Cadence Bank(US:CADE)2025-10-21 16:02Financial Data and Key Metrics Changes - Adjusted net income from continuing operations increased to $152.8 million or $0.81 per share, with adjusted return on assets at 1.13% for the quarter [7] - Tangible book value per share declined only $0.12 to $22.82, largely offset by strong operating earnings and improvement in accumulated other comprehensive income (AOCI) [6] - Adjusted pre-tax pre-provision net revenue reached a record $224 million, up nearly 9% from the prior quarter [9] - Total adjusted revenue of $517 million increased by $41 million or 9% in the quarter, with net interest revenue up $46 million or 12% [10] Business Line Data and Key Metrics Changes - Deposits increased by $3.4 billion, with core customer deposits up $3.1 billion due to the influx from the Industry acquisition [7] - Loans rose by $1.3 billion, with $1 billion attributed to the Industry acquisition and over $300 million in organic growth across mortgage and multiple verticals [7] - Adjusted non-interest revenue of $93.5 million decreased by $4.7 million, primarily due to seasonal declines in mortgage banking revenue [12] Market Data and Key Metrics Changes - The company experienced an uptick in commercial real estate (CRE) paydowns during the quarter, but new origination activity remained strong across its footprint [8] - Non-performing asset levels and criticized and classified asset levels continued to reflect stability [8] Company Strategy and Development Direction - The company completed the acquisition of Industry Bankshares and integrated it into its systems, aiming to grow in Central Texas and Georgia markets [4] - The management expressed confidence in leveraging deposit products and services more fully now that integration is complete [7] - The company plans to continue focusing on organic growth while also considering additional acquisitions in a consolidating industry [60] Management's Comments on Operating Environment and Future Outlook - Management noted that the pipeline for loan growth remains strong, with expectations for continued modest improvement in net interest margin through the end of the year and into next year [11] - The company anticipates that the expense expectations will align with revenue expectations, driving operating leverage as they approach year-end [23] Other Important Information - The company reported a $4.3 million securities gain offset by a $4.3 million hedge loss, resulting in a net impact of zero on the P&L [9][12] - The adjusted efficiency ratio improved to 56.5% [7] Q&A Session Summary Question: Can you talk about the drivers of the slightly lower revenue and loan growth guide? - Management indicated that the shorter timeline for the remaining months of the year provides better clarity, and they expect good growth in the fourth quarter [20][21] Question: What sort of beta do you expect in the broker and time deposits as rates go down? - Management expects interest-bearing betas to reach about 50%, with total deposits between 30% and 40% [25][26] Question: What's the expectation for DDA specifically as we go through the rest of the year? - Management noted that non-interest-bearing deposits finished Q3 at 20.6%, with expectations to stabilize around 21% [32][33] Question: What should we think of as a good capital level or a base capital level that you're trying to manage to? - Management aims to continue being good stewards of capital, with plans to execute on organic growth and consider additional deals [39] Question: What was driving the increase in deposits this quarter? - Management clarified that the increase was largely due to the Industry acquisition, with stable core organic deposits [46] Question: Can you provide insight into the fee income businesses this quarter? - Management highlighted a typical seasonal dip in mortgage production but noted a year-over-year increase of 13% [124]