Cadence Bank(US:CADE)2024-10-23 01:12Financial Data and Key Metrics Changes - GAAP net income for Q3 2024 was $134.1 million, or $0.72 per diluted common share, with adjusted net income from continuing operations at $135.6 million, or $0.73 per diluted common share, reflecting a 6% increase compared to Q2 2024 [4][7] - Core customer deposits grew over 11% on an annualized basis, with total deposit growth of approximately $985 million for the quarter, or 10.4% annualized [4][8] - Net interest margin improved to 3.31%, up 4 basis points from the previous year [5][9] Business Line Data and Key Metrics Changes - Loan balances were flat for the quarter, with net declines in non-real estate C&I loans offsetting a 2% overall growth in other loan segments [9] - Non-interest revenue was $88.8 million on an adjusted basis, increasing 3.7% in Q3, driven by broad-based fee growth despite a decline in mortgage banking revenue [11][12] - Total adjusted non-interest expense was just over $260 million, up 3.7% due to merit increases and other factors [13][14] Market Data and Key Metrics Changes - The company maintained a solid allowance for credit losses at 1.38% of loans, with net charge-offs at $22.2 million, or 26 basis points annualized [15][16] - Non-accrual loans increased by $56 million, primarily due to migration of previously criticized credits, but overall credit quality remained stable [15][16] Company Strategy and Development Direction - The company is focused on maintaining strong deposit growth while managing costs effectively, with plans to replace BTFP borrowings with core deposits [11][51] - Management expressed optimism about loan originations outpacing payoff pressures, supported by a robust and diverse loan pipeline [5][28] - The company aims to grow within existing markets rather than pursuing aggressive M&A, focusing on expanding in cities like Tampa, Orlando, and Nashville [39] Management's Comments on Operating Environment and Future Outlook - Management noted that credit quality remains stable and in line with expectations, with no significant concerns observed in the current economic environment [6][15] - The company is optimistic about continued momentum throughout the remainder of 2024 and into 2025, with expectations for improved net interest margins and fee income [17][39] Other Important Information - The company repurchased over 323,000 shares of stock during the quarter, with strong capital metrics including a CET1 ratio of 12.3% [7][16] - Adjusted efficiency ratio for the quarter was 57.7%, reflecting solid expense management [14] Q&A Session Summary Question: Discussion on NIM and loan yields - Management indicated that loan yields are expected to continue increasing modestly due to upcoming repricing of loans at higher rates [18][20] Question: Impact of BTFP paydowns on deposit betas - Management expects deposit costs to peak in the current quarter, with efforts to bring them down while retaining deposit growth [22][24] Question: Loan pipeline and production levels - New loan commitments were approximately $1.7 billion, with a strong pipeline but challenges in retaining loans on the balance sheet due to payoffs [27][28] Question: Expense growth normalization - Management acknowledged the difficulty in defining "normalized" expense growth but indicated that it would be influenced by inflation and ongoing investments in technology and personnel [32][36] Question: Capital management and M&A prospects - The company remains committed to share buybacks and is focused on organic growth within existing markets rather than pursuing aggressive M&A strategies [38][39]