Earnings call transcript: Cadence Bancorp Q2 2025 sees earnings beat, stock dips

Cadence Bancorp reported its second-quarter 2025 earnings, surpassing Wall Street expectations with an earnings per share (EPS) of $0.73, compared to the forecasted $0.68. Despite this positive earnings surprise, the company’s stock experienced a 1.21% decline in after-hours trading, closing at $35.04. According to InvestingPro analysis, the stock appears undervalued compared to its Fair Value, with nine analysts recently revising their earnings estimates upward for the upcoming period. The decline comes as investors weigh the broader market dynamics and future guidance, despite the company’s strong financial performance and strategic expansions.

Key Takeaways

• Cadence Bancorp’s EPS of $0.73 exceeded the forecast by 7.35%.
• Revenue reached $476.32 million, beating forecasts by 1.89%.
• Stock dipped by 1.21% in after-hours trading.
• Strategic acquisitions and loan growth drive performance.
• Future guidance anticipates continued growth despite potential rate cuts.

Company Performance

Cadence Bancorp demonstrated robust performance in Q2 2025, marked by strategic acquisitions and significant loan growth. The company expanded its footprint in Georgia and Central Texas through acquisitions of First Chatham Bank and Industry Bank. Organic loan growth was strong at $1.1 billion, reflecting a 12.6% annualized increase. The bank’s efforts in wealth management and treasury services also contributed to its solid performance.

Financial Highlights

• Revenue: $476.32 million, up 6% from the previous quarter.
• Earnings per share: $0.73, surpassing the forecast of $0.68.
• Net interest margin: 3.4%, a slight decline of 6 basis points.
• Adjusted efficiency ratio improved to 56.7%.

Earnings vs. Forecast

Cadence Bancorp’s actual EPS of $0.73 exceeded the forecasted $0.68, representing a 7.35% surprise. Revenue also beat expectations, coming in at $476.32 million against the forecast of $467.48 million. This marks a continuation of the bank’s trend of outperforming estimates, driven by strategic growth initiatives.

Market Reaction

Despite the earnings beat, Cadence Bancorp’s stock fell 1.21% in after-hours trading. The stock closed at $35.04, down from the previous close of $35.47. This movement contrasts with the broader market trend and may reflect investor caution over future economic conditions and anticipated interest rate cuts.

Outlook & Guidance

Cadence Bancorp maintains a positive outlook, projecting full-year loan growth between 11% and 15%, and core customer deposit growth of 12% to 15%. The company expects total revenue growth of 10% to 12%, building on its strong 5-year revenue CAGR of 13%. However, it anticipates two potential rate cuts later in the year, which could impact net interest margins. InvestingPro’s comprehensive analysis rates Cadence’s overall financial health as "GOOD," with particularly strong scores in relative value and growth metrics. For detailed insights and expert analysis, investors can access the full Pro Research Report, available exclusively to subscribers.

Executive Commentary

CEO Dan Rollins remarked, "We continue to report growth and improvement in many of our operating metrics." He emphasized the bank’s broad and diverse loan growth across geographies and lines of business. The executive team highlighted the strong loan origination volumes and strategic M&A approach as key drivers of success.

Risks and Challenges

• Potential interest rate cuts could compress net interest margins.
• Integration risks associated with recent acquisitions.
• Economic uncertainties may affect loan demand.
• Competitive pressures in high-growth markets like Texas and Georgia.
• Regulatory changes impacting the banking sector.

Q&A

During the earnings call, analysts inquired about the bank’s strategic approach to mergers and acquisitions, margin expectations, and opportunities for deposit cost compression. Executives addressed these topics, underscoring the bank’s proactive strategies and robust loan pipelines.

Cadence Bancorp’s Q2 2025 performance underscores its strategic growth initiatives and market expansion, though the stock market’s cautious response highlights ongoing economic uncertainties.

Full transcript - Cadence Bancorp (CADE) Q2 2025:

Conference Operator: Good day, and welcome to the Cadence Bank Second Quarter twenty twenty five Earnings Webcast and Conference Call. All participants will be in a listen only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today’s presentation, there will be an opportunity to ask questions. To ask a question, you may press then one on a touch tone phone.

Please note this event is being recorded. I would now like to turn the conference over to Will Fizakerley, Director of Corporate Finance. Please go ahead.

Will Fizakerley, Director of Corporate Finance, Cadence Bank: Good morning and thank you for joining the Cadence Bank second quarter twenty twenty five earnings conference call. We have members from our executive management team here with us this morning, Dan Rollins, Chris Bagley, Valerie Toalson and Billy Braddock. Our speakers will be referring to prepared slides during the discussion. You can find the slides by going to our Investor Relations page at ir.cadencebank.com, where you’ll find them on the link to our webcast or you can view them at the exhibit to the eight ks that we filed yesterday afternoon. These slides are also available in the presentation section of our Investor Relations website.

I would remind you that the presentation along with our earnings release contains our customary disclosures around forward looking statements and any non GAAP metrics that may be discussed. The disclosures regarding forward looking statements contained in those documents apply to our presentation today. And now I’ll turn to Dan for his opening comments.

Dan Rollins, CEO, Cadence Bank: Good morning. Thank you for joining us today to discuss our second quarter results. I could not be prouder of our team and the results we are producing. I will cover a few highlights. Valerie will provide some additional detail on the financials.

After our prepared comments, our executive management team will be available for questions. It was an active quarter for Cadence, both organically and for M and A. On the M and A front, we announced our acquisition of Industry Bank shares on April 25. We then completed our acquisition of First Chatham Bank effective May 1, and we closed the industry transaction on July 1. The announcement to close timeline for industry was sixty seven days, which followed the ninety nine day announced to close timeline for First Chatham.

These achievements are the result of a tremendous amount of collaboration between the teams at each of the target banks and with the various regulatory bodies. We are excited about the opportunity to expand our presence in Georgia and Central Texas. We welcome these teammates and customers to the Cadence family. Regarding the second quarter results, we continue to perform exceptionally well. Adjusted net income from continuing operations increased to 137,500,000.0 or $0.73 per share, and adjusted ROA was 1.14% for the quarter.

Our balance sheet growth drove a meaningful increase in revenue, and our adjusted efficiency ratio improved by 90 basis points to 56.7%. Our loan growth once again highlighted the strength of our footprint. We achieved organic loan growth of $1,100,000,000 for the quarter or 12.6% annualized. The growth came across our geography and nearly all verticals, with the highest growth coming out of Texas. Our community bank, corporate bank, private banking, and mortgage teams all reported nice organic growth for the quarter, and our pipelines are strong and growing.

Our core customer deposit balances also showed growth, which offset some intentional runoff in brokered and a seasonal decline in public fund balances. Organic core customer deposits increased at a 4.4% annualized rate, with the largest portion of this growth in non interest bearing deposits. Credit results continue to remain in line with our expectations with net charge offs of 24 basis points annualized for the quarter. Finally, our tangible book value continued to improve, increasing to $22.94 per share and regulatory capital levels remained strong with CET1 of 12.2%. Now let me turn the call over to Valerie and she can get into the weeds and the details for our financials.

Valerie?

Valerie Toalson, CFO, Cadence Bank: Great. Thank you, Dan. To add to Dan’s comments, our pretax pre provision net revenue for the second quarter increased to an all time high of $2.00 $6,000,000 up over 8% from the prior quarter, driven by the balance sheet growth that Dan mentioned, combined with strong fee income performance and improved operating leverage. Average loans were up a little over $800,000,000 in the quarter, while period end loans grew by $1,400,000,000 a $1.1 in organic growth and close to $400,000,000 from the First Chatham acquisition. We also added just over $500,000,000 in deposits from First Chatham in the quarter, in addition to our organic core customer deposit growth of three seventy six million dollars These increases were partially offset by declines of $437,000,000 in brokered deposits and $300,000,000 in public funds.

Our period end non interest bearing deposits as a percent of total deposits actually increased this quarter to 22.6%. Average deposits were down, which is not unusual for the second quarter as seasonal runoff earlier in the quarter was offset by growth in the latter part of the quarter. Our second quarter total adjusted revenue was strong at $476,000,000 an increase of $28,000,000 or 6%. Net interest revenue increased $15,000,000 or 4% as a result of the robust loan growth as well as added securities. We added about $2,000,000,000 in securities in the late first quarter and early second quarter, funded by Federal Home Loan Bank term borrowings.

These securities added nice revenue, but did result in a slight dip in the net interest margin in the quarter. The NIM declined six basis points in the second quarter to 3.4%. Before considering the impact of the added securities, the quarter’s NIM actually increased two basis points as the trends in our earning asset yields and cost of funds were favorable. Loan yields were 6.34% in the quarter, up one basis point from the first quarter, and new and renewed loans in the quarter came on the books at just over 7%, which is well north of the total portfolio yield. Total cost of deposits also improved by five basis points linked quarter to 2.3%, and time deposit costs improved by 12 basis points as new and renewed time deposits in the quarter came in over 30 basis points lower than the total portfolio rate.

Adjusted non interest revenue reflected great performance, really across the board, increasing $13,000,000 or 15% compared to the first quarter. We had another big quarter in mortgage originations, and the MSR valuation adjustment improved as well. Our wealth management teams also had a good quarter, from improved market conditions as well as seasonal tax revenue. And finally, other non interest revenue increased just over $7,000,000 a combination of several items, including strong credit and customer swap fees, SBA income, Federal Home Loan Bank dividends, and BOLI income. Adjusted non interest expense increased $11,700,000 linked quarter, mostly as a result of the closing of First Chatham combined with costs associated with business growth and strong operating performance.

Salaries and employee benefits increased just over $4,000,000 about half of that related to FCB, and the rest mostly due to increases in commissions and share based payment accruals. Data processing increased $3,600,000 partially impacted by higher business and project volumes, and we incurred a seasonal increase in our advertising and PR expense. Legal costs were up 4,600,000 driven by final resolution of a legal matter, and the decline in other miscellaneous expense of over $5,000,000 was due to fraud and loss recoveries and lower consulting and regulatory expenses. Turning to credit on slides nine and ten. Net charge offs for the second quarter were $21,000,000 or 24 basis points annualized, which is down slightly from the first quarter and consistent with expectations.

Nonperforming loans declined just under $5,000,000 linked quarter, while nonperforming increased about two. All in all, a stable linked quarter. We did see an increase in criticized and classified loans linked quarter due to a handful of credits, but the balances continued to remain within historical ranges. The loan provision was $31,000,000 reflecting the day one provision of just over $4,000,000 associated with acquired loans, as well as the impact of loan growth in the quarter. Our allowance for credit loss coverage remained flat linked quarter at 1.34%.

At this level, combined with our capital foundation laid out on slide 16, we believe our strong balance sheet continues to be very well positioned. As a quick update on industry bank shares, we did close the transaction effective 07/01/2025, and as you may recall, Industry had a sizable municipal portfolio. Once we closed, we immediately sold a large majority of that portfolio, liquidating $1,900,000,000 of securities and continuing to hold just under 600,000,000 We have since used that 1,900,000,000.0 in liquidity to reinvest in 1,000,000,000 of securities yielding just over five and a quarter percent, with the remaining 900,000,000 used to lower wholesale funding. Additionally, we put on about five fifty million dollars in notional interest rate swaps to minimize any residual interest rate volatility in these securities that remained on our balance sheet. Finally, we have updated our guidance on slide 17 to reflect both the acquisition of First Chatham and Industry.

We continue to expect solid loan demand for the latter half of the year, bringing full year loan growth, including the acquisitions, to between 1115%. This, combined with full year core customer deposit growth of between 1215%, supports our expectation for total revenue growth between ten percent and twelve percent. We forecast continued operating leverage, with expenses increasing between 79%, in support of the growth in the balance sheet and continued investment in our future. Combined with stable credit, we expect these results will continue to drive strong EPS performance for us throughout the rest of this year. Operator, we would like to open the call to questions, please.

Conference Operator: We will now begin the question and answer session. To ask a question, you may press star, then one on your touch tone phone. If you are using a speakerphone, please pick up your handset before pressing the key. If at any time your question has been addressed and you would like to withdraw your question, please press star, then 2. We ask that you please limit yourself to one question and one follow-up.

At this time, we will pause momentarily to assemble our roster. The first question today comes from Casey Haire from Autonomous Research. Please go ahead.

Casey Haire, Analyst, Autonomous Research: Thanks. Good morning. Can you guys hear me?

Dan Rollins, CEO, Cadence Bank: Good to hear from

Casey Haire, Analyst, Autonomous Research: you guys. Sorry, it’s been a little bit choppy, so I apologize if I’m in and out. But I guess first off, I wanted to touch on the NII and the restructure. It feels like the margin can be bound to the mid-340s given what you did with the industry restructuring. Just wondering if I’m missing anything or just some help on the margin guide.

And then also are you guys have you is there any more restructuring to be done with the on the side balance sheet? Thanks.

Dan Rollins, CEO, Cadence Bank: Yeah, on the industry piece, we’ve done what we wanted to do. We certainly could divest a few more of those securities if we have that opportunity, but right now that’s not on the top burner. Valerie, you need to go through all the NII and NIM.

Valerie Toalson, CFO, Cadence Bank: Yeah, there’s obviously a lot of moving parts, particularly with the acquisitions, but where we ended up with the repurchases of the industry security 05/27, when you combine that with the low yields, the new loans coming on north of 7% and some of the repricing expectations that we have for the other portions of the portfolio that we have in our slide deck, as well as the fact that our new CDs are coming in well south of where the maturity, maturing CDs are coming in. We expect some continued improvement there. So we’re actually very optimistic about the net interest margin and anticipate that that would increase as we

Executive Team Member, Cadence Bank: go through the rest of the year.

Dan Rollins, CEO, Cadence Bank: Yeah, we knew that what we did at the end of the first quarter, beginning of the second quarter, bring on borrowings and buying the bonds was going to negatively impact NIM, but positively impact NII. Right. And

Valerie Toalson, CFO, Cadence Bank: so actually, hope you caught it basically that the impact of that was a negative eight basis points. If you just kind of set aside those security purchases, net interest margin would have actually increased in a quarter by

Executive Team Member, Cadence Bank: a couple of basis points.

Casey Haire, Analyst, Autonomous Research: Yep, okay. Great, thank you. And then, so just switching to M and A, just feels like it’s activity is picking up here. You guys obviously have two deals under your belt year to date. Just wanted to get some updated thoughts on where you guys fit in on what appears to be M and A activity picking up.

Dan Rollins, CEO, Cadence Bank: The next thing that we have noticed. Clearly there’s a lot of talk, a lot of activity. We’re seeing small transactions, a couple larger than what we’ve obviously done. I think what we’ve said when we announced the industry transaction earlier in the year was we thought we could get this transaction done quickly. We think we’re in a position to continue to execute.

We like the footprint that we serve. We like the nine states that we’re in. We’re looking for opportunities to continue to grow in those states, and we think we’ll have future opportunities.

Casey Haire, Analyst, Autonomous Research: Great. Thank you.

Dan Rollins, CEO, Cadence Bank: Appreciate it. Thanks, Casey.

Conference Operator: The next question comes from Manon Ghislia with Morgan Stanley. Please go ahead.

Manon Ghislia, Analyst, Morgan Stanley: Hey, good morning all. Can you provide some more color on the increase in the revenue guide? The differences in the old guide and the new guide on the loan and deposit side were particularly helpful. So I was wondering if the revenue guide is going up on an organic basis as well. And on the acquisitions piece, if you can just help us with some of the assumptions around purchase accounting?

Dan Rollins, CEO, Cadence Bank: Yes, so let me take a little bit of that and Valerie’s going have to jump in here and help. I think from your question on is the guide up on an organic basis, yes. So we saw a tremendous loan growth in the quarter. The pipelines are good. Billy and Chris can talk about that.

We really feel good about where we sit. Some of that’s footprint. Some of that’s our team just doing an outstanding job. We’re bringing new customers into the bank. All of that moves the guide up.

So with the increased guide on loan growth, that’s going to produce organic revenue growth that you’re seeing in the increased guide there. When you talk about purchase accounting marks, we’re early in. We’re twenty four days in from when we did that. Go ahead, Laura.

Valerie Toalson, CFO, Cadence Bank: Yeah. You’re exactly right. We’ll be obviously reporting more on that as we go. But I guess just for a little color, just initially, and I’m speaking more to the industry when the first chat was really pretty small, the grinsky thing, far as first accounting marks. On the industry, on the securities, particularly, I think in the announcements, we assumed a 2.5% liquidity mark on some of those securities.

We’re actually able to dispose of those securities, but less than half of that. So we’re coming in much better on that front.

Dan Rollins, CEO, Cadence Bank: We just closed 1,400,000,000 to $1.9

Valerie Toalson, CFO, Cadence Bank: Yeah, and to Dan’s point, we assumed that we’re holding less ongoing. So again, less tangible book value impact from that transaction itself. The other pieces, the deposit pieces are fairly close to market values, loans, there wasn’t too much of a market in there, and they refined that obviously over the next several weeks. But I would say, all in all, probably a little bit better on some of those marks than what we had originally estimated.

Dan Rollins, CEO, Cadence Bank: Does that help you, Raj?

Manon Ghislia, Analyst, Morgan Stanley: Yep, and as my follow-up, just on the loan side, I mean loan growth is fairly strong. Value, I think I heard you mention the new loans are coming on at a little over 7%, so that might be a little bit of an improvement versus last quarter. And then if I look at the fixed rate and variable rate loans on Slide 12, those have also repriced up nicely. But the overall loan yields were up only one basis point Q on Q. Is there something that we might be missing there on the purchase accounting or anything related to the acquisitions there?

Valerie Toalson, CFO, Cadence Bank: Yeah, no, it really has the loans that pay down, loans that pay off, timing of some of those types of things are really what impacted that. We did dig into that as well because to your point, all the underlying support items would lead to a higher loan yield. So that’s part of what drives our expectations for a higher net interest margin as we go through the rest of the year is continuing to see good pipelines in our loan portfolio, continuing to have good performance from where those rates are coming in as we look out through the rest of the year.

Manon Ghislia, Analyst, Morgan Stanley: Got it. Thank you.

Dan Rollins, CEO, Cadence Bank: Appreciate your time.

Conference Operator: The next question comes from Catherine Mealor with KBW. Please go ahead.

Catherine Mealor, Analyst, KBW: Thanks. Good morning.

Dan Rollins, CEO, Cadence Bank: Hey. Good morning, Catherine.

Catherine Mealor, Analyst, KBW: Just curious kind of back to the loan growth, which was really strong this quarter. I think last quarter you talked about paydowns impacting some of your period end balances and it seems like that’s getting better. Can you talk a little bit about kind of new origination volumes versus paid on activity and what you’re seeing with both of those and your thoughts on that balance as we get into the back half of the year, particularly with maybe some rate cuts? Thanks.

Dan Rollins, CEO, Cadence Bank: Yeah, you can see where we didn’t grow was in the CRE book. That’s where we saw some pay downs. Willy, you jump in here. Yeah. Hey, Catherine.

So in the first quarter, we saw a lot in the merchant real estate portfolio from

Billy Braddock, Executive, Cadence Bank: a pay down standpoint and from our midstream energy. We saw that kind of slow, while at the same time continuing really good origination, particularly in the midstream energy. That space, we’ve all the backfill, the payoffs that have occurred really over the last six quarters in that space. That’s been a recurring theme. On top of that, we just had widespread success.

I mean, our C and I teams across the footprint all had some success. Our private banking team had significant success, and a lot of that’s attributed to some hiring that we did last year and the team’s been able to capitalize on that. So the pay down activity was more robust in the first quarter, specifically in that larger merchant CRE and midstream space, and that was curtailed. And pipelines? And pipelines continue to be widespread or robust.

The borrower activity with all the know, sitting this time last quarter, we were feeling more uncertain. Think there’s still some thoughts of that, but borrowers talking to their vendors and clients, they’ve been able to formulate a strategy. And the loan pipelines are remaining as strong. And the pull through from our approvals is similar to what it’s been. It’s just the pipelines are stronger.

Dan Rollins, CEO, Cadence Bank: I guess

Executive Team Member, Cadence Bank: just to add to that, really, loan growth has been broad, diverse, both geographies, lines of business, community bank, mortgage was healthy this quarter. So we really got it from all the orders. It was a good quarter for them.

Catherine Mealor, Analyst, KBW: Okay, great. And then your accretion with industry with selling more of the bonds than originally expected, Is there any change to your expectations for the accretion just with that nuance?

Valerie Toalson, CFO, Cadence Bank: Yes, the accretion would be a little bit less, but of course your upfront impact to your tangible book value is less. So net net, it’s

Executive Team Member, Cadence Bank: But not material. Yeah, it’s

Valerie Toalson, CFO, Cadence Bank: not usually material. We’re still looking at a pretty meaningful impact to

Executive Team Member, Cadence Bank: our ABS. We look out of the stress of this year and next year with this acquisition. Yeah, the

Dan Rollins, CEO, Cadence Bank: difference is difference in what we would have been earning off the bonds that we held versus the 5.7%. It’s not that big.

Valerie Toalson, CFO, Cadence Bank: So it’s less than 100

Executive Team Member, Cadence Bank: basis points on a portion of that security. Really important.

Catherine Mealor, Analyst, KBW: That makes sense. And then, of course, also with the loan growth being better, your reinvestment rates probably higher too than you would have expected. Okay.

Dan Rollins, CEO, Cadence Bank: Remember we talked about wanting to grow loans within the industry footprint, 1,000,000,000 over the next five years, we did that organically in one quarter. Clearly the loan growth is a big difference for us.

Catherine Mealor, Analyst, KBW: Yes, for sure. Okay, great. Thank you.

Dan Rollins, CEO, Cadence Bank: Thanks, Catherine.

Conference Operator: The next question comes from Jared Shaw with Barclays. Please go ahead.

Dan Rollins, CEO, Cadence Bank: Hey, Jared.

Jared Shaw, Analyst, Barclays: Good morning. You may be shifting to the other side of the balance sheet, just the deposit growth, strength in that core deposit origination and especially on the DDA side. As we look out, should we think that there’s still sort of steady growth in DDAs here? Or was there any sort of one time beyond the deal benefit from DDA growth?

Dan Rollins, CEO, Cadence Bank: Yeah, think the teams are doing a great job of mixing it up in the community and trying to bring business into us. I don’t know that one quarter is something that we can say this is a trend that we’re on, but we certainly like what we look what we saw.

Jared Shaw, Analyst, Barclays: Okay, and then on the CDs, you talked about the renewal rates coming in lower. Are those now? And is there more room for CD costs to move lower assuming stable rates?

Valerie Toalson, CFO, Cadence Bank: Yeah, so I think there is. Right now we saw in the second quarter, we have out $3,800,000,000 in originations of CDs that were at just shy of $3.60. And so that’s encouraging. We have a lot that are maturing, you know, you look at really the last half of twenty five, we’ve got about 5,400,000,000.0 that are maturing really right about 4%. So depending on where those come back on, how many we’re repaying, you know, there is an opportunity to continue to see a little bit of compression in that overall amount.

Dan Rollins, CEO, Cadence Bank: And his assumptions of rates are stable, I

Valerie Toalson, CFO, Cadence Bank: think. Yeah, rates are stable. Right now, we’ve got two rate cuts later in the year in our forecast. And so if those come to fruition, then there’s further opportunity there, obviously.

Jared Shaw, Analyst, Barclays: Okay. Thanks. That’s good color on that. And then just on credit, credit overall good trends. Just anything you would call out on the criticizing classified migration that’s either lumpy or episodic?

Executive Team Member, Cadence Bank: No, I can’t cut, maybe a little, 22,000,000 or so of that was part of the first charter merger, so that was a fit of the increase. Most of the increase in criticized was special mention. I would call it normal range, normal process of working through credits in our normal processes. It’s really those select few larger credits that moved in there along with the first chat merger. Thank you.

Valerie Toalson, CFO, Cadence Bank: I’ll follow back up with your comment on the deposits. You know, the other thing that we got is a significant focus with our treasury management team. And so they continue to ramp up their efforts. And I think that’s part of what we’re seeing in some of the success that we’ve had.

Executive Team Member, Cadence Bank: And so we would hope for more success there as we go through the rest

Will Fizakerley, Director of Corporate Finance, Cadence Bank0: of year.

Executive Team Member, Cadence Bank: And thinking going forward, we’re adding a lot of branches with new products We’re going have a little having like next six months. We’re excited about that. Thanks. Thanks, Jared.

Conference Operator: The next question comes from Michael Rose with Raymond James. Please go ahead.

Will Fizakerley, Director of Corporate Finance, Cadence Bank1: Hey, good morning everyone. Thanks for taking my questions. Just two quick ones. Any change into beta expectations either on the loan or deposit side with industry? And then that have any kind of material change to the interest rate sensitivity profile?

Thanks.

Dan Rollins, CEO, Cadence Bank: Thanks sensitivity profile, the bond portfolio industry has an ability to move interest rate sensitivity, but we

Executive Team Member, Cadence Bank: worked on that. Yeah, I

Valerie Toalson, CFO, Cadence Bank: would say no significant changes on the betas. We’ll be offering our products and services. And so, I think that over time, will just kind of work into a little bit consistent with some of the legacy efforts. There may be a little bit of movement in the first quarter or so, but I don’t think that’ll be ongoing. As far as interest sensitivity, Dan’s right, really pretty consistent interest sensitivity.

We continue to remain pretty neutral on that But then, you know, that one hundred

Executive Team Member, Cadence Bank: and fifty days, plus or minus one hundred.

Will Fizakerley, Director of Corporate Finance, Cadence Bank1: Okay, great. Thanks, Valerie. And then maybe just final. I know you guys have a buyback in place. You got a lot of deals going on.

I wouldn’t expect that you’d be using it here. Maybe just holding out for other opportunities. Is that the right way to think about it? Just it’s a tool at this point, but not really looking to use it? Thanks.

Dan Rollins, CEO, Cadence Bank: Yeah, I think we said that when we announced the industry transaction, as we knew with that transaction, we needed to continue to build capital. So unless something drastic changes here, I think for this quarter, I don’t think we’ll be doing very much there.

Will Fizakerley, Director of Corporate Finance, Cadence Bank1: All right, thanks for taking my questions.

Dan Rollins, CEO, Cadence Bank: Thanks, Michael.

Conference Operator: The next question comes from Jon Arfstrom with RBC Capital Markets. Please go ahead.

Will Fizakerley, Director of Corporate Finance, Cadence Bank2: Thanks. Good morning.

Dan Rollins, CEO, Cadence Bank: Jon, good morning.

Will Fizakerley, Director of Corporate Finance, Cadence Bank2: Hey. Back back to loan growth. Would you would you guys call the pace of growth in the second quarter abnormal at all in terms of what you expect going forward? I mean, was it a rebound or catch up from the uncertainty in the first quarter? Or is this like, a like, real change in demand where this is a realistic pace of growth?

Dan Rollins, CEO, Cadence Bank: Yeah. I think I’ve said for a while, I think what we saw post, you know, liberation day was people took their foot off the accelerator and question marks about what was going on out there. I think that’s just catching back up with us. No, I don’t know that this was abnormal. I think when we look at what’s coming through, just watching the flow, we’re as busy as we’ve ever been.

Billy Braddock, Executive, Cadence Bank: Billy? Yeah, that’s right.

Casey Haire, Analyst, Autonomous Research: I mean, John, I touched on

Billy Braddock, Executive, Cadence Bank: it, but our kind of our weekly volumes that we’re seeing come through are as high as they’ve been in over a year. And that’s continued from the last couple months of the quarter to now. I mean, it’s a continuing trend, so we’re not

Dan Rollins, CEO, Cadence Bank: seeing it slow. Just talking to bankers across our footprint, there’s excitement about opportunities in front of us.

Executive Team Member, Cadence Bank: Yeah, I would just add, I mean, take the other side of it, you know, if capital markets open up, you can see some downward volume impact via purchase builders moving some things out. That is a little slower, but that could impact volumes going forward but the pipelines are good, new originations.

Dan Rollins, CEO, Cadence Bank: Okay, good.

Will Fizakerley, Director of Corporate Finance, Cadence Bank2: Dan, a question for you on Texas industry. I think we’ll take your Texas deposit your share up to 35% of total deposits. The approach in Texas is that right? Is that the right number?

Dan Rollins, CEO, Cadence Bank: That’s a verified that some people believe that you go in question. They’re they’re they’re pulling It’s just

Will Fizakerley, Director of Corporate Finance, Cadence Bank2: the the question is are are do you have to do anything in different in Texas, or is it just kinda business as as usual? Because it’s obviously a much, much larger piece of your franchise than it has been, you know, over the last several years.

Dan Rollins, CEO, Cadence Bank: Yeah. Yeah. So we’re at 37% of deposits in Texas with this, but we’re higher than that with loans in Texas. So, you know, I I think the answer is no. We continue to see outsized growth.

When we look at our footprint and you see where growth is coming from, Texas continues to drive that growth. The high growth markets of Georgia, Florida, Tennessee continue to add to us, but frankly, we’re seeing growth across our footprint. Texas just continues to lead.

Will Fizakerley, Director of Corporate Finance, Cadence Bank2: Okay. Just last one, Valerie, for you. On the expense range, is it safe to assume the higher end of the range is aligned with the higher end of your loan growth, or is there something else that we need to think about in terms of expenses that that higher or lower end of your range?

Valerie Toalson, CFO, Cadence Bank: Yeah. No. The higher end tends to align with higher revenues. You know, there are associated

Executive Team Member, Cadence Bank: costs associated with that. So that would drive that. Yep. Okay.

Will Fizakerley, Director of Corporate Finance, Cadence Bank1: All right. Thank you very much.

Conference Operator: Okay. Thanks, John. The The next question comes from Ben Gerlinger with Citi. Please go ahead.

Will Fizakerley, Director of Corporate Finance, Cadence Bank1: Good morning.

Dan Rollins, CEO, Cadence Bank: Ben, good morning, Ben.

Will Fizakerley, Director of Corporate Finance, Cadence Bank0: Seems like prior to this week, every bank that operates with a SEC football school in their state has highlighted growth through hirings and putting up numbers. It seems like, I mean, you guys have always had a little bit of a different strategy. But with the footprint that you have, I mean, know you’ve been doing both at the same time, but is have we seen outsized level of hirings from potential or even already announced acquisitions? Or is it more so just kind of filling in, letting the operation because you now have these two deals to integrate? How should we think about the organic perspective of hirings and loan growth over the next year or two?

Dan Rollins, CEO, Cadence Bank: Yeah. We we’ve not gone out and hired big teams of people. That’s just not been in our past practices. We continue to hire good people. So we’ve added in Texas.

We’ve added in Georgia. We’ve added across our footprint in Multin Florida over the last several quarters. But those are one and two. The acquisitions that we’ve got, we’ve not lost any of those people, if you’re asking. So I think on the other side, I think we’ve got good people that are out there wanting to grow business.

And I think we’ve got capacity to grow with the team that we have today.

Will Fizakerley, Director of Corporate Finance, Cadence Bank0: Gotcha. That’s helpful. And then just one modeling question, Valerie. I know you said marks were a little bit smaller, so dilution should be a little bit less. And originally at eight and a half on TBV, is it fair to think it’s less than that at this point or is it still de minimis?

Dan Rollins, CEO, Cadence Bank: I don’t know. We have a number put out today.

Valerie Toalson, CFO, Cadence Bank: Yeah, no, I think that we’ll be obviously working on refining all of that as we go through the quarter. But overall, I mean, would just say that we still anticipate

Executive Team Member, Cadence Bank: regardless for the numbers move, but this just really gonna be a great acquisition for us. Yeah. Yeah. Our execution is significant.

Will Fizakerley, Director of Corporate Finance, Cadence Bank0: Gotcha. Yeah. No, I appreciate it. Okay. Thank you.

Conference Operator: The next question comes from Puneet with Stephens. Please go ahead.

Will Fizakerley, Director of Corporate Finance, Cadence Bank1: Yeah. Thanks. Good morning. Just similar to Ben’s last question on the industry impact in the third quarter. Any color on the capital ratios and when these can look like at September 30 with the impact of industry on there?

Dan Rollins, CEO, Cadence Bank: Yeah, Matt, good to hear from you. That’s what we were talking about earlier. We’re twenty four days in the marks. We just don’t have anything to be able to give you where we think we’re going to end up. The pieces of the puzzle all look good to us and not far off of what we were talking about when we made the announcement back in April.

It’s just too quick. And we understand it’s a big transaction that could move the needle. So we hope to be able to, as we’re out on the road, maybe file some investor deck that would give us some mid quarter update to some of that.

Will Fizakerley, Director of Corporate Finance, Cadence Bank1: Okay. Thank you. That’s all for me.

Dan Rollins, CEO, Cadence Bank: Thanks, Matt. Appreciate the time.

Conference Operator: This concludes our question and answer session. I would like to turn the conference back over for any closing remarks.

Dan Rollins, CEO, Cadence Bank: Hey. Thank you all very much for joining this morning.

Billy Braddock, Executive, Cadence Bank: Since we

Dan Rollins, CEO, Cadence Bank: brought up the SEC with college football only twenty nine days away, we’re glad that we finished the first half of twenty twenty five here at Cadence, and we had a great first half. We continue to report growth and improvement in many of our operating metrics, including earnings per share, ROTCE, ROA, operating efficiency, just to name a few. I continue to be very confident that we’ve achieved both organically and through strategic partnerships in Texas and Georgia, that we positioned ourselves to continue that momentum through the second half of twenty twenty five, and it sets us up in a position of strength for 2026. We appreciate everybody’s support on our call today. This concludes the call.

We look forward to seeing you all again soon.

Conference Operator: The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.

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