Cadence Bancorporation (CADE) Misses Q2 EPS by 57c, Revenues Miss

Cadence Bancorporation (NYSE: CADE) reported Q2 EPS of ($0.45), $0.57 worse than the analyst estimate of $0.12. Revenue for the quarter came in at $184.7 million versus the consensus estimate of $188.47 million.

Second Quarter 2020 Highlights:

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

• Adjusted pre-tax pre-provision net revenue(1) for the second quarter of 2020 remained consistent at $95.0 million, a decrease of $1.1 million or 1.2% compared to the second quarter of 2019 and an increase of $2.0 million or 2.1% compared to the first quarter of 2020. As a percent of average assets, adjusted pre-tax pre-prevision net revenue was 2.06%, 2.18%, and 2.11% for the second quarter of 2020, second quarter of 2019 and first quarter of 2020, respectively.
• We originated $1.0 billion of loans under the Paycheck Protection Program (“PPP”) during the second quarter of 2020. These PPP loans are 100% federally guaranteed and were fully funded by core deposits.
• Total deposits increased $1.6 billion as non-interest bearing deposits increased $1.3 billion to 32% of total deposits. At the same time, we aggressively managed funding costs, with total deposit costs at 0.46%, representing a decline of 50 basis points from prior quarter.
• Our tax equivalent net interest margin (“NIM”) remained notable at 3.51%, in spite of the impact of lower interest rates, lower yielding PPP loans and securities, and lower accretion income on acquired loans. The gain on our collar transaction and our deposit cost management continue to provide a strong foundation to our NIM.
• Adjusted expenses (see Table 10) declined by $5.1 million and we realized an adjusted efficiency ratio(1) of 47.9%, down from 49.9%.
• The provision for credit losses for the second quarter 2020 was $158.8 million compared to $83.4 million in the linked quarter reflecting degradation of economic forecasts, depressed energy markets and COVID-19 driven stress. As of June 30, 2020, our Allowance for Credit Losses (“ACL”) was 2.71% of total loans, up from 1.83% at March 31, 2020. Excluding PPP loans, our ACL was 2.93% at June 30, 2020.
• Capital remained very strong with our Common Equity Tier 1 capital ratio increasing to 11.7% and total risk weighted capital increasing to 14.3%, providing a robust capital base well-positioned for the current environment.
• Annualized returns on average assets and tangible common equity for the second quarter of 2020 were (1.22%) and (10.56%), respectively, compared to 1.10% and 12.23%, respectively, for the second quarter of 2019 and (9.08%) and 3.86%, respectively, for the first quarter of 2020.
• Adjusted annualized returns on average assets(1) and adjusted tangible common equity(1) for the second quarter of 2020 were (1.24%) and (10.73%), respectively, compared to 1.17% and 12.96%, respectively, for the second quarter of 2019 and 0.28% and 3.62%, respectively, for the first quarter of 2020.

“The challenge and uncertainty of the second quarter in many ways brought out the best in Cadence and I am proud of how our team operated and served our customers through it all. Our pre-provision results continue to showcase a key strength of our operations, highlighted by our increased net interest income and continued expense management. That noted, clearly the credit backdrop is very challenging, as our portfolio has been meaningfully impacted by the COVID-19 pandemic and related economic shutdown. This quarter, we again spent a great deal of time critically reviewing our portfolios to ensure we are fully reflecting the realities of the environment. While the trajectory of the pandemic and its impact on the economy remain uncertain, we are very confident that our risk management and robust capital position will allow Cadence to exit this crisis in a strong position,” stated Paul B. Murphy, Jr., Chairman and Chief Executive Officer of Cadence Bancorporation.

For earnings history and earnings-related data on Cadence Bancorporation (CADE) click here.

You May Also Be Interested In

• American Express (AXP) down despite beating Q1 estimates on top and bottom lines
• MetroCity Bankshares, Inc. (MCBS) Tops Q1 EPS by 4c
• Schlumberger (SLB) earnings in-line, revenue beats expectations