• GAAP Net Income: $130.3 million for Q4 2024, $514.1 million for the full year.
• Adjusted Net Income: $130 million for Q4 2024, $507.9 million for the full year.
• Adjusted EPS: $0.70 for Q4 2024, $2.74 for the full year.
• Loan Growth: $438 million for Q4 2024, $1.2 billion for the full year.
• Core Customer Deposit Growth: $260 million for Q4 2024, $2.2 billion for the full year.
• Net Interest Margin: Improved by 7 basis points to 3.38% for Q4 2024.
• Net Charge-Offs: 17 basis points annualized for Q4 2024.
• Efficiency Ratio: Improved to 58.4% for 2024 from 63.3% in 2023.
• Tangible Book Value Per Share: Increased by over 11% to $21.54 at year-end 2024.
• Net Interest Revenue: $364.5 million for Q4 2024, $1.4 billion for the full year.
• Noninterest Revenue: $86.2 million for Q4 2024, $345 million for the full year.
• Adjusted Noninterest Expense: $266.7 million for Q4 2024, $1 billion for the full year.
• Dividend Increase: 10% increase to $0.275 per share.

• Warning! GuruFocus has detected 4 Warning Sign with CADE.

Release Date: January 23, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Cadence Bank (NYSE:CADE) announced a merger with FCB Financial Corporation, expanding its presence in the Savannah, Georgia market.
• The bank reported a significant improvement in financial performance for 2024, with GAAP net income of $514.1 million, up 25% compared to 2023.
• Core customer deposits grew by $2.2 billion or approximately 7% for the full year, indicating strong customer retention and growth.
• Net interest margin improved by 22 basis points for the full year to 3.30%, driven by effective management of deposit costs.
• Cadence Bank (NYSE:CADE) achieved a meaningful growth in tangible book value per share, improving by over 11% to $21.54 at year-end 2024.

Negative Points

• The bank experienced a slight decline in adjusted EPS from continuing operations in the fourth quarter due to isolated expenses related to a system upgrade.
• Noninterest revenue declined by 2.9% in the fourth quarter, impacted by a decrease in other noninterest revenue.
• Noninterest-bearing deposits as a percentage of total deposits declined to 21.2% during the quarter.
• The bank anticipates a modest decline in noninterest-bearing deposits as a percentage of total deposits over the next year.
• Cadence Bank (NYSE:CADE) has not announced a buyback plan for 2025, indicating a potential reduction in share repurchase activity.

Q & A Highlights

Q: Can you unpack the loan growth guidance and assumptions for different loan segments and utilization rates? A: James Rollins, CEO, explained that they haven't made significant changes to utilization rates and are optimistic about market growth. They anticipate potential high-end growth if the economy improves, but consider their guidance conservative. Billy Braddock, Chief Banking Officer, noted strong loan approval levels and momentum in closings, expecting continued growth in the near term.

Q: How should loan yields trend given the forward curve, especially for floating, variable, and fixed-rate loans? A: Valerie Toalson, CFO, stated that the overall portfolio yield is at 6.40%, with new loan production above 7%. If this continues without rate cuts, they expect favorable portfolio yield trends. They are optimistic about sustaining growth and potentially increasing overall portfolio yield.

Q: What is the expectation for fees versus net interest income (NII) in the guidance, and is there flexibility in expenses if revenue is lower? A: James Rollins, CEO, emphasized ongoing investments in people and technology, with limited flexibility in reducing expenses. Valerie Toalson, CFO, noted they are more bullish on NII growth, with steady noninterest income growth expected. Market performance and mortgage rates could impact fee income positively.

Q: Can you discuss the credit outlook and charge-off guidance, considering the decline in criticized and classified loans? A: James Rollins, CEO, acknowledged the potential for lower charge-offs but emphasized the lumpy nature of credit events. Chris Bagley, President & Chief Credit Officer, noted the guidance is conservative, with potential for better outcomes if economic conditions improve.

Q: Regarding the recent acquisition, is this a one-off deal or part of a strategy for multiple smaller deals? A: James Rollins, CEO, stated there is no preference for deal size, but they aim to be an acquirer of choice. The Savannah market expansion aligns with their strategy, and they are open to larger opportunities as the industry consolidates. The current deal does not preclude further acquisitions.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.