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Cadence Bank(CADE) - 2023 Q4 - Earnings Call Transcript
CADECadence Bank(CADE)2024-01-30 23:30

Financial Data and Key Metrics Changes - The company reported adjusted net income from continuing operations for Q4 2023 of 72.7million,or72.7 million, or 0.40 per common share, bringing annual adjusted net income to 401.2million,or401.2 million, or 2.20 per common share [11][132] - Net interest income for Q4 was 335million,anincreaseof335 million, an increase of 5.6 million compared to the prior quarter, with a net interest margin of 3.04%, up 6 basis points [123][133] - Total criticized loans remained stable at 2.09% of net loans and leases, with an increase in credit provision to 38millionforthequarter[12][26]BusinessLineDataandKeyMetricsChanges−Thecompanycompletedtheclosureof35branchesinQ3andreducedheadcountbyalmost500fromthebeginningoftheyear[10]−Noninterestrevenueonanadjustedbasiswas38 million for the quarter [12][26] Business Line Data and Key Metrics Changes - The company completed the closure of 35 branches in Q3 and reduced headcount by almost 500 from the beginning of the year [10] - Noninterest revenue on an adjusted basis was 73.1 million, down from 80.6millioninQ3,primarilyduetoanegativevarianceinmortgageservicingrightsvaluationandareductioninservicechargefeeincome[46]MarketDataandKeyMetricsChanges−Totaldepositsincreasedbyover80.6 million in Q3, primarily due to a negative variance in mortgage servicing rights valuation and a reduction in service charge fee income [46] Market Data and Key Metrics Changes - Total deposits increased by over 160 million, with core customer deposit growth contributing significantly [121] - The total cost of deposits increased at the slowest pace of the year, up 18 basis points to 2.32% [25] Company Strategy and Development Direction - The company aims to build upon its accomplishments in 2023 and improve performance in 2024, focusing on loan growth and capital management [21][43] - The restructuring of the securities portfolio is expected to enhance operating performance and net interest margin [120][133] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the stability of the macroeconomic environment and expects net charge-offs in 2024 to be comparable to 2023 [16][70] - The company anticipates additional positive impacts on net interest margin from the securities repositioning in Q1 2024 [133] Other Important Information - The company completed the sale of its insurance business, enhancing capital by $620 million, and used part of the proceeds to restructure its securities portfolio [24][120] - The CET1 ratio improved to 11.6% at year-end, providing flexibility for capital management in 2024 [43] Q&A Session Summary Question: What is the outlook for loan growth and deposit growth? - Management indicated that loan growth is expected to be broad-based across various sectors, with a focus on community banking [100][101] Question: How does the company view the impact of potential rate cuts? - Management prefers stability in rates, as it allows for better repricing of loans and overall positive impacts on net interest income [235] Question: What are the expectations for credit quality in 2024? - Management expects credit quality to remain stable, with net charge-offs anticipated to be manageable [72][74] Question: How does the company plan to utilize the remaining capital from the insurance sale? - The company plans to reinvest part of the capital into securities and reduce reliance on brokered deposits [92][135] Question: What is the company's strategy regarding M&A? - The company aims to grow market share within its existing footprint rather than pursuing acquisitions outside its current markets [289]