Cadence (CADE) Q4 Earnings & Revenues Lag Estimates, Dividend Up
Cadence Bank CADE reported fourth-quarter 2023 adjusted earnings per share from continuing operations of 40 cents, missing the Zacks Consensus Estimate of 53 cents. Also, the bottom line declined 48.7% year over year.
CADE sold Cadence Insurance, Inc. in the fourth quarter of 2023. The fourth-quarter results presented both continuing and discontinued operations. The company's results were positively impacted by a rise in deposit balances and an improvement in capital position. However, notable increase in expenses and a decline in revenues were the offsetting factors.
The company’s adjusted net income from continuing operations available to common shareholders in fourth-quarter 2023 was $72.7 million compared with $141.4 million in the fourth quarter of 2022.
For full-year 2023, adjusted earnings per share were $2.20 compared with $2.85 reported a year ago. Net income available to common shareholders was $532.8 million, up from $453.7 million in 2022.
Revenues Decline, Expenses Rise
Total adjusted revenues (excluding net security losses and negative mortgage banking income) in the reported quarter were $408.8 million compared with $439.6 million in the year-ago quarter. Further, the top line missed the Zacks Consensus Estimate of $434 million.
In 2023, total adjusted revenues (excluding net security losses) were $1.67 billion, down from $1.69 billion in the prior year. Also, the top line missed the Zacks Consensus Estimate of $1.82 billion.
Net interest revenues in the quarter were $334.6 million, down 6.9% year over year. The fully taxable equivalent net interest margin (NIM) was 3.04%, down from 3.33% in the prior-year quarter.
Total non-interest revenues were negative $311.5 million in the reported quarter. Excluding the security losses and negative mortgage banking income, adjusted non-interest income came in at $74.2 million, down from $158.4 million in the prior-year quarter.
Total non-interest expenses were $329.4 million, which increased 6.7% year over year. The increase was primarily stemmed from FDIC special assessment fees.
As of Dec 31, 2023, total deposits increased marginally to $38.5 billion on a sequential basis, while loans and leases, net of unearned income, declined marginally to $32.5 billion.
Credit Quality Deteriorates
Non-performing loans and leases were 0.67% of net loans and leases as of Dec 31, 2023, up from 0.35% as of Dec 31, 2022.
In the fourth quarter, the company recorded $38 million in provision for credit losses compared with $6 million in the prior-year quarter. Also, non-performing assets were $222.4 million, jumping 95% from the prior-year quarter.
Capital Position Strong
As of Dec 31, 2023, tier 1 capital and tier 1 leverage capital ratios were 12.1% and 9.3%, respectively, compared with 10.7% and 8.4% at the end of the prior-year quarter.
The ratio of its total shareholders' equity to total assets was 10.56% at the end of the fourth quarter, up from 8.86% as of Dec 31, 2022.
Capital Deployment Update
In the reported quarter, the company did not repurchase any shares.
Concurrent with fourth-quarter earnings, the company’s board of directors declared cash dividends of 25 cents per common share, indicating a sequential rise of 6.4%. The dividend will be paid out on Apr 1 to shareholders of record as of Mar 15, 2024.
Our Viewpoint
Cadence put up a decent performance in the fourth quarter. An improvement in deposit balances and capital position is the encouraging factor. However, a rise in expenses and a decline in revenues hurt results.
Cadence Bank Price, Consensus and EPS Surprise
Cadence Bank price-consensus-eps-surprise-chart | Cadence Bank Quote
Currently, Cadence carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Banks
East West Bancorp’s EWBC fourth-quarter 2023 adjusted earnings per share of $2.02 surpassed the Zacks Consensus Estimate of $1.89. However, the bottom line declined 14.8% year over year.
Including FDIC special assessment-related expenses and gain on the sale of available-for-sale debt security, EWBC’s earnings per share were $1.69.
Results were primarily aided by an increase in non-interest income. Also, loan balances increased sequentially in the quarter, which was an upside. However, lower NII, and higher expenses and provisions were the undermining factors for EWBC.
Webster Financial’s WBS fourth-quarter 2023 adjusted earnings per share of $1.46 were in line with the Zacks Consensus Estimate. This compares favorably with earnings of $1.38 a year ago.
Results benefited from lower provisions, and solid loans and deposit balances. However, a fall in both NII and non-interest income, along with elevated expenses, was a major headwind for WBS.
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Cadence Bank (CADE) : Free Stock Analysis Report
