, Industry Bancshares reported total assets of $4.4 billion, total loans of $1.1 billion, and total deposits of $4.5 billion [2] Group 3: Strategic Importance - The merger aligns with Cadence Bank's community banking foundation and aims to enhance customer service and expand product offerings in similar markets across Texas and the South [4] - Cadence Bank's scale and resources are expected to strengthen personal service and trusted expertise for customers of Industry Bancshares [5] Group 4: Leadership and Continuity - Key personnel from Industry Bancshares are expected to continue in their roles within the combined organization, ensuring continuity of service for existing customers [4]

Core Viewpoint - Cadence Bank's Board of Directors has authorized a new share repurchase program allowing the purchase of up to 10 million shares of its common stock, pending Federal Reserve approval, with an expiration date set for December 31, 2025 [1][2]. Group 1: Share Repurchase Program Details - The Repurchase Program allows for shares to be purchased periodically in open market transactions, privately negotiated transactions, or other means in compliance with federal securities laws [2]. - The program can be extended, modified, amended, suspended, or discontinued at the discretion of Cadence's Board of Directors, and does not obligate the company to repurchase shares [2]. - The actual means of purchase, timing, target number of shares per purchase, and maximum price will be determined by management based on various factors including capital position, liquidity, financial performance, market price, and economic conditions [2]. Group 2: Company Overview - Cadence Bank is a regional financial services company with assets totaling $50 billion, operating over 350 locations across the South and Texas [4]. - The bank offers a wide range of services including banking, investment, trust, and mortgage products to meet the needs of individuals, businesses, and corporations [4]. - Cadence has received accolades such as being recognized as one of the nation's best employers and as one of America's Best Banks in 2025 by Forbes [4].

Financial Data and Key Metrics Changes - Gap net income increased to $130.9 million, or $0.70 per share, while adjusted net income from continuing operations rose to $131.4 million, or $0.71 per share [9] - Return on Assets (ROA) improved to 1.15% [9] - Net interest margin increased by 8 basis points to 3.46% [16] - Adjusted efficiency ratio improved to 57.6%, down 150 basis points from the previous quarter [21] Business Line Data and Key Metrics Changes - First quarter loan growth was nearly 4% on an annualized basis, with strong performance in mortgage, private banking, and community bank groups [10][14] - Average loans increased by over $482 million, while period-end loans grew by $310 million, or 3.7% annualized [14] - Average deposits increased by $610 million, but period-end deposits were flat [15] Market Data and Key Metrics Changes - Strong loan pipelines remain solid across most regional markets, particularly in Texas, Georgia, and Florida [10][34] - Merchant commercial real estate activity is robust, with competition driving yields down somewhat [11] Company Strategy and Development Direction - The company plans to close the acquisition of First Chatham Bank on May 1, aiming to expand its presence in Georgia [8][24] - The focus remains on organic growth, with M&A opportunities considered when appropriate [53][124] Management's Comments on Operating Environment and Future Outlook - Management noted stability in credit results, with net charge-offs at 27 basis points annualized [12] - There is awareness of potential borrower issues, but no significant impact has been observed yet [12][106] - The macroeconomic environment is being closely monitored, with management expressing confidence in the company's ability to navigate challenges [33][110] Other Important Information - The company’s tangible book value increased to $22.30 per share, with strong regulatory capital levels [12] - The company anticipates stable net interest margins despite competitive pressures on loan yields [50] Q&A Session Summary Question: Loan pipelines and client feedback post-April 2nd announcements - Management indicated that there has been little impact on loan pipelines and expressed confidence in continued loan growth [29][33] Question: Deposit side and high-cost deposits - Management noted about $3.5 billion in time deposits maturing in the second quarter, with expectations of benefits from lower renewal rates [36][38] Question: Loan yields and margin outlook - Management acknowledged yield compression due to competition but expects stable net interest margins moving forward [47][50] Question: Capital priorities and M&A outlook - Management emphasized organic growth as the primary goal, with M&A opportunities considered based on cultural fit [53][124] Question: Revenue and balance sheet growth - Management discussed the addition of federal home loan bank borrowings to support balance sheet growth and income [58][60] Question: Concerns about credit quality and customer segments - Management reported stable credit quality, with no specific segments of concern identified at this time [106][110]

1Q25 Highlights | Solid Net Income | | | --- | --- | | $131.4 million | $0.71 $ | | Adjusted Net Income Available To Common Shareholders(1) | Adjusted EPS(1) | | Period End Loan Growth | | | $34.1 billion | 3.7% | | Period End Loans | 1Q25 Ann. Growth | | Net Interest Margin Expansion | | | 3.46% | +8bps | | 1Q25 Net Interest Margin | Δ vs. 4Q24 | | Improved Efficiency Ratio | | | 57.6% | +151bps | | 1Q25 Adjusted Efficiency Ratio(1) | Δ vs. 4Q24 | Earnings Presentation Q1 2025 | April 21, 2025 First Quarte ...

Group 1 - Cadence reported revenue of $448.54 million for the quarter ended March 2025, reflecting a 2.5% increase year-over-year, but a revenue surprise of -0.67% compared to the Zacks Consensus Estimate of $451.57 million [1] - The earnings per share (EPS) for the quarter was $0.71, up from $0.62 in the same quarter last year, resulting in an EPS surprise of +10.94% against the consensus estimate of $0.64 [1] - Shares of Cadence have returned -8% over the past month, underperforming the Zacks S&P 500 composite's -5.6% change, and the stock currently holds a Zacks Rank 3 (Hold) [3] Group 2 - The adjusted efficiency ratio was reported at 57.6%, better than the average estimate of 59.6% based on four analysts [4] - The net interest margin was 3.5%, slightly above the average estimate of 3.4% from four analysts [4] - Total noninterest income was $85.39 million, below the average estimate of $88.23 million from four analysts [4]

Company Performance - Cadence reported quarterly earnings of $0.71 per share, exceeding the Zacks Consensus Estimate of $0.64 per share, and up from $0.62 per share a year ago, representing an earnings surprise of 10.94% [1] - The company posted revenues of $448.54 million for the quarter ended March 2025, which missed the Zacks Consensus Estimate by 0.67%, compared to year-ago revenues of $437.69 million [2] - Over the last four quarters, Cadence has surpassed consensus EPS estimates four times but has only topped consensus revenue estimates once [2] Stock Performance - Cadence shares have declined approximately 19% since the beginning of the year, while the S&P 500 has decreased by 10.2% [3] - The current consensus EPS estimate for the upcoming quarter is $0.68 on revenues of $463.98 million, and for the current fiscal year, it is $2.82 on revenues of $1.88 billion [7] Industry Outlook - The Zacks Industry Rank for Banks - Southeast, which includes Cadence, is currently in the top 36% of over 250 Zacks industries, indicating a favorable industry outlook [8] - Empirical research suggests a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can impact Cadence's stock performance [5]

Core Viewpoint - Cadence Bank reported strong financial results for Q1 2025, highlighting improved operating leverage, expanded net interest margin, and organic loan growth despite economic volatility. The bank also received regulatory approvals for its merger with First Chatham Bank, expected to close on May 1, 2025 [3][14]. Financial Performance - Net income available to common shareholders for Q1 2025 was $130.9 million, or $0.70 per diluted share, compared to $114.6 million, or $0.62 per diluted share in Q1 2024 [4][14]. - Adjusted net income for Q1 2025 was $131.4 million, or $0.71 per diluted share, up from $114.4 million, or $0.62 per diluted share in Q1 2024 [4][14]. - Return on average assets improved to 1.15% in Q1 2025, up from 0.97% in Q1 2024 [5][14]. - Adjusted pre-tax pre-provision net revenue (PPNR) was $189.9 million, an increase of 3.2% from Q4 2024 and 9.0% from Q1 2024 [5][14]. Net Interest Revenue - Net interest revenue for Q1 2025 was $363.2 million, compared to $353.9 million in Q1 2024 [6][14]. - The net interest margin improved to 3.46% in Q1 2025, up from 3.22% in Q1 2024 [6][14]. - Average earning assets slightly declined to $42.6 billion, with a net loan growth of $309.9 million, or 3.7% annualized [7][10]. Balance Sheet Activity - Total loans and leases increased to $34.1 billion as of March 31, 2025, compared to $33.7 billion at the end of Q4 2024 [10][14]. - Total deposits were $40.3 billion, a slight decline from $40.5 billion at the end of Q4 2024, primarily due to a decrease in brokered deposits [11][14]. - The loan to deposit ratio was 84.4% as of March 31, 2025 [11][14]. Credit Quality - Net charge-offs for Q1 2025 were $23.0 million, or 0.27% of average net loans, compared to $19.5 million, or 0.24% in Q1 2024 [13][14]. - The allowance for credit losses was $457.8 million, representing 1.34% of total loans and leases [15][14]. - Total nonperforming assets as a percentage of total assets were stable at 0.51% as of March 31, 2025 [16][14]. Noninterest Revenue and Expense - Noninterest revenue for Q1 2025 was $85.4 million, compared to $83.8 million in Q1 2024 [17][14]. - Noninterest expense decreased to $259.3 million in Q1 2025 from $263.2 million in Q1 2024, leading to an improved adjusted efficiency ratio of 57.6% [21][14]. Capital Management - Total shareholders' equity increased to $5.7 billion as of March 31, 2025, up from $5.2 billion a year earlier [23][14]. - Common Equity Tier 1 capital ratio was 12.4% as of March 31, 2025, indicating strong capital management [23][14]. Merger Activity - The merger with FCB Financial Corp. is expected to close on May 1, 2025, with all necessary regulatory approvals obtained [14][24]. - The transaction involves the issuance of approximately 2.3 million shares of common stock and $23.1 million in cash for all outstanding shares of First Chatham [24].

Group 1: Company Overview - Cadence (CADE) is headquartered in Tupelo and has experienced a price change of -11.73% this year [3] - The current dividend payout is $0.28 per share, resulting in a dividend yield of 3.62%, which is higher than the Southeast banking industry's yield of 2.36% and the S&P 500's yield of 1.59% [3] Group 2: Dividend Performance - The annualized dividend of Cadence is currently $1.10, reflecting a 10% increase from the previous year [4] - Over the past five years, Cadence has increased its dividend four times, averaging an annual increase of 7.84% [4] - The current payout ratio is 36%, indicating that Cadence pays out 36% of its trailing 12-month earnings per share as dividends [4] Group 3: Earnings Growth - The Zacks Consensus Estimate for Cadence's earnings in 2025 is $2.86 per share, which represents a year-over-year earnings growth rate of 4.38% [5] Group 4: Investment Considerations - Dividends are favored by investors as they enhance stock investing profits, reduce overall portfolio risk, and offer tax advantages [6] - High-growth firms or tech start-ups typically do not provide dividends, while established companies with secure profits are preferred for dividend investments [7] - Cadence is positioned as a compelling investment opportunity due to its strong dividend profile and a Zacks Rank of 3 (Hold) [7]