CADE
$7.75
Cadence Bancorp Cl A
($.23)
(2.88%)
Earnings Details
1st Quarter March 2020
Wednesday, April 29, 2020 6:31:00 AM
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Summary

Cadence Bancorp Cl A (CADE) Recent Earnings

Cadence Bancorp Cl A (CADE) reported 1st Quarter March 2020 earnings of $0.10 per share on revenue of $227.8 million. The consensus earnings estimate was $0.20 per share on revenue of $187.0 million. Revenue fell 9.9% compared to the same quarter a year ago.

Results
Reported Earnings
$0.10
Earnings Whisper
-
Consensus Estimate
$0.20
Reported Revenue
$227.8 Mil
Revenue Estimate
$187.0 Mil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Cadence Bancorporation Reports First Quarter 2020 Financial Results

HOUSTON--(BUSINESS WIRE)--Cadence Bancorporation (NYSE: CADE) (“Cadence”) today announced a net loss for the quarter ended March 31, 2020 of ($399.3) million or ($3.15) per share, compared to net income of $58.2 million or $0.44 per share for the quarter ended March 31, 2019, and $51.4 million or $0.40 per share for the quarter ended December 31, 2019. The 2020 net loss resulted from a non-cash goodwill impairment charge of $412.9 million, net of tax, or ($3.26) per share. Adjusted net income(1), excluding non-routine income and expenses(2) and the impairment charge, was $12.5 million or $0.10 per share for the first quarter of 2020, compared to adjusted net income of $75.5 million or $0.58 per share for the quarter ended March 31, 2019 and compared to $51.9 million or $0.40 per share for the quarter ended December 31, 2019.

“There are several positive points about our first quarter results that should be mentioned. Our adjusted pre-tax, pre-provision earnings of $93 million or 2.11% as a percent of average assets is relatively stable compared to the linked quarter. Our loan loss reserves more than doubled to 1.83% of loans in part due to CECL implementation as well as the impact of COVID-19. Importantly, our capital ratios and liquidity are strong and our tangible book value per share increased from $14.65 to $15.65 linked quarter, up 6.7%. Our team has seen numerous cycles and we are cautiously and prudently preparing for an extended period of stress. Our bankers, while largely working remotely and safely, are actively and effectively meeting the needs of our customers and communities. Cadence, as an existing SBA preferred lender, has been active in the Paycheck Protection Program (“PPP”), and we have secured approximately $1 billion in these PPP loans for our customers. This is a particularly difficult time for restaurants, energy companies and their banks. COVID-19, coupled with historically low oil prices, has taken a toll on these industries in which we have an active banking presence. Our exposure to these industries contributed to the significant drop in our share price, which was a primary trigger of the goodwill impairment charge that impacted our first quarter earnings. This non-cash goodwill charge does not adversely affect our strong capital ratios or liquidity, and we remain confident in our ability to deal with any additional pressures we may experience in the quarters ahead. In light of the higher level of stress, our Board declared a second quarter dividend of $0.05 cents per share, down from $0.175 in previous quarter. This prudent step is consistent with our historical conservative approach to capital management,” stated Paul B. Murphy, Jr., Chairman and Chief Executive Officer of Cadence Bancorporation.

First Quarter 2020 Highlights:

First quarter 2020 highlights (compared to the linked quarter where applicable) are as follows:

  • Annualized returns on average assets and tangible common equity for the first quarter of 2020 were (9.08%) and 3.86%, respectively, compared to 1.34% and 15.54%, respectively, for the first quarter of 2019 and 1.14% and 11.82%, respectively, for the fourth quarter of 2019.
  • Adjusted annualized returns on average assets(1) and adjusted tangible common equity(1) for the first quarter of 2020 were 0.28% and 3.62%, respectively, compared to 1.74% and 19.83%, respectively, for the first quarter of 2019 and 1.16% and 11.93%, respectively, for the fourth quarter of 2019.
  • Adjusted pre-tax pre-provision net earnings(1) for the first quarter of 2020 was $93.0 million, a decrease of $15.5 million or 14.3% compared to the first quarter of 2019 and a decrease of $1.9 million or 2.0% compared to the fourth quarter of 2019. The linked quarter decline was driven by lower accretion income. As a percent of average assets, adjusted pre-tax pre-prevision net earnings was 2.11%, 2.50% and 2.11% for the first quarter of 2020, first quarter of 2019 and fourth quarter of 2019, respectively.
  • On March 6, 2020, we terminated our $4.0 billion notional interest rate collar, realizing a gain of $261.2 million (“transaction gain”). The locked-in transaction gain, currently reflected in other comprehensive income net of deferred income taxes, will amortize over an expected four years into interest income, regardless of the interest rate environment.
  • On January 1, 2020, Cadence adopted the current expected credit loss (“CECL”) accounting standard for estimating credit losses. Upon adoption, we recognized an increase of $75.9 million in our allowance for credit losses (“ACL”), increasing the ACL by 63.4% to $195.5 million or 1.50% of total loans. Note that this “Day 1” impact did not impact first quarter loan provisions, but instead only impacted the ACL, deferred taxes, and equity.
  • The provision for credit losses for the first quarter 2020 was $83.4 million compared to $27.1 million in the linked quarter. Upon the adoption of CECL, the provision for credit losses includes the provision for loan losses and the provision for unfunded credit commitments. Prior to the adoption of CECL, the provision for unfunded credit commitments was included in other noninterest expenses. Our calculation for the ACL used the baseline scenario provided by a nationally recognized service released on April 4, 2020, as adjusted after considering qualitative and environmental factors.
  • We continued to actively manage funding costs, with total cost of funds at 1.05% and total cost of deposits at 0.96%, representing declines of 18 basis points for each.
  • We more than offset the effect of declining rates on our earning assets through the impact of our hedging and deposit cost management. While tax equivalent net interest margin (“NIM”) declined by 9 basis points to 3.80%, 11 basis points was due to lower accretion income during the quarter due in part to the implementation of CECL.
  • We aggressively managed expenses, with adjusted expenses (see Table 10) declining $7.0 million and realized an adjusted efficiency ratio(1) of 49.9%.
  • Capital remained very strong with CET1 at 11.4%, and we ended the quarter with a well-positioned, diverse balance sheet reflecting strong liquidity and a robust capital base.

Balance Sheet:

Total assets were $17.2 billion as of March 31, 2020, a decrease of $215.0 million or 1.2% from March 31, 2019, and a decrease of $562.3 million or 3.2% from December 31, 2019.

Loans at March 31, 2020 totaled $13.4 billion as compared to $13.6 billion at March 31, 2019, a decrease of $232.8 million or 1.7%. Loans increased $408.5 million or 3.1% from $13.0 billion at December 31, 2019. The year-over-year decline included sales of equipment financing loans of $130 million in 2Q19, sales of homebuilder finance loans of $47.1 million in the first quarter of 2020, and strategic declines in the restaurant and leveraged loan sectors as part of our risk management. The declines also reflect an overall heightened risk focus on new originations in the past year. The increases in loan balances during the first quarter of 2020 reflect primarily increased customer draws on outstanding credit lines and modest new originations, partially offset by routine paydowns. During the first quarter of 2020, draws on existing lines of credit increased by $457.3 million.

Investment Securities at March 31, 2020 totaled $2.5 billion or 14.3% of total assets as compared to $1.8 billion or 10.1% of total assets at March 31, 2019, an increase of $706.8 million or 40.3%. Investment securities for the first quarter of 2020 increased $93.1 million from $2.4 billion, or 13.3% of total assets at December 31, 2019. The increase in securities as a percent of assets from the prior year is a result of growth in deposits and lower loan balances.

Goodwill at March 31, 2020 totaled $43.1 million, down from $480.4 million at March 31, 2019 and $485.3 million at December 31, 2019. The Company performed an interim goodwill impairment test as of March 31, 2020 which indicated goodwill impairment resulting in the recording of a $443.7 million ($412.9 million, after-tax), non-cash impairment charge in the first quarter of 2020. The impairment, representing all of the Bank reporting unit’s goodwill, was primarily the result of economic and industry conditions at March 31, 2020, volatility in the market capitalization of the Company’s and its peer banks, increased loan provision estimates in light of COVID-19, increased discount rates and other changes in variables driven by the uncertain macro-environment that when combined, resulted in the fair value of the reporting unit being less than the reporting unit’s carrying value. The remaining goodwill at March 31, 2020 relates to our registered investment advisory subsidiary and trust division.

Total Deposits at March 31, 2020 totaled $14.5 billion, an increase of $290.3 million or 2.0% from March 31, 2019 and a decrease of $253.3 million or 2% from December 31, 2019. First quarter 2020 core deposit declines of $636 million reflect an intentional reduction in certain higher priced and larger depositor relationships totaling nearly $1 billion and seasonal public fund and large corporate deposit declines of $175 million, partially offset by granular core deposit account growth of nearly $550 million. These strategic deposit activities resulted in a 16% reduction in costs of deposits to 0.96% for the quarter and an increase of noninterest-bearing deposits as a percent of total deposits to 27% from 24% in the prior quarter.

Total borrowings were $372.4 million at March 31, 2020, down from $717.3 million at March 31, 2019 and flat from $372.2 million at December 31, 2019. The year-over-year decline was largely due to a decrease of $295.0 million in FHLB borrowings as a result of increased core deposits, as well as a decline of approximately $50 million in other long-term debt.

Shareholders’ equity was $2.1 billion at March 31, 2020, a decrease of $189.3 million or 8.2% from March 31, 2019, and a decrease of $347.3 million or 14.1% from December 31, 2019. The linked quarter decrease resulted primarily from the net goodwill impairment charge of $412.9 million, $22.1 million in cash dividends, $30.0 million related to common share buybacks, and the cumulative effect of adopting CECL at January 1, 2020 of $62.8 million. These reductions to equity were partially offset by an increase of $166.0 million in other comprehensive income largely driven by the realized gain from the termination of our interest rate collar.

Tangible common shareholders’ equity(1) was $2.0 billion at March 31, 2020, an increase of $266.6 million or 15.6% from March 31, 2019 and an increase of $100.9 million or 5.4% from December 31, 2019. The linked quarter increase resulted from the same factors noted above excluding the goodwill impairment charge as it does not impact tangible common equity.

  • Tangible book value per share(1) was $15.65 as of March 31, 2020, an increase of $2.42 or 18% from $13.23 as of March 31, 2019 and an increase of $1.00 or 7% from $14.65 as of December 31, 2019.
  • Total outstanding shares at March 31, 2020 were 125.9 million.
  • Total shareholders’ equity to total assets and tangible equity to tangible assets were 12.3% and 11.5%, respectively, at March 31, 2020 compared to 13.2% and 10.1% at March 31, 2019, respectively.

Capital ratios remained robust at March 31, 2020, with all the ratios increasing or stable in the current quarter except for the leverage ratio, which was down slightly:

Common equity Tier 1 capital

11.4%

Tier 1 leverage capital

10.1%

Tier 1 risk-based capital

 

11.4%

Total risk-based capital

 

13.8%

  • For regulatory capital purposes, pursuant to the Federal Reserve Board’s final interim rule as of April 3, 2020, 100% of the CECL $62.8 million “Day-1” impact and 25% of the $83.4 million “Day-2” first quarter 2020 provision for credit losses will be deferred over a two-year period ending January 1, 2022, at which time it will be phased in on a pro rata basis over a three-year period ending January 1, 2025.

Asset Quality:

Credit quality metrics were elevated during the first quarter of 2020 as certain of our borrowers, predominantly in the Restaurant, Energy, and General C&I categories, experienced increased credit stress compared to our historical experience and long-term expectations.

  • Upon our adoption of CECL on January 1, 2020, we recorded an increase of $76.2 million, a 63.4% increase, to our ACL and reserve for unfunded commitments.
  • Provision for credit losses for the first quarter of 2020 (includes provision for loans and unfunded commitments) was $83.4 million or 2.55% annualized of average loans as compared to $11.2 million or 0.33% annualized of average loans for the first quarter of 2019 and $27.1 million or 0.80% annualized of average loans for the fourth quarter of 2019. The current quarter’s provision was driven by CECL methodology which included an economic forecast that was significantly adversely affected by the COVID-19 pandemic and lower oil prices.
  • Net charge-offs for the first quarter of 2020 were $32.5 million or 0.99% annualized of average loans compared to $0.6 million or 0.02% annualized and $35.3 million or 1.04% annualized for the quarters ended March 31, 2019 and December 31, 2019, respectively. The current quarter charge-offs included $19.0 million in three general C&I credits, $9.4 million in four restaurant credits, and $0.8 million in one energy credit.
  • The ACL was $245.2 million or 1.83% of total loans as of March 31, 2020, as compared to $105.0 million or 0.77% of total loans as of March 31, 2019, and $119.6 million or 0.92% of total loans as of December 31, 2019.
  • The ACL to total nonperforming loans (“NPL”) was 153.6% as of March 31, 2020, as compared to 135.2% as of March 31, 2019, and 100.1% as of December 31, 2019.
  • Loans 30-89 days past due were 0.19% of total loans at March 31, 2020, compared to 0.17% at March 31, 2019 and 0.17% at December 31, 2019.
  • Accruing loans 90 days or more past due were 0.01% of total loans at March 31, 2020, compared to 0.30% at March 31, 2019 and 0.18% at December 31, 2019.
  • NPL as a percent of total loans were 1.19% at March 31, 2020, compared to 0.57% at March 31, 2019 and 0.92% at December 31, 2019. NPL totaled $159.7 million, $77.8 million and $119.6 million as of March 31, 2020, March 31, 2019 and December 31, 2019, respectively. Note that the adoption of CECL resulted in $35.5 million in additional NPL or 27 basis points in the purchased credit deteriorated (“PCD”) population at March 31, 2020 that were previously considered performing when evaluated as a pool under prior accounting methodology versus individually under CECL. Had CECL been in place at December 31, 2019, the amount of these PCD loans would have been $43.0 million.
  • Total criticized loans (see Table 6) at March 31, 2020 were $665.7 million or 4.97% of total loans as compared to $278.5 million or 2.04% at March 31, 2019 and $605.1 million or 4.66% at December 31, 2019. The linked quarter increase included net downgrades in energy credits and general C&I credits, partially mitigated by net upgrades of $28.3 million in technology credits.

Total Revenue:

Total operating revenue(1) for the first quarter of 2020 was $188.5 million, down $11.4 million or 5.7% from the same period in 2019 and down $6.3 million or 3.2% from the linked quarter.

Net interest income Net interest income for the first quarter of 2020 was $153.5 million, a decrease of $15.8 million or 9.3% from the same period in 2019 and a decrease of $7.4 million or 4.6% from the fourth quarter of 2019.

  • Our fully tax-equivalent net interest margin (“NIM”) for the first quarter of 2020 was 3.80% as compared to 4.21% for the first quarter of 2019 and 3.89% for the fourth quarter of 2019.
  • Net interest spread in the first quarter of 2020 decreased to 3.38% as compared to 3.70% for the first quarter of 2019 and 3.41% for the fourth quarter of 2019.
  • Accretion on acquired loans totaled $9.8 million for the first quarter of 2020, adding 23 basis points to the NIM. As part of the CECL implementation, interest earned on PCD loans is reflected through interest income where it was previously considered in ACI loan accretion. The comparable PCD loan interest for each period amounts to $3.0 million, $3.6 million and $3.8 million for the quarters ended March 31, 2020, March 31, 2019 and December 31, 2019, respectively. PCD accretion was $2.0 million for the first quarter of 2020 as compared to comparable accretion of $6.0 million for the fourth quarter of 2019. We have normalized PCD income to CECL presentation throughout this release for comparability purposes between quarters.

The year-over-year decrease in NIM reflects positive impacts from changes in our balance sheet mix, derivative activities, funding costs, loan yields offset by declines in accretion income. The first quarter 2020 NIM, as compared to the linked quarter, was down only 9 basis points due fully to lower accretion as we effectively mitigated the impact of declining rates on our loan portfolio by aggressively managing funding costs and realizing the positive impact of our terminated collar gain. Specifically, the NIM change during the quarter included:

Quarterly Change in NIM

Balance

 

Yield

 

Total

4Q 2019 Net Interest Margin

 

 

 

 

3.89%

Securities & ST Investments

0.05%

 

-0.03%

 

0.02%

Originated Loans

0.01%

 

-0.06%

 

-0.05%

Acquired Loans

-0.09%

 

-0.03%

 

-0.12%

Loan Fees

 

 

-0.02%

 

-0.02%

Non Accrual Impact

 

 

-0.01%

 

-0.01%

Hedging

 

 

0.04%

 

0.04%

Earning Assets excl Accretion

-0.03%

 

-0.11%

 

-0.14%

Accretion

 

 

-0.11%

 

-0.11%

Earning Assets

-0.03%

 

-0.22%

 

-0.25%

Funding/Deposits

0.02%

 

0.14%

 

0.16%

Net Interest Margin Change

-0.01%

 

-0.08%

 

-0.09%

1Q 2020 Net Interest Margin

 

 

 

 

3.80%

The impact of the changes in yields and costs on our balance sheet included the following highlights:

  • Yield on originated loans, excluding hedging, was 4.75% for the first quarter of 2020, as compared to 5.00% for the fourth quarter of 2019. Approximately 68% of the total loan portfolio was floating at March 31, 2020, which drove the declines in originated loan yields in the first quarter of 2020.
  • The impact of declining rates on our loan yields was partially offset by the positive impact of our hedges linked quarter:
    • Collar gain recognition: Hedge income and gain recognition for the first quarter of 2020 was $8.0 million as compared to $6.9 million for the fourth quarter of 2019.
    • Rate swaps: Swap income for the first quarter of 2020 was ($0.1) million as compared to ($0.5) million for the fourth quarter of 2019.
  • Funding costs declined meaningfully this quarter as we worked proactively to lower higher cost deposit rates and/or balances, resulting in total cost of deposits for the first quarter of 2020 of 0.96% compared to 1.14% for the linked quarter, and total funding costs of 1.05% for the first quarter of 2020 compared to 1.23% for the linked quarter.

Noninterest income for the first quarter of 2020 was $35.1 million, an increase of $4.4 million or 14.4% from the same period of 2019 and an increase of $1.2 million or 3.5% over the linked quarter. Adjusted noninterest income(1) for the first quarter of 2020 was $32.1 million, an increase of $1.4 million or 4.6% from the first quarter of 2019, and a decrease of $0.2 million or 0.8% from the fourth quarter of 2019.

  • The year-over-year increase was led by increases in service charges, credit fees, trust revenue and SBA income, partially offset by declines in earnings from limited partnerships. The linked quarter results included an increase in credit related fees resulting from increased arrangement fees and an increase in service charges on deposits offset by decreases in investment advisory revenue impacted by declines in market values.
  • Noninterest income as a percent of total revenue for the first quarter of 2020 was 15.4% as compared to 12.1% for the first quarter of 2019 and 14.0% for the fourth quarter of 2019.

Noninterest expense excluding goodwill impairment charge for first quarter of 2020 was $94.0 million, a decrease of $19.5 million or 17.2% from the same period in 2019 and a decrease of $6.6 million or 6.5% from the fourth quarter of 2019.

Adjusted noninterest expense(2), which excludes the impact of non-routine items(2), was $92.6 million, up $1.1 million or 1.2% from the first quarter of 2019 and down $5.8 million or 5.9% from $98.4 million for the fourth quarter of 2019. The linked quarter decrease in adjusted expenses resulted from:

  • Decrease of $6.0 million in personnel costs primarily related to a reduction in incentive compensation and other compensation accruals;
  • Increase of $1.2 million in FDIC insurance assessment due to incremental credits received in the fourth quarter 2019 for assessments paid prior to reaching $10 billion in total assets; and
  • Decrease of $0.8 million in consulting and professional fees.

Our adjusted efficiency ratio(1) for the first quarter of 2020 of 49.9% improved slightly from the linked quarter ratio of 50.9% with lower expenses and increased from the prior year’s first quarter ratio of 45.7% due to lower revenue.

Taxes:

The effective tax rate for the first quarter of 2020 was 7.7% compared to 23.4% for the linked quarter and 22.7% for the first quarter of 2019. The first quarter of 2020 was impacted by the non-deductible portion of the goodwill impairment.

Dividend:

On April 28, 2020, the board of directors of Cadence Bancorporation approved a quarterly cash dividend in the amount of $0.05 per share of outstanding common stock, representing an annualized dividend of $0.20 per share. The dividend will be paid on May 15, 2020 to holders of record of Cadence’s Class A common stock on May 8, 2020.

Supplementary Financial Tables (Unaudited):

Supplementary financial tables (unaudited) are included in this release following the customary disclosure information.

First Quarter 2020 Earnings Conference Call:

Cadence Bancorporation executive management will host a conference call to discuss first quarter 2020 results on Wednesday, April 29, 2020, at 7:30 a.m. CT / 8:30 a.m. ET. Slides to be presented by management on the conference call can be viewed by visiting www.cadencebancorporation.com and selecting “Events & Presentations” then “Presentations”.

Conference Call Access:

To access the conference call, please dial one of the following numbers approximately 10-15 minutes prior to the start time to allow time for registration and use the Elite Entry Number provided below.

Dial in (toll free):

1-888-317-6003

International dial in:

1-412-317-6061

Canada (toll free):

1-866-284-3684

Participant Elite Entry Number:

7008277

For those unable to participate in the live presentation, a replay will be available through May 13, 2020. To access the replay, please use the following numbers:

US Toll Free:

1-877-344-7529

International Toll:

1-412-317-0088

Canada Toll Free:

1-855-669-9658

Replay Access Code:

10141328

Webcast Access:

The call and corresponding presentation slides will be webcast live on the home page of the Company’s website: www.cadencebancorporation.com.

About Cadence Bancorporation

Cadence Bancorporation (NYSE: CADE), headquartered in Houston, Texas, is a regional financial holding company with $17.2 billion in total assets as of March 31, 2020. Cadence operates 98 branch locations in Alabama, Florida, Georgia, Mississippi, Tennessee and Texas, and provides corporations, middle-market companies, small businesses and consumers with a full range of innovative banking and financial solutions. Services and products include commercial and business banking, treasury management, specialized lending, asset-based lending, commercial real estate, SBA lending, foreign exchange, wealth management, investment and trust services, financial planning, retirement plan management, payroll and insurance services, consumer banking, consumer loans, mortgages, home equity lines and loans, and credit cards. Clients have access to leading-edge online and mobile solutions, interactive teller machines, and more than 55,000 ATMs. The Cadence team of 1,800 associates is committed to exceeding customer expectations and helping their clients succeed financially.

(1)

 

Considered a non-GAAP financial measure. See Table 10 “Reconciliation of Non-GAAP Financial Measures” for a reconciliation of our non-GAAP measures to the most directly comparable GAAP financial measure.

(2)

 

See Table 10 for a detail of non-routine income and expenses.

Cautionary Statement Regarding Forward-Looking Information

This communication contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements reflect our current views with respect to, among other things, future events and our results of operations, financial condition and financial performance. These statements are often, but not always, made through the use of words or phrases such as “may,” “should,” “could,” “predict,” “potential,” “believe,” “will likely result,” “expect,” “continue,” “will,” “anticipate,” “seek,” “estimate,” “intend,” “plan,” “projection,” “would” and “outlook,” or the negative version of those words or other comparable words of a future or forward-looking nature. These forward-looking statements are not historical facts, and are based on current expectations, estimates and projections about our industry, management’s beliefs and certain assumptions made by management, many of which, by their nature, are inherently uncertain and beyond our control. Accordingly, we caution you that any such forward-looking statements are not guarantees of future performance and are subject to risks, assumptions and uncertainties that are difficult to predict.

Although we believe that the expectations reflected in these forward-looking statements are reasonable as of the date made, actual results may prove to be materially different from the results expressed or implied by the forward-looking statements. Such factors include, without limitation, the “Risk Factors” referenced in our Registration Statement on Form S-3 filed with the Securities and Exchange Commission (the “SEC”) on May 21, 2018, and our Registration Statement on Form S-4 filed with the SEC on July 20, 2018, other risks and uncertainties listed from time to time in our reports and documents filed with the SEC, including our Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q, and the following factors: business and economic conditions generally and in the financial services industry, nationally and within our current and future geographic market areas; economic, market, operational, liquidity, credit and interest rate risks associated with our business; deteriorating asset quality and higher loan charge-offs; the laws and regulations applicable to our business; our ability to achieve organic loan and deposit growth and the composition of such growth; increased competition in the financial services industry, nationally, regionally or locally; our ability to maintain our historical earnings trends; our ability to raise additional capital to implement our business plan; material weaknesses in our internal control over financial reporting; systems failures or interruptions involving our information technology and telecommunications systems or third-party servicers; the composition of our management team and our ability to attract and retain key personnel; the fiscal position of the U.S. federal government and the soundness of other financial institutions; the composition of our loan portfolio, including the identity of our borrowers and the concentration of loans in energy-related industries and in our specialized industries; the portion of our loan portfolio that is comprised of participations and shared national credits; the amount of nonperforming and classified assets we hold; the impact on our financial condition, results of operations, financial disclosures, and future business strategies related to the implementation of FASB Accounting Standards Update 2016-13, Financial Instruments – Credit Losses, commonly referred to as CECL. Cadence can give no assurance that any goal or plan or expectation set forth in forward-looking statements can be achieved and readers are cautioned not to place undue reliance on such statements. The forward-looking statements are made as of the date of this communication, and Cadence does not intend, and assumes no obligation, to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events or circumstances, except as required by applicable law.

About Non-GAAP Financial Measures

Certain of the financial measures and ratios we present, including “efficiency ratio,” “adjusted efficiency ratio,” “adjusted noninterest expenses,” “adjusted operating revenue,” “tangible common equity ratio,” “tangible book value per share” and “return on average tangible common equity”, “adjusted return on average tangible common equity”, “adjusted return on average assets”, “adjusted diluted earnings per share”, and “pre-tax, pre-provision net earnings” are supplemental measures that are not required by, or are not presented in accordance with, U.S. generally accepted accounting principles (GAAP). We refer to these financial measures and ratios as “non-GAAP financial measures.” We consider the use of select non-GAAP financial measures and ratios to be useful for financial and operational decision making and useful in evaluating period-to-period comparisons. We believe that these non-GAAP financial measures provide meaningful supplemental information regarding our performance by excluding certain expenditures or assets that we believe are not indicative of our primary business operating results or by presenting certain metrics on a fully taxable equivalent basis.

We believe that management and investors benefit from referring to these non-GAAP financial measures in assessing our performance and when planning, forecasting, analyzing and comparing past, present and future periods.

These non-GAAP financial measures should not be considered a substitute for financial information presented in accordance with GAAP and you should not rely on non-GAAP financial measures alone as measures of our performance. The non-GAAP financial measures we present may differ from non-GAAP financial measures used by our peers or other companies. We compensate for these limitations by providing the equivalent GAAP measures whenever we present the non-GAAP financial measures and by including a reconciliation of the impact of the components adjusted for in the non-GAAP financial measure so that both measures and the individual components may be considered when analyzing our performance. A reconciliation of non-GAAP financial measures to the comparable GAAP financial measures is included at the end of the financial statement tables (Table 10).

Table 1 – Selected Financial Data

 

 

As of and for the Three Months Ended

 

 

(In thousands, except share and per share data)

 

March 31,
2020

 

 

December 31,
2019

 

 

September 30,
2019

 

 

June 30,
2019

 

 

March 31,
2019

 

 

Statement of Operations Data

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

$

192,754

 

 

$

207,620

 

 

$

213,149

 

 

$

217,124

 

 

$

222,185

 

 

Interest expense

 

 

39,286

 

 

 

46,709

 

 

 

52,962

 

 

 

56,337

 

 

 

52,896

 

 

Net interest income

 

 

153,468

 

 

 

160,911

 

 

 

160,187

 

 

 

160,787

 

 

 

169,289

 

 

Provision for credit losses

 

 

83,429

 

 

 

27,126

 

 

 

43,764

 

 

 

28,927

 

 

 

11,210

 

 

Net interest income after provision

 

 

70,039

 

 

 

133,785

 

 

 

116,423

 

 

 

131,860

 

 

 

158,079

 

 

Noninterest income

 

 

35,069

 

 

 

33,898

 

 

 

34,642

 

 

 

31,722

 

 

 

30,664

 

 

Noninterest expense (1)

 

 

537,653

 

 

 

100,519

 

 

 

94,283

 

 

 

100,529

 

 

 

113,440

 

 

(Loss) income before income taxes

 

 

(432,545

)

 

 

67,164

 

 

 

56,782

 

 

 

63,053

 

 

 

75,303

 

 

Income tax (benefit) expense

 

 

(33,234

)

 

 

15,738

 

 

 

12,796

 

 

 

14,707

 

 

 

17,102

 

 

Net (loss) income

 

$

(399,311

)

 

$

51,426

 

 

$

43,986

 

 

$

48,346

 

 

$

58,201

 

 

Weighted average common shares outstanding

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

126,630,446

 

 

 

127,953,742

 

 

 

128,457,491

 

 

 

128,791,933

 

 

 

130,485,521

 

 

Diluted

 

 

126,630,446

 

 

 

128,003,089

 

 

 

128,515,274

 

 

 

129,035,553

 

 

 

130,549,319

 

 

(Loss) earnings per share

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

(3.15

)

 

$

0.40

 

 

$

0.34

 

 

$

0.37

 

 

$

0.44

 

 

Diluted

 

 

(3.15

)

 

 

0.40

 

 

 

0.34

 

 

 

0.37

 

 

 

0.44

 

 

Period-End Balance Sheet Data

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investment securities

 

$

2,461,644

 

 

$

2,368,592

 

 

$

1,705,325

 

 

$

1,684,847

 

 

$

1,754,839

 

 

Total loans, net of unearned income

 

 

13,392,191

 

 

 

12,983,655

 

 

 

13,637,042

 

 

 

13,627,934

 

 

 

13,624,954

 

 

Allowance for credit losses

 

 

245,246

 

 

 

119,643

 

 

 

127,773

 

 

 

115,345

 

 

 

105,038

 

 

Total assets

 

 

17,237,918

 

 

 

17,800,229

 

 

 

17,855,946

 

 

 

17,504,005

 

 

 

17,452,911

 

 

Total deposits

 

 

14,489,505

 

 

 

14,742,794

 

 

 

14,789,712

 

 

 

14,487,821

 

 

 

14,199,223

 

 

Noninterest-bearing deposits

 

 

3,959,721

 

 

 

3,833,704

 

 

 

3,602,861

 

 

 

3,296,652

 

 

 

3,210,321

 

 

Interest-bearing deposits

 

 

10,529,784

 

 

 

10,909,090

 

 

 

11,186,851

 

 

 

11,191,169

 

 

 

10,988,902

 

 

Borrowings and subordinated debentures

 

 

372,440

 

 

 

372,173

 

 

 

371,892

 

 

 

376,240

 

 

 

717,278

 

 

Total shareholders’ equity

 

 

2,113,543

 

 

 

2,460,846

 

 

 

2,475,944

 

 

 

2,426,072

 

 

 

2,302,823

 

 

Average Balance Sheet Data

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investment securities

 

$

2,397,275

 

 

$

2,003,339

 

 

$

1,650,902

 

 

$

1,716,550

 

 

$

1,748,714

 

 

Total loans, net of unearned income

 

 

13,161,371

 

 

 

13,423,435

 

 

 

13,719,286

 

 

 

13,921,873

 

 

 

13,798,386

 

 

Allowance for credit losses

 

 

201,785

 

 

 

132,975

 

 

 

119,873

 

 

 

106,656

 

 

 

97,065

 

 

Total assets

 

 

17,694,018

 

 

 

17,843,383

 

 

 

17,621,163

 

 

 

17,653,511

 

 

 

17,634,267

 

 

Total deposits

 

 

14,574,614

 

 

 

14,749,327

 

 

 

14,539,420

 

 

 

14,645,110

 

 

 

14,579,771

 

 

Noninterest-bearing deposits

 

 

3,658,612

 

 

 

3,648,874

 

 

 

3,456,807

 

 

 

3,281,383

 

 

 

3,334,399

 

 

Interest-bearing deposits

 

 

10,916,002

 

 

 

11,100,454

 

 

 

11,082,613

 

 

 

11,363,727

 

 

 

11,245,372

 

 

Borrowings and subordinated debentures

 

 

439,698

 

 

 

374,179

 

 

 

381,257

 

 

 

441,619

 

 

 

554,281

 

 

Total shareholders’ equity

 

 

2,446,810

 

 

 

2,471,398

 

 

 

2,447,189

 

 

 

2,331,855

 

 

 

2,241,652

 

 

(1)

For the quarter ended March 31, 2020, includes the non-cash goodwill impairment charge of $443.7 million, $412.9 million after-tax.

Table 1 (Continued) – Selected Financial Data

 

 

As of and for the Three Months Ended

 

 

(In thousands, except share and per

share data)

 

March 31,
2020

 

 

December 31,
2019

 

 

September 30,
2019

 

 

June 30,
2019

 

 

March 31,
2019

 

 

Per Share Data:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Book value

 

$

16.79

 

 

$

19.29

 

 

$

19.32

 

 

$

18.84

 

 

$

17.88

 

 

Tangible book value (1)

 

 

15.65

 

 

 

14.65

 

 

 

14.66

 

 

 

14.21

 

 

 

13.23

 

 

Cash dividends declared

 

 

0.175

 

 

 

0.175

 

 

 

0.175

 

 

 

0.175

 

 

 

0.175

 

 

Dividend payout ratio

 

 

(5.56

)%

 

 

43.75

%

 

 

51.47

%

 

 

47.30

%

 

 

39.77

%

 

Performance Ratios:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Return on average common equity (2)

 

 

(65.64

)%

 

 

8.26

%

 

 

7.13

%

 

 

8.32

%

 

 

10.53

%

 

Return on average tangible common

equity (1) (2)

 

 

3.86

 

 

 

11.82

 

 

 

10.43

 

 

 

12.23

 

 

 

15.54

 

 

Return on average assets (2)

 

 

(9.08

)

 

 

1.14

 

 

 

0.99

 

 

 

1.10

 

 

 

1.34

 

 

Net interest margin (2)

 

 

3.80

 

 

 

3.89

 

 

 

3.94

 

 

 

3.97

 

 

 

4.21

 

 

Efficiency ratio (1)

 

 

285.17

 

 

 

51.60

 

 

 

48.39

 

 

 

52.22

 

 

 

56.73

 

 

Adjusted efficiency ratio (1)

 

 

49.88

 

 

 

50.91

 

 

 

48.07

 

 

 

49.97

 

 

 

45.73

 

 

Asset Quality Ratios:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total NPA to total loans, OREO,

and other NPA

 

 

1.31

%

 

 

0.97

%

 

 

0.84

%

 

 

0.85

%

 

 

0.63

%

 

Total nonperforming loans ("NPL") to

total loans

 

 

1.19

 

 

 

0.92

 

 

 

0.79

 

 

 

0.80

 

 

 

0.57

 

 

Total ACL to total loans

 

 

1.83

 

 

 

0.92

 

 

 

0.94

 

 

 

0.85

 

 

 

0.77

 

 

ACL to total NPL

 

 

153.61

 

 

 

100.07

 

 

 

118.17

 

 

 

106.08

 

 

 

135.21

 

 

Net charge-offs to average loans (2)

 

 

0.99

 

 

 

1.04

 

 

 

0.91

 

 

 

0.54

 

 

 

0.02

 

 

Capital Ratios:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total shareholders’ equity to assets

 

 

12.3

%

 

 

13.8

%

 

 

13.9

%

 

 

13.9

%

 

 

13.2

%

 

Tangible common equity to tangible

assets (1)

 

 

11.5

 

 

 

10.9

 

 

 

10.9

 

 

 

10.8

 

 

 

10.1

 

 

Common equity Tier 1 capital

 

 

11.4

 

 

 

11.5

 

 

 

11.0

 

 

 

10.9

 

 

 

10.4

 

 

Tier 1 leverage capital (3)

 

 

10.1

 

 

 

10.3

 

 

 

10.3

 

 

 

10.3

 

 

 

10.0

 

 

Tier 1 risk-based capital (3)

 

 

11.4

 

 

 

11.5

 

 

 

11.0

 

 

 

10.9

 

 

 

10.4

 

 

Total risk-based capital (3)

 

 

13.8

 

 

 

13.7

 

 

 

13.1

 

 

 

12.9

 

 

 

11.9

 

 

_____________________

(1)

Considered a non-GAAP financial measure. See Table 10 "Reconciliation of Non-GAAP Financial Measures" for a reconciliation of our non-GAAP measures to the most directly comparable GAAP financial measure.

(2)

Annualized.

(3)

Current quarter regulatory capital ratios are estimates.

Table 2 – Average Balances/Yield/Rates

 

 

For the Three Months Ended March 31,

 

 

 

 

2020

 

 

 

2019

 

 

 

 

Average

 

 

Income/

 

 

Yield/

 

 

 

Average

 

 

Income/

 

 

Yield/

 

 

(In thousands)

 

Balance

 

 

Expense

 

 

Rate

 

 

 

Balance

 

 

Expense

 

 

Rate

 

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-earning assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans, net of unearned income (1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Originated loans

 

$

10,213,846

 

 

$

129,402

 

 

 

5.10

 

%

 

$

9,811,821

 

 

$

132,065

 

 

 

5.46

 

%

ANCI portfolio

 

 

2,731,240

 

 

 

40,650

 

 

 

5.99

 

 

 

 

3,684,905

 

 

 

67,337

 

 

 

7.41

 

 

PCD portfolio (3)

 

 

216,285

 

 

 

5,082

 

 

 

9.45

 

 

 

 

301,660

 

 

 

6,349

 

 

 

8.54

 

 

Total loans

 

 

13,161,371

 

 

 

175,134

 

 

 

5.35

 

 

 

 

13,798,386

 

 

 

205,751

 

 

 

6.05

 

 

Investment securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Taxable

 

 

2,198,528

 

 

 

14,015

 

 

 

2.56

 

 

 

 

1,531,514

 

 

 

10,796

 

 

 

2.86

 

 

Tax-exempt (2)

 

 

198,747

 

 

 

1,807

 

 

 

3.66

 

 

 

 

217,200

 

 

 

2,202

 

 

 

4.11

 

 

Total investment securities

 

 

2,397,275

 

 

 

15,822

 

 

 

2.65

 

 

 

 

1,748,714

 

 

 

12,998

 

 

 

3.01

 

 

Federal funds sold and short-term investments

 

 

628,885

 

 

 

1,783

 

 

 

1.14

 

 

 

 

763,601

 

 

 

3,281

 

 

 

1.74

 

 

Other investments

 

 

80,173

 

 

 

394

 

 

 

1.98

 

 

 

 

58,139

 

 

 

618

 

 

 

4.31

 

 

Total interest-earning assets

 

 

16,267,704

 

 

 

193,133

 

 

 

4.77

 

 

 

 

16,368,840

 

 

 

222,648

 

 

 

5.52

 

 

Noninterest-earning assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and due from banks

 

 

250,804

 

 

 

 

 

 

 

 

 

 

 

 

118,833

 

 

 

 

 

 

 

 

 

 

Premises and equipment

 

 

127,812

 

 

 

 

 

 

 

 

 

 

 

 

128,990

 

 

 

 

 

 

 

 

 

 

Accrued interest and other assets

 

 

1,249,483

 

 

 

 

 

 

 

 

 

 

 

 

1,114,669

 

 

 

 

 

 

 

 

 

 

Allowance for credit losses

 

 

(201,785

)

 

 

 

 

 

 

 

 

 

 

 

(97,065

)

 

 

 

 

 

 

 

 

 

Total assets

 

$

17,694,018

 

 

 

 

 

 

 

 

 

 

 

$

17,634,267

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS' EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Demand deposits

 

$

8,121,641

 

 

$

21,667

 

 

 

1.07

 

%

 

$

8,011,001

 

 

$

29,259

 

 

 

1.48

 

%

Savings deposits

 

 

272,444

 

 

 

317

 

 

 

0.47

 

 

 

 

248,651

 

 

 

226

 

 

 

0.37

 

 

Time deposits

 

 

2,521,917

 

 

 

12,744

 

 

 

2.03

 

 

 

 

2,985,720

 

 

 

17,186

 

 

 

2.33

 

 

Total interest-bearing deposits

 

 

10,916,002

 

 

 

34,728

 

 

 

1.28

 

 

 

 

11,245,372

 

 

 

46,671

 

 

 

1.68

 

 

Other borrowings

 

 

217,363

 

 

 

1,108

 

 

 

2.05

 

 

 

 

418,347

 

 

 

3,695

 

 

 

3.58

 

 

Subordinated debentures

 

 

222,335

 

 

 

3,450

 

 

 

6.24

 

 

 

 

135,934

 

 

 

2,530

 

 

 

7.55

 

 

Total interest-bearing liabilities

 

 

11,355,700

 

 

 

39,286

 

 

 

1.39

 

 

 

 

11,799,653

 

 

 

52,896

 

 

 

1.82

 

 

Noninterest-bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Demand deposits

 

 

3,658,612

 

 

 

 

 

 

 

 

 

 

 

 

3,334,399

 

 

 

 

 

 

 

 

 

 

Accrued interest and other liabilities

 

 

232,896

 

 

 

 

 

 

 

 

 

 

 

 

258,563

 

 

 

 

 

 

 

 

 

 

Total liabilities

 

 

15,247,208

 

 

 

 

 

 

 

 

 

 

 

 

15,392,615

 

 

 

 

 

 

 

 

 

 

Shareholders' equity

 

 

2,446,810

 

 

 

 

 

 

 

 

 

 

 

 

2,241,652

 

 

 

 

 

 

 

 

 

 

Total liabilities and shareholders' equity

 

$

17,694,018

 

 

 

 

 

 

 

 

 

 

 

$

17,634,267

 

 

 

 

 

 

 

 

 

 

Net interest income/net interest spread

 

 

 

 

 

 

153,847

 

 

 

3.38

 

%

 

 

 

 

 

 

169,752

 

 

 

3.70

 

%

Net yield on earning assets/net interest margin

 

 

 

 

 

 

 

 

 

 

3.80

 

%

 

 

 

 

 

 

 

 

 

 

4.21

 

%

Taxable equivalent adjustment:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investment securities

 

 

 

 

 

 

(379

)

 

 

 

 

 

 

 

 

 

 

 

(463

)

 

 

 

 

 

Net interest income

 

 

 

 

 

$

153,468

 

 

 

 

 

 

 

 

 

 

 

$

169,289

 

 

 

 

 

 

_____________________

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

Nonaccrual loans are included in loans, net of unearned income. No adjustment has been made for these loans in the calculation of yields.

(2)

Interest income and yields are presented on a fully taxable equivalent basis using an income tax rate of 21%.

(3)

Prior to the adoption of CECL on January 1, 2020, these loans were referred to as ACI loans, but with the adoption of CECL they are referred to as PCD loans.

Table 2 (Continued) – Average Balances/Yield/Rates

 

 

For the Three Months Ended
March 31, 2020

 

 

 

For the Three Months Ended
December 31, 2019

 

 

 

 

Average

 

 

Income/

 

 

Yield/

 

 

 

Average

 

 

Income/

 

 

Yield/

 

 

(In thousands)

 

Balance

 

 

Expense

 

 

Rate

 

 

 

Balance

 

 

Expense

 

 

Rate

 

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-earning assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans, net of unearned income (1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Originated loans

 

$

10,213,846

 

 

$

129,402

 

 

 

5.10

 

%

 

$

10,160,970

 

 

$

134,450

 

 

 

5.25

 

%

ANCI portfolio

 

 

2,731,240

 

 

 

40,650

 

 

 

5.99

 

 

 

 

3,017,005

 

 

 

46,247

 

 

 

6.08

 

 

PCD portfolio (3)

 

 

216,285

 

 

 

5,082

 

 

 

9.45

 

 

 

 

245,474

 

 

 

9,857

 

 

 

15.93

 

 

Total loans

 

 

13,161,371

 

 

 

175,134

 

 

 

5.35

 

 

 

 

13,423,449

 

 

 

190,554

 

 

 

5.63

 

 

Investment securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Taxable

 

 

2,198,528

 

 

 

14,015

 

 

 

2.56

 

 

 

 

1,806,932

 

 

 

11,699

 

 

 

2.57

 

 

Tax-exempt (2)

 

 

198,747

 

 

 

1,807

 

 

 

3.66

 

 

 

 

196,407

 

 

 

1,829

 

 

 

3.69

 

 

Total investment securities

 

 

2,397,275

 

 

 

15,822

 

 

 

2.65

 

 

 

 

2,003,339

 

 

 

13,528

 

 

 

2.68

 

 

Federal funds sold and short-term investments

 

 

628,885

 

 

 

1,783

 

 

 

1.14

 

 

 

 

930,910

 

 

 

3,392

 

 

 

1.45

 

 

Other investments

 

 

80,173

 

 

 

394

 

 

 

1.98

 

 

 

 

77,348

 

 

 

530

 

 

 

2.72

 

 

Total interest-earning assets

 

 

16,267,704

 

 

 

193,133

 

 

 

4.77

 

 

 

 

16,435,046

 

 

 

208,004

 

 

 

5.02

 

 

Noninterest-earning assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and due from banks

 

 

250,804

 

 

 

 

 

 

 

 

 

 

 

 

107,180

 

 

 

 

 

 

 

 

 

 

Premises and equipment

 

 

127,812

 

 

 

 

 

 

 

 

 

 

 

 

128,458

 

 

 

 

 

 

 

 

 

 

Accrued interest and other assets

 

 

1,249,483

 

 

 

 

 

 

 

 

 

 

 

 

1,305,674

 

 

 

 

 

 

 

 

 

 

Allowance for credit losses

 

 

(201,785

)

 

 

 

 

 

 

 

 

 

 

 

(132,975

)

 

 

 

 

 

 

 

 

 

Total assets

 

$

17,694,018

 

 

 

 

 

 

 

 

 

 

 

$

17,843,383

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Demand deposits

 

$

8,121,641

 

 

$

21,667

 

 

 

1.07

 

%

 

$

8,195,455

 

 

$

26,946

 

 

 

1.30

 

%

Savings deposits

 

 

272,444

 

 

 

317

 

 

 

0.47

 

 

 

 

262,638

 

 

 

320

 

 

 

0.48

 

 

Time deposits

 

 

2,521,917

 

 

 

12,744

 

 

 

2.03

 

 

 

 

2,642,361

 

 

 

14,983

 

 

 

2.25

 

 

Total interest-bearing deposits

 

 

10,916,002

 

 

 

34,728

 

 

 

1.28

 

 

 

 

11,100,454

 

 

 

42,249

 

 

 

1.51

 

 

Other borrowings

 

 

217,363

 

 

 

1,108

 

 

 

2.05

 

 

 

 

152,102

 

 

 

953

 

 

 

2.49

 

 

Subordinated debentures

 

 

222,335

 

 

 

3,450

 

 

 

6.24

 

 

 

 

222,077

 

 

 

3,507

 

 

 

6.27

 

 

Total interest-bearing liabilities

 

 

11,355,700

 

 

 

39,286

 

 

 

1.39

 

 

 

 

11,474,633

 

 

 

46,709

 

 

 

1.61

 

 

Noninterest-bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Demand deposits

 

 

3,658,612

 

 

 

 

 

 

 

 

 

 

 

 

3,648,874

 

 

 

 

 

 

 

 

 

 

Accrued interest and other liabilities

 

 

232,896

 

 

 

 

 

 

 

 

 

 

 

 

248,478

 

 

 

 

 

 

 

 

 

 

Total liabilities

 

 

15,247,208

 

 

 

 

 

 

 

 

 

 

 

 

15,371,985

 

 

 

 

 

 

 

 

 

 

Stockholders' equity

 

 

2,446,810

 

 

 

 

 

 

 

 

 

 

 

 

2,471,398

 

 

 

 

 

 

 

 

 

 

Total liabilities and stockholders' equity

 

$

17,694,018

 

 

 

 

 

 

 

 

 

 

 

$

17,843,383

 

 

 

 

 

 

 

 

 

 

Net interest income/net interest spread

 

 

 

 

 

 

153,847

 

 

 

3.38

 

%

 

 

 

 

 

 

161,295

 

 

 

3.41

 

%

Net yield on earning assets/net interest margin

 

 

 

 

 

 

 

 

 

 

3.80

 

%

 

 

 

 

 

 

 

 

 

 

3.89

 

%

Taxable equivalent adjustment:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investment securities

 

 

 

 

 

 

(379

)

 

 

 

 

 

 

 

 

 

 

 

(384

)

 

 

 

 

 

Net interest income

 

 

 

 

 

$

153,468

 

 

 

 

 

 

 

 

 

 

 

$

160,911

 

 

 

 

 

 

_____________________

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

Nonaccrual loans are included in loans, net of unearned income. No adjustment has been made for these loans in the calculation of yields.

(2)

Interest income and yields are presented on a fully taxable equivalent basis using an income tax rate of 21%.

(3)

Prior to the adoption of CECL on January 1, 2020, these loans were referred to as ACI loans, but with the adoption of CECL they are referred to as PCD loans.

Table 3 – Loan Interest Income Detail

 

 

For the Three Months Ended

(In thousands)

 

March 31,
2020

 

 

December 31,
2019

 

 

September 30,
2019

 

 

June 30,
2019

 

 

March 31,
2019

 

 

Interest Income Detail

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Originated loans

 

$

129,402

 

 

$

134,450

 

 

$

136,333

 

 

$

135,946

 

 

$

135,815

 

 

ANCI loans: interest income

 

 

32,940

 

 

 

37,637

 

 

 

43,133

 

 

 

49,095

 

 

 

51,109

 

 

ANCI loans: accretion

 

 

7,710

 

 

 

8,610

 

 

 

10,951

 

 

 

6,171

 

 

 

12,478

 

 

PCD loans: interest income (1)

 

 

3,039

 

 

 

3,839

 

 

 

3,406

 

 

 

2,781

 

 

 

3,561

 

 

PCD loans: accretion (1)

 

 

2,043

 

 

 

6,018

 

 

 

4,147

 

 

 

8,018

 

 

 

2,788

 

 

Total loan interest income

 

$

175,134

 

 

$

190,554

 

 

$

197,970

 

 

$

202,012

 

 

$

205,750

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Yields

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Originated loans

 

 

5.10

 

%

 

5.25

 

%

 

5.31

 

%

 

5.43

 

%

 

5.61

 

%

ANCI loans without discount accretion

 

 

4.85

 

 

 

4.95

 

 

 

5.23

 

 

 

5.49

 

 

 

5.62

 

 

ANCI loans discount accretion

 

 

1.14

 

 

 

1.13

 

 

 

1.33

 

 

 

0.69

 

 

 

1.38

 

 

PCD loans without discount accretion

 

 

5.65

 

 

 

6.20

 

 

 

5.23

 

 

 

3.84

 

 

 

4.79

 

 

PCD loans discount accretion

 

 

3.80

 

 

 

9.73

 

 

 

6.37

 

 

 

11.06

 

 

 

3.75

 

 

Total loan yield

 

 

5.35

 

%

 

5.63

 

%

 

5.72

 

%

 

5.82

 

%

 

6.05

 

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

Prior quarter PCD amounts have been revised to be comparable to the current quarter presentation. Interest income for PCD loans represents contractual interest.

Table 4 – Allowance for Credit Losses (“ACL”) (1)

 

 

For the Three Months Ended

 

(In thousands)

 

March 31,
2020

 

 

December 31,
2019

 

 

September 30,
2019

 

 

June 30,
2019

 

 

March 31,
2019

 

Balance at beginning of period

 

$

119,643

 

 

$

127,773

 

 

$

115,345

 

 

$

105,038

 

 

$

94,378

 

Cumulative effect of the adoption of CECL (2)

 

 

75,850

 

 

 

 

 

 

 

 

 

 

 

 

 

Charge-offs

 

 

(33,098

)

 

 

(35,432

)

 

 

(31,650

)

 

 

(18,981

)

 

 

(938

)

Recoveries

 

 

613

 

 

 

176

 

 

 

314

 

 

 

361

 

 

 

388

 

Net charge-offs

 

 

(32,485

)

 

 

(35,256

)

 

 

(31,336

)

 

 

(18,620

)

 

 

(550

)

Provision for credit losses

 

 

82,238

 

 

 

27,126

 

 

 

43,764

 

 

 

28,927

 

 

 

11,210

 

Balance at end of period

 

$

245,246

 

 

$

119,643

 

 

$

127,773

 

 

$

115,345

 

 

$

105,038

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

This table represents the activity in the ACL for funded loans.

(2)

The Company adopted ASU 2016-13, Financial Instruments – Credit Losses (“CECL”), on January 1, 2020 and recorded this cumulative effect adjustment as a result of accounting change.

Table 5 – ACL Activity by Segment

 

 

For the Three Months Ended March 31, 2020

 

(In thousands)

 

Commercial
and
Industrial

 

 

Commercial
Real Estate

 

 

Consumer

 

 

Total
Allowance for
Credit Losses

 

 

Reserve for
Unfunded
Commitments (1)

 

 

Total

 

As of December 31, 2019

 

$

89,796

 

 

$

15,319

 

 

$

14,528

 

 

$

119,643

 

 

$

1,699

 

 

$

121,342

 

Cumulative effect of the adoption of CECL

 

 

32,951

 

 

 

20,599

 

 

 

22,300

 

 

 

75,850

 

 

 

332

 

 

 

76,182

 

As of January 1, 2020

 

 

122,747

 

 

 

35,918

 

 

 

36,828

 

 

 

195,493

 

 

 

2,031

 

 

 

197,524

 

Provision for loan losses

 

 

63,684

 

 

 

17,798

 

 

 

756

 

 

 

82,238

 

 

 

1,191

 

 

 

83,429

 

Charge-offs

 

 

(31,987

)

 

 

(478

)

 

 

(633

)

 

 

(33,098

)

 

 

 

 

 

(33,098

)

Recoveries

 

 

141

 

 

 

180

 

 

 

292

 

 

 

613

 

 

 

 

 

 

613

 

As of March 31, 2020

 

$

154,585

 

 

$

53,418

 

 

$

37,243

 

 

$

245,246

 

 

$

3,222

 

 

$

248,468

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

The reserve for unfunded commitments is recorded in other liabilities in the consolidated balance sheets

Table 6 – Criticized Loans by Segment

 

 

As of March 31, 2020

 

(Amortized cost in thousands)

 

Special Mention

 

 

Substandard

 

 

Doubtful

 

 

Total Criticized

 

Commercial and Industrial

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

General C&I

 

$

64,326

 

 

$

208,452

 

 

$

7,130

 

 

$

279,908

 

Energy

 

 

111,261

 

 

 

43,326

 

 

 

5,915

 

 

 

160,502

 

Restaurant

 

 

43,916

 

 

 

66,243

 

 

 

3,761

 

 

 

113,920

 

Healthcare

 

 

35,604

 

 

 

3,122

 

 

 

 

 

 

38,726

 

Total commercial and industrial

 

 

255,107

 

 

 

321,143

 

 

 

16,806

 

 

 

593,056

 

Commercial Real Estate

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Industrial, retail, and other

 

 

30,158

 

 

 

14,241

 

 

 

 

 

 

44,399

 

Multifamily

 

 

1,219

 

 

 

 

 

 

 

 

 

1,219

 

Office

 

 

327

 

 

 

9,907

 

 

 

 

 

 

10,234

 

Total commercial real estate

 

 

31,704

 

 

 

24,148

 

 

 

 

 

 

55,852

 

Consumer

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential

 

 

 

 

 

16,760

 

 

 

 

 

 

16,760

 

Other

 

 

 

 

 

8

 

 

 

 

 

 

8

 

Total consumer

 

 

 

 

 

16,768

 

 

 

 

 

 

16,768

 

Total

 

$

286,811

 

 

$

362,059

 

 

$

16,806

 

 

$

665,676

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of December 31, 2019

 

(Recorded investment in thousands)

 

Special Mention

 

 

Substandard

 

 

Doubtful

 

 

Total Criticized

 

Commercial and Industrial

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

General C&I

 

$

70,058

 

 

$

204,087

 

 

$

8,191

 

 

$

282,336

 

Energy sector

 

 

66,235

 

 

 

26,439

 

 

 

2,754

 

 

 

95,428

 

Restaurant industry

 

 

45,456

 

 

 

58,559

 

 

 

4,697

 

 

 

108,712

 

Healthcare

 

 

22,414

 

 

 

3,984

 

 

 

 

 

 

26,398

 

Total commercial and industrial

 

 

204,163

 

 

 

293,069

 

 

 

15,642

 

 

 

512,874

 

Commercial Real Estate

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income producing

 

 

36,205

 

 

 

7,125

 

 

 

 

 

 

43,330

 

Land and development

 

 

8,997

 

 

 

2,350

 

 

 

 

 

 

11,347

 

Total commercial real estate

 

 

45,202

 

 

 

9,475

 

 

 

 

 

 

54,677

 

Consumer

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential real estate

 

 

152

 

 

 

11,603

 

 

 

 

 

 

11,755

 

Other

 

 

 

 

 

81

 

 

 

 

 

 

81

 

Total consumer

 

 

152

 

 

 

11,684

 

 

 

 

 

 

11,836

 

Small Business Lending

 

 

6,573

 

 

 

19,126

 

 

 

 

 

 

25,699

 

Total

 

$

256,090

 

 

$

333,354

 

 

$

15,642

 

 

$

605,086

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Table 7 – Nonperforming Assets

 

 

As of

 

 

 

March 31,
2020

 

 

December 31,
2019

 

 

September 30,
2019

 

 

June 30,
2019

 

 

March 31,
2019

 

Nonperforming loans (1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial and industrial

 

$

137,302

 

 

$

106,803

 

 

$

92,643

 

 

$

103,379

 

 

$

74,656

 

Commercial real estate

 

 

7,544

 

 

 

1,127

 

 

 

6,855

 

 

 

 

 

 

 

Consumer

 

 

14,807

 

 

 

7,289

 

 

 

5,294

 

 

 

2,942

 

 

 

2,577

 

Small business

 

 

 

 

 

4,337

 

 

 

3,334

 

 

 

2,434

 

 

 

450

 

Total nonperforming loans

 

 

159,653

 

 

 

119,556

 

 

 

108,126

 

 

 

108,755

 

 

 

77,683

 

Foreclosed OREO and other NPA

 

 

15,679

 

 

 

5,958

 

 

 

6,731

 

 

 

7,712

 

 

 

8,179

 

Total nonperforming assets

 

$

175,332

 

 

$

125,514

 

 

$

114,857

 

 

$

116,467

 

 

$

85,862

 

NPL as a percentage of total loans

 

 

1.19

%

 

 

0.92

%

 

 

0.79

%

 

 

0.80

%

 

 

0.57

%

NPA as a percentage of loans plus OREO/other

 

 

1.31

%

 

 

0.97

%

 

 

0.84

%

 

 

0.85

%

 

 

0.63

%

NPA as a percentage of total assets

 

 

0.99

%

 

 

0.71

%

 

 

0.64

%

 

 

0.67

%

 

 

0.49

%

Total accruing loans 90 days or more past due

 

$

1,999

 

 

$

23,364

 

 

$

24,487

 

 

$

31,374

 

 

$

41,173

 

(1)

Amounts are not comparable due to our adoption of CECL on January 1, 2020. Prior to this date, pools of individual ACI loans were excluded because they continued to earn interest income from the accretable yield at the pool level. With the adoption of CECL, the pools were discontinued, and performance is based on contractual terms for individual loans. Additionally, prior to January 1, 2020, the we used recorded investment in this table. With the adoption of CECL we now use amortized cost.

Table 8 – Noninterest Income

 

 

For the Three Months Ended

 

(In thousands)

 

March 31,
2020

 

 

December 31,
2019

 

 

September 30,
2019

 

 

June 30,
2019

 

 

March 31,
2019

 

Noninterest Income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investment advisory revenue

 

$

5,605

 

 

$

6,920

 

 

$

6,532

 

 

$

5,797

 

 

$

5,642

 

Trust services revenue

 

 

4,815

 

 

 

4,713

 

 

 

4,440

 

 

 

4,578

 

 

 

4,335

 

Service charges on deposit accounts

 

 

6,416

 

 

 

5,181

 

 

 

5,462

 

 

 

4,730

 

 

 

5,130

 

Credit-related fees

 

 

5,983

 

 

 

5,094

 

 

 

5,960

 

 

 

5,341

 

 

 

4,870

 

Bankcard fees

 

 

1,958

 

 

 

1,933

 

 

 

2,061

 

 

 

2,279

 

 

 

2,213

 

Payroll processing revenue

 

 

1,367

 

 

 

1,373

 

 

 

1,196

 

 

 

1,161

 

 

 

1,419

 

SBA income

 

 

1,908

 

 

 

2,153

 

 

 

2,216

 

 

 

1,415

 

 

 

1,449

 

Other service fees

 

 

1,912

 

 

 

1,701

 

 

 

1,700

 

 

 

1,907

 

 

 

2,104

 

Securities gains (losses), net

 

 

2,994

 

 

 

317

 

 

 

775

 

 

 

938

 

 

 

(12

)

Other

 

 

2,111

 

 

 

4,513

 

 

 

4,300

 

 

 

3,576

 

 

 

3,514

 

Total noninterest income

 

$

35,069

 

 

$

33,898

 

 

$

34,642

 

 

$

31,722

 

 

$

30,664

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Table 9 – Noninterest Expenses

 

 

For the Three Months Ended

 

(In thousands)

 

March 31,
2020

 

 

December 31,
2019

 

 

September 30,
2019

 

 

June 30,
2019

 

 

March 31,
2019

 

Noninterest Expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

$

48,807

 

 

$

54,840

 

 

$

51,904

 

 

$

53,660

 

 

$

53,471

 

Premises and equipment

 

 

10,808

 

 

 

11,618

 

 

 

10,913

 

 

 

11,148

 

 

 

10,958

 

Merger related expenses

 

 

1,282

 

 

 

925

 

 

 

1,010

 

 

 

4,562

 

 

 

22,000

 

Intangible asset amortization

 

 

5,592

 

 

 

5,876

 

 

 

6,025

 

 

 

5,888

 

 

 

6,073

 

Data processing

 

 

3,352

 

 

 

3,343

 

 

 

3,641

 

 

 

3,435

 

 

 

2,594

 

Software amortization

 

 

3,547

 

 

 

3,427

 

 

 

3,406

 

 

 

3,184

 

 

 

3,335

 

Consulting and professional fees

 

 

2,707

 

 

 

3,552

 

 

 

2,621

 

 

 

1,899

 

 

 

2,229

 

Loan related expenses

 

 

760

 

 

 

654

 

 

 

(921

)

 

 

1,740

 

 

 

910

 

FDIC insurance

 

 

2,436

 

 

 

1,245

 

 

 

527

 

 

 

1,870

 

 

 

1,752

 

Communications

 

 

1,156

 

 

 

1,236

 

 

 

1,425

 

 

 

1,457

 

 

 

998

 

Advertising and public relations

 

 

1,464

 

 

 

1,764

 

 

 

1,368

 

 

 

1,104

 

 

 

781

 

Legal expenses

 

 

411

 

 

 

306

 

 

 

500

 

 

 

645

 

 

 

158

 

Other

 

 

11,636

 

 

 

11,732

 

 

 

11,864

 

 

 

9,938

 

 

 

8,181

 

Noninterest expenses excluding goodwill impairment charge

 

 

93,958

 

 

 

100,519

 

 

 

94,283

 

 

 

100,529

 

 

 

113,440

 

Goodwill impairment charge

 

 

443,695

 

 

 

 

 

 

 

 

 

 

 

 

 

Total noninterest expenses

 

$

537,653

 

 

$

100,519

 

 

$

94,283

 

 

$

100,529

 

 

$

113,440

 

 

Table 10 – Reconciliation of Non-GAAP Financial Measures

 

 

As of and for the Three Months Ended

 

(In thousands, except share and per share data)

 

March 31,
2020

 

 

December 31,
2019

 

 

September 30,
2019

 

 

June 30,
2019

 

 

March 31,
2019

 

Efficiency ratio

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest expenses (numerator)

 

$

537,653

 

 

$

100,519

 

 

$

94,283

 

 

$

100,529

 

 

$

113,440

 

Net interest income

 

$

153,468

 

 

$

160,911

 

 

$

160,187

 

 

$

160,787

 

 

$

169,289

 

Noninterest income

 

 

35,069

 

 

 

33,898

 

 

 

34,642

 

 

 

31,722

 

 

 

30,664

 

Operating revenue (denominator)

 

$

188,537

 

 

$

194,809

 

 

$

194,829

 

 

$

192,509

 

 

$

199,953

 

Efficiency ratio

 

 

285.17

%

 

 

51.60

%

 

 

48.39

%

 

 

52.22

%

 

 

56.73

%

Adjusted efficiency ratio

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest expenses

 

$

537,653

 

 

$

100,519

 

 

$

94,283

 

 

$

100,529

 

 

$

113,440

 

Less: non-cash goodwill impairment charge

 

 

443,695

 

 

 

 

 

 

 

 

 

 

 

 

 

Less: merger related expenses

 

 

1,282

 

 

 

925

 

 

 

1,010

 

 

 

4,562

 

 

 

22,000

 

Less: pension plan termination expense

 

 

 

 

 

1,225

 

 

 

 

 

 

 

 

 

 

Less: expenses related to COVID-19 pandemic

 

 

122

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted noninterest expenses (numerator)

 

$

92,554

 

 

$

98,369

 

 

$

93,273

 

 

$

95,967

 

 

$

91,440

 

Net interest income

 

$

153,468

 

 

$

160,911

 

 

$

160,187

 

 

$

160,787

 

 

$

169,289

 

Noninterest income

 

 

35,069

 

 

 

33,898

 

 

 

34,642

 

 

 

31,722

 

 

 

30,664

 

Plus: revaluation of receivable from sale of insurance assets

 

 

 

 

 

 

 

 

 

 

 

2,000

 

 

 

 

Less: gain on sale of acquired loans

 

 

 

 

 

1,263

 

 

 

 

 

 

1,514

 

 

 

 

Less: securities gains (losses), net

 

 

2,994

 

 

 

317

 

 

 

775

 

 

 

938

 

 

 

(12

)

Adjusted noninterest income

 

 

32,075

 

 

 

32,318

 

 

 

33,867

 

 

 

31,270

 

 

 

30,676

 

Adjusted operating revenue (denominator)

 

$

185,543

 

 

$

193,229

 

 

$

194,054

 

 

$

192,057

 

 

$

199,965

 

Adjusted efficiency ratio

 

 

49.88

%

 

 

50.91

%

 

 

48.07

%

 

 

49.97

%

 

 

45.73

%

Tangible common equity ratio

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shareholders’ equity

 

$

2,113,543

 

 

$

2,460,846

 

 

$

2,475,944

 

 

$

2,426,072

 

 

$

2,302,823

 

Less: goodwill and other intangible assets, net

 

 

(142,782

)

 

 

(590,949

)

 

 

(597,488

)

 

 

(595,605

)

 

 

(598,674

)

Tangible common shareholders’ equity

 

 

1,970,761

 

 

 

1,869,897

 

 

 

1,878,456

 

 

 

1,830,467

 

 

 

1,704,149

 

Total assets

 

 

17,237,918

 

 

 

17,800,229

 

 

 

17,855,946

 

 

 

17,504,005

 

 

 

17,452,911

 

Less: goodwill and other intangible assets, net

 

 

(142,782

)

 

 

(590,949

)

 

 

(597,488

)

 

 

(595,605

)

 

 

(598,674

)

Tangible assets

 

$

17,095,136

 

 

$

17,209,280

 

 

$

17,258,458

 

 

$

16,908,400

 

 

$

16,854,237

 

Tangible common equity ratio

 

 

11.53

%

 

 

10.87

%

 

 

10.88

%

 

 

10.83

%

 

 

10.11

%

Tangible book value per share

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shareholders’ equity

 

$

2,113,543

 

 

$

2,460,846

 

 

$

2,475,944

 

 

$

2,426,072

 

 

$

2,302,823

 

Less: goodwill and other intangible assets, net

 

 

(142,782

)

 

 

(590,949

)

 

 

(597,488

)

 

 

(595,605

)

 

 

(598,674

)

Tangible common shareholders’ equity

 

$

1,970,761

 

 

$

1,869,897

 

 

$

1,878,456

 

 

$

1,830,467

 

 

$

1,704,149

 

Common shares outstanding

 

 

125,897,827

 

 

 

127,597,569

 

 

 

128,173,765

 

 

 

128,798,549

 

 

 

128,762,201

 

Tangible book value per share

 

$

15.65

 

 

$

14.65

 

 

$

14.66

 

 

$

14.21

 

 

$

13.23

 

Table 10 (Continued) – Reconciliation of Non-GAAP Measures

 

 

As of and for the Three Months Ended

 

 

 

 

 

(In thousands, except share and per share data)

 

March 31,
2020

 

 

December 31,
2019

 

 

September 30,
2019

 

 

June 30,
2019

 

 

March 31,
2019

 

Return on average tangible common equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average common equity

 

$

2,446,810

 

 

$

2,471,398

 

 

$

2,447,189

 

 

$

2,331,855

 

 

$

2,241,652

 

Less: average intangible assets

 

 

(584,513

)

 

 

(595,439

)

 

 

(598,602

)

 

 

(597,772

)

 

 

(602,446

)

Average tangible common shareholders’ equity

 

$

1,862,297

 

 

$

1,875,959

 

 

$

1,848,587

 

 

$

1,734,083

 

 

$

1,639,206

 

Net (loss) income

 

$

(399,311

)

 

$

51,426

 

 

$

43,986

 

 

$

48,346

 

 

$

58,201

 

Plus: non-cash goodwill impairment charge, net of tax

 

 

412,918

 

 

 

 

 

 

 

 

 

 

 

 

 

Plus: intangible asset amortization, net of tax

 

 

4,261

 

 

 

4,477

 

 

 

4,620

 

 

 

4,515

 

 

 

4,628

 

Tangible net income

 

$

17,868

 

 

$

55,903

 

 

$

48,606

 

 

$

52,861

 

 

$

62,829

 

Return on average tangible common equity

 

 

3.86

%

 

 

11.82

%

 

 

10.43

%

 

 

12.23

%

 

 

15.54

%

Adjusted return on average tangible common equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average tangible common shareholders’ equity

 

$

1,862,297

 

 

$

1,875,959

 

 

$

1,848,587

 

 

$

1,734,083

 

 

$

1,639,206

 

Tangible net income

 

$

17,868

 

 

$

55,903

 

 

$

48,606

 

 

$

52,861

 

 

$

62,829

 

Non-routine items:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Plus: merger related expenses

 

 

1,282

 

 

 

925

 

 

 

1,010

 

 

 

4,562

 

 

 

22,000

 

Plus: pension plan termination expense

 

 

 

 

 

1,225

 

 

 

 

 

 

 

 

 

 

Plus: expenses related to COVID-19 pandemic

 

 

122

 

 

 

 

 

 

 

 

 

 

 

 

 

Plus: revaluation of receivable from sale of insurance assets

 

 

 

 

 

 

 

 

 

 

 

2,000

 

 

 

 

Less: gain on sale of acquired loans

 

 

 

 

 

1,263

 

 

 

 

 

 

1,514

 

 

 

 

Less: securities gains (losses), net

 

 

2,994

 

 

 

317

 

 

 

775

 

 

 

938

 

 

 

(12

)

Tax expense:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Less: income tax effect of tax deductible non-routine items

 

 

(464

)

 

 

48

 

 

 

55

 

 

 

958

 

 

 

4,694

 

Total non-routine items, after tax

 

 

(1,126

)

 

 

522

 

 

 

180

 

 

 

3,152

 

 

 

17,318

 

Adjusted tangible net income

 

$

16,742

 

 

$

56,425

 

 

$

48,786

 

 

$

56,012

 

 

$

80,146

 

Adjusted return on average tangible common equity

 

 

3.62

%

 

 

11.93

%

 

 

10.47

%

 

 

12.96

%

 

 

19.83

%

Adjusted return on average assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average assets

 

$

17,694,018

 

 

$

17,843,383

 

 

$

17,621,163

 

 

$

17,653,511

 

 

$

17,634,267

 

Net (loss) income

 

$

(399,311

)

 

$

51,426

 

 

$

43,986

 

 

$

48,346

 

 

$

58,201

 

Return on average assets

 

 

(9.08

)%

 

 

1.14

%

 

 

0.99

%

 

 

1.10

%

 

 

1.34

%

Net (loss) income

 

$

(399,311

)

 

$

51,426

 

 

$

43,986

 

 

$

48,346

 

 

$

58,201

 

Plus: non-cash goodwill impairment charge, net of tax

 

 

412,918

 

 

 

 

 

 

 

 

 

 

 

 

 

Total non-routine items, after tax

 

 

(1,126

)

 

 

522

 

 

 

180

 

 

 

3,152

 

 

 

17,318

 

Adjusted net income

 

$

12,481

 

 

$

51,948

 

 

$

44,166

 

 

$

51,497

 

 

$

75,519

 

Adjusted return on average assets

 

 

0.28

%

 

 

1.16

%

 

 

0.99

%

 

 

1.17

%

 

 

1.74

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted diluted earnings per share

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted weighted average common shares outstanding

 

 

126,630,446

 

 

 

128,003,089

 

 

 

128,515,274

 

 

 

129,035,553

 

 

 

130,549,319

 

Net income allocated to common stock

 

$

(399,311

)

 

$

51,248

 

 

$

43,849

 

 

$

48,176

 

 

$

58,028

 

Plus: non-cash goodwill impairment, net of tax

 

$

412,918

 

 

 

 

 

 

 

 

 

 

 

 

 

Total non-routine items, after tax

 

 

(1,126

)

 

 

522

 

 

 

180

 

 

 

3,152

 

 

 

17,318

 

Adjusted net income allocated to common stock

 

$

12,481

 

 

$

51,770

 

 

$

44,029

 

 

$

51,328

 

 

$

75,346

 

Adjusted diluted earnings per share

 

$

0.10

 

 

$

0.40

 

 

$

0.34

 

 

$

0.40

 

 

$

0.58

 

Adjusted pre-tax, pre-provision net earnings

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before taxes

 

$

(432,545

)

 

$

67,164

 

 

$

56,782

 

 

$

63,053

 

 

$

75,303

 

Plus: Provision for credit losses

 

 

83,429

 

 

 

27,126

 

 

 

43,764

 

 

 

28,927

 

 

 

11,210

 

Plus: non-cash goodwill impairment

 

 

443,695

 

 

 

 

 

 

 

 

 

 

 

 

 

Plus: Total non-routine items before taxes

 

 

(1,590

)

 

 

570

 

 

 

235

 

 

 

4,110

 

 

 

22,012

 

Adjusted pre-tax, pre-provision net earnings

 

$

92,989

 

 

$

94,860

 

 

$

100,781

 

 

$

96,090

 

 

$

108,525

 

 (1) 

Annualized.

 

Cadence Bancorporation

Media contact:
Danielle Kernell
713-871-4051
danielle.kernell@cadencebank.com

Investor relations contact:
Valerie Toalson
713-871-4103 or 800-698-7878
vtoalson@cadencebancorporation.com

Source: Cadence Bancorporation