Cadence Bank(US:CADE)2022-01-26 20:34Financial Data and Key Metrics Changes - The company reported a net loss on a GAAP basis for Q4 2021 of $37 million or $0.22 per share, while adjusted net income available to common shareholders was $102 million or $0.62 per share [26] - Adjusted pretax pre-provision net revenue (PPNR) was $134 million or 1.29% of average assets, remaining flat compared to the prior quarter [27] - The net interest margin for Q4 was reported at 2.9%, up due to increased accretion revenue from the merger [30] Business Line Data and Key Metrics Changes - The mortgage team reported origination volume of $818 million for the quarter, with two-thirds being purchase money [46] - Insurance reported total commission revenue of $32.6 million, marking the third consecutive quarter of near double-digit revenue growth [45] - Organic loan growth for the quarter was $400 million or 6% annualized, with growth spread across various loan categories [39] Market Data and Key Metrics Changes - The company experienced a decline in deposits of approximately $470 million on an organic basis during the quarter, primarily due to routine volatility in large municipal deposit accounts [42] - Non-performing loans decreased to $38.4 million or 20% during the quarter, with non-performing assets declining to 39 basis points of total assets [44] Company Strategy and Development Direction - The company aims to complete the integration of the two legacy organizations and capitalize on the opportunities presented by the merger [95][96] - There is a focus on enhancing the brand identity and operational integration, with plans for further development in various business lines, including insurance and wealth management [8][96] - The management team is optimistic about growth opportunities in 2022, particularly in commercial and industrial (C&I) lending [49] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the credit quality improvement and the overall economic environment, noting a mature credit culture [17][24] - The company anticipates a period of rising interest rates, which positions it well for future growth [24] - Management highlighted the importance of retaining key bankers and the positive cultural alignment between the legacy organizations [20] Other Important Information - The merger resulted in recorded goodwill of $452 million and a preliminary intangible asset value of $152 million [35] - The company has a robust pipeline for loan growth, with expectations for mid-single-digit portfolio growth in 2022 [49] Q&A Session Summary Question: Updates on merger assumptions and EPS accretion expectations - Management remains confident in achieving planned cost savings and expects to see significant reductions in costs post-Q4 operational integration [55][56] Question: Impact of purchase accounting accretion - The company anticipates a balanced accretion income throughout 2022, with an estimated total of about $40 million [56][58] Question: Thoughts on share buyback and intrinsic value - Management views the current stock valuation as low and plans to utilize share buybacks as a tool for capital management [60] Question: Near-term expense guidance - Management indicated that Q1 expenses may see typical seasonal increases but expects to identify efficiencies as integration progresses [62][65] Question: Outlook on loan growth and credit quality - Management expressed optimism about continued loan growth and improving credit quality, with net recoveries reported for multiple quarters [83][84]