Cadence Bank Announces First Quarter 2025 Financial Results

• Reported quarterly net income available to common shareholders of $130.9 million, or $0.70 per diluted common share, and adjusted net income available to common shareholders⁽¹⁾ of $131.4 million, or $0.71 per diluted common share.
• Improved return on average assets to 1.15%, up 18 basis points from the first quarter of 2024 and up 3 basis points from the fourth quarter of 2024.
• Achieved quarterly adjusted pre-tax pre-provision net revenue (PPNR)⁽¹⁾ of $189.9 million, an increase of $5.9 million compared to the fourth quarter of 2024 and an increase of $15.7 million, or 9.0%, from the first quarter of 2024.
• Generated net organic loan growth of $309.9 million for the first quarter of 2025, or 3.7% on an annualized basis; core customer deposit balances, which exclude brokered and public fund deposits, remained stable and were flat linked quarter.
• Improved net interest margin to 3.46%, up 8 basis points compared to the fourth quarter of 2024.
• Adjusted noninterest expense⁽¹⁾ declined $8.1 million, or 3.0%, linked quarter driving improvement in the adjusted efficiency ratio⁽¹⁾ to 57.6% for the quarter.
• Maintained strong regulatory capital with Common Equity Tier 1 Capital of 12.4% and Total Capital of 14.1%.
• Received all required regulatory and shareholder approvals to complete proposed merger with FCB Financial Corp., the bank holding company for First Chatham Bank in Savannah, Georgia. The transaction is expected to close May 1, 2025, subject to customary closing conditions.

"Our first quarter results reflect a number of key accomplishments related to our financial performance and strategic growth efforts," remarked Dan Rollins, Chairman and Chief Executive Officer of Cadence Bank. "We reported strong earnings driven by improved operating leverage and further expanded our net interest margin. Despite the recent economic volatility, we also captured nice organic loan growth while maintaining stable credit quality. Importantly, we received all necessary regulatory approvals related to our pending merger with First Chatham Bank in a very short timeframe, allowing us to quickly close and begin expanding our Company's presence in Savannah and other surrounding markets in Georgia."

Earnings Summary

For the first quarter of 2025, the Company reported net income available to common shareholders of $130.9 million, or $0.70 per diluted common share, compared to $114.6 million, or $0.62 per diluted common share, for the first quarter of 2024 and $130.3 million, or $0.70 per diluted common share, for the fourth quarter of 2024. Adjusted net income available to common shareholders⁽¹⁾ was $131.4 million, or $0.71 per diluted common share, for the first quarter of 2025, compared with $114.4 million, or $0.62 per diluted common share, for the first quarter of 2024 and $130.0 million, or $0.70 per diluted common share, for the fourth quarter of 2024.

Return on average assets was 1.15% for the first quarter of 2025, improved from both 0.97% for the first quarter of 2024 and 1.12% for the fourth quarter of 2024.  Additionally, the Company reported adjusted PPNR⁽¹⁾ of $189.9 million, or 1.63% of average assets on an annualized basis, for the first quarter of 2025, which represents an increase of $5.9 million or 3.2% compared to the fourth quarter of 2024, and an increase of $15.7 million or 9.0% compared to the same quarter of 2024.

Net Interest Revenue

Net interest revenue was $363.2 million for the first quarter of 2025, compared to $353.9 million for the first quarter of 2024 and $364.5 million for the fourth quarter of 2024. The net interest margin (fully taxable equivalent) improved to 3.46% for the first quarter of 2025, compared with 3.22% for the first quarter of 2024 and 3.38% for the fourth quarter of 2024.

Net interest revenue declined $1.4 million compared to the fourth quarter of 2024 due to fewer number of days in the first quarter of 2025 and a slightly smaller average balance sheet. Purchase accounting accretion revenue was $2.6 million for the first quarter of 2025 compared with $2.4 million for the fourth quarter of 2024. Average earning assets declined slightly to $42.6 billion, as growth in average loans of $482.5 million was offset by lower linked quarter average cash and securities balances as the Company paid off the Bank Term Funding Program balances and called a subordinated-debt issuance in the fourth quarter of 2024.

Yield on net loans, loans held for sale and leases, excluding accretion, was 6.30% for the first quarter of 2025, down 10 basis points from 6.40% for the fourth quarter of 2024, reflecting the full quarter's impact of the December rate cut as well as new origination loan mix. Investment securities yielded 3.00% in the first quarter of 2025, down slightly from 3.04% for the fourth quarter of 2024.  The yield on total interest earning assets was 5.71% for the first quarter of 2025 compared with 5.76% for the fourth quarter of 2024.

The average cost of total deposits of 2.35% for the first quarter of 2025 declined by 9 basis points from 2.44% for the fourth quarter of 2024. The decline in the cost of deposits was driven by the full quarter's impact of the December rate cut on interest bearing deposits and repricing time deposits, combined with a stable funding mix. Total cost of interest-bearing liabilities declined 20 basis points to 2.97% for the first quarter of 2025 compared to 3.17% for the fourth quarter of 2024, benefiting from declining deposit costs as well as the payoff of the Bank Term Funding Program and the subordinated debt call in the fourth quarter of 2024.

Balance Sheet Activity

Loans and leases, net of unearned income, increased to $34.1 billion at March 31, 2025 compared to $33.7 billion at December 31, 2024.  Net loan growth of $309.9 million, or 3.7% annualized, for the first quarter of 2025 was driven primarily by growth in our mortgage, community banking, and private banking segments, while corporate banking was relatively flat quarter over quarter.

Total deposits were $40.3 billion as of March 31, 2025, declining $0.2 billion from $40.5 billion at the end of the fourth quarter of 2024. This decline was driven primarily by a decline in brokered deposits, partially offset by a nominal seasonal increase in public fund deposits. The March 31, 2025 loan to deposit ratio was 84.4%. Noninterest bearing deposits remained stable at 21.2% of total deposits at the end of the first quarter of 2025 compared to December 31, 2024. Borrowed funds increased $0.8 billion during the first quarter of 2025 compared to December 31, 2024, supporting the purchase of additional investment securities. The borrowed funds increase was in FHLB borrowings with maturities generally ranging between six months and two years.

Total investment securities increased $0.6 billion from December 31, 2024 to $7.9 billion at March 31, 2025, representing 16.6% of total assets. Cash, due from balances and deposits at the Federal Reserve of $1.6 billion at March 31, 2025 was relatively flat compared to $1.7 billion at December 31, 2024.

Credit Results, Provision for Credit Losses and Allowance for Credit Losses

Credit metrics for the first quarter of 2025 reflected continued overall stability in credit quality. Net charge-offs for the first quarter of 2025 were $23.0 million, or 0.27% of average net loans and leases on an annualized basis, compared with net charge-offs of $19.5 million, or 0.24% of average net loans and leases on an annualized basis, for the first quarter of 2024 and net charge-offs of $14.1 million, or 0.17% of average net loans and leases on an annualized basis, for the fourth quarter of 2024. The linked quarter increase was driven primarily by one C&I credit that was previously identified and reserved for in a prior quarter. The provision for credit losses for the first quarter of 2025 was $20.0 million, compared with $22.0 million for the first quarter of 2024 and $15.0 million for the fourth quarter of 2024. The allowance for credit losses of $457.8 million at March 31, 2025 was 1.34% of total loans and leases compared to 1.37% of total loans and leases at December 31, 2024 and 1.44% of total loans and leases at March 31, 2024.

Total nonperforming assets as a percent of total assets were 0.51% at March 31, 2025 compared to 0.51% at March 31, 2024 and 0.58% at December 31, 2024. Total nonperforming loans and leases as a percent of loans and leases, net were 0.69% at March 31, 2025 compared to 0.73% at March 31, 2024 and 0.78% at December 31, 2024.  Other real estate owned and other repossessed assets was $8.5 million at March 31, 2025 compared to the March 31, 2024 balance of $5.3 million and the December 31, 2024 balance of $5.8 million. Criticized loans represented 2.39% of loans at March 31, 2025 compared to 2.64% at March 31, 2024 and 2.35% at December 31, 2024, while classified loans were 1.95% at March 31, 2025 compared to 2.19% at March 31, 2024 and 2.02% at December 31, 2024. 

Noninterest Revenue

Noninterest revenue was $85.4 million for the first quarter of 2025 compared with $83.8 million for the first quarter of 2024 and $86.2 million for the fourth quarter of 2024.  Adjusted noninterest revenue⁽¹⁾ had no significant adjustments for the quarters presented.

Noninterest revenue declined slightly compared to the fourth quarter of 2024, with improvements in mortgage banking revenue offset by a decline in other noninterest revenue as well as service charge and card revenues that were impacted by day count. Wealth management revenue was $23.3 million for the first quarter of 2025, down slightly from $24.0 million for the fourth quarter of 2024 due to market conditions. Credit card, debit card and merchant fee revenue was $12.0 million for the first quarter of 2025, compared with $12.7 million for the fourth quarter of 2024 and reflective of typical softer first quarter card activity.  Deposit service charge revenue was $17.7 million for the first quarter of 2025, compared to $18.7 million for the fourth quarter of 2024, partially impacted by fewer number of days.

Mortgage banking revenue totaled $6.6 million for the first quarter of 2025, compared to $6.4 million for the first quarter of 2024 and $3.6 million for the fourth quarter of 2024. The $3.1 million improvement during the linked quarter was primarily due to seasonally higher mortgage production and servicing revenue.

Other noninterest revenue was $25.8 million for the first quarter of 2025, down from $27.3 million for the fourth quarter of 2024, with the $1.5 million decline impacted by lower credit related fees and other miscellaneous revenues.

Noninterest Expense

Noninterest expense for the first quarter of 2025 was $259.3 million, compared with $263.2 million for the first quarter of 2024 and $266.2 million for the fourth quarter of 2024. Adjusted noninterest expense⁽¹⁾ for the first quarter of 2025 was $258.6 million, compared with $263.5 million for the first quarter of 2024 and $266.7 million for the fourth quarter of 2024. Adjusted noninterest expense for the first quarter of 2025 excludes an insignificant amount of merger expense and incremental merger related expense. The adjusted efficiency ratio⁽¹⁾ was 57.6% for the first quarter of 2025, compared to 60.1% for the first quarter of 2024 and 59.1% for the fourth quarter of 2024.

The $8.1 million, or 3.0%, linked quarter decline in adjusted noninterest expense⁽¹⁾ was driven primarily by declines in data processing and software expense as well as other noninterest expense, partially offset by small increase in various other expense categories. Data processing and software expense declined $6.1 million in the first quarter of 2025 compared to the fourth quarter of 2024, primarily as a result of the fourth quarter expenses associated with technology investments including enhancements to the Company's treasury management platform. Other noninterest expense decreased $3.0 million in the first quarter of 2025 compared to the fourth quarter of 2024 driven by declines in various items including advertising/public relations and legal expense.

Capital Management

Total shareholders' equity was $5.7 billion at March 31, 2025, up from $5.2 billion at March 31, 2024 and $5.6 billion at December 31, 2024.  Estimated regulatory capital ratios at March 31, 2025 included Common Equity Tier 1 capital of 12.4%, Tier 1 capital of 12.9%, Total risk-based capital of 14.1%, and Tier 1 leverage capital of 10.6%. During the first quarter of 2025, the Company did not repurchase any shares of Company common stock.  Outstanding common shares were 184.0 million as of March 31, 2025.

Summary

Rollins concluded, "Our team remains excited about the opportunity to build on our accomplishments and momentum. Our relentless focus on customer service, quality growth and enhanced operating efficiency has resulted in continued improvement in our profitability and financial performance. We look forward to building on this success throughout 2025 and beyond as we focus on our company's vision of helping people, companies and communities prosper."

Key Transactions

On January 22, 2025, the Company announced the signing of a definitive merger agreement with FCB Financial Corp., the bank holding company for First Chatham Bank, (collectively referred to as "First Chatham"), pursuant to which First Chatham will be merged with and into the Company. First Chatham is a Savannah, Georgia-based community bank operating eight branches across the Greater Savannah Area.  As of December 31, 2024, First Chatham reported total assets of $589 million, total loans of $326 million, and total deposits of $507 million.  Under the terms of the definitive merger agreement, the Company will issue approximately 2,300,000 shares of common stock plus $23.1 million in cash for all outstanding shares of First Chatham. The Company has received all required regulatory and shareholder approvals related to the transaction. Subject to the satisfaction of all closing conditions, the merger is expected to close May 1, 2025, although the Company can provide no assurance that the merger will close on this date or at all.

Conference Call and Webcast

The Company will conduct a conference call to discuss its first quarter 2025 financial results on April 22, 2025, at 10:00 a.m. (Central Time). This conference call will be an interactive session between management and analysts. Interested parties may listen to this live conference call via Internet webcast by accessing http://ir.cadencebank.com/events. The webcast will also be available in archived format at the same address.

About Cadence Bank

Cadence Bank (NYSE: CADE) is a $50 billion regional financial services company committed to helping people, companies and communities prosper. With more than 350 locations spanning the South and Texas, Cadence offers comprehensive banking, investment, trust and mortgage products and services to meet the needs of individuals, businesses and corporations. Accolades include being recognized as one of the nation's best employers by Forbes and U.S. News & World Report and a 2025 America's Best Banks by Forbes. Cadence maintains dual headquarters in Houston, Texas and Tupelo, Mississippi, and has dutifully served customers for nearly 150 years. Learn more at www.cadencebank.com. Cadence Bank, Member FDIC. Equal Housing Lender.

Forward-Looking Statements

Certain statements made in this news release constitute "forward-looking statements" within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and are subject to the safe harbor under the Private Securities Litigation Reform Act of 1995 as well as the "bespeaks caution" doctrine. These statements are often, but not exclusively, made through the use of words or phrases like "assume," "believe," "budget," "contemplate," "continue," "could," "foresee," "indicate," "may," "might," "outlook," "prospect," "potential," "roadmap," "should," "target," "will," "would," the negative versions of such words, or comparable words of a future or forward-looking nature. These forward-looking statements may include, without limitation, discussions regarding general economic, interest rate, trade, real estate market, competitive, employment, and credit market conditions, or any of the Company's comments related to topics in its risk disclosures or results of operations as well as the impact of the Company's pending acquisition of FCB Financial Corp. and First Chatham Bank on the Company's financial condition and future net income and earnings per share, and the Company's ability to deploy capital into strategic and growth initiatives. Forward-looking statements are based upon management's expectations as well as certain assumptions and estimates made by, and information available to, the Company's management at the time such statements were made. Forward-looking statements are not guarantees of future results or performance and are subject to certain known and unknown risks, uncertainties and other factors that are beyond the Company's control and that may cause actual results to differ materially from those expressed in, or implied by, such forward-looking statements.

Risks, uncertainties and other factors the Company may face include, without limitation: general economic, unemployment, trade, credit market and real estate market conditions, including inflation, and the effect of such conditions on customers, potential customers, assets, investments and liquidity; risks arising from market and consumer reactions to the general banking environment, or to conditions or situations at specific banks; risks arising from media coverage of the banking industry; the risks of changes in interest rates and their effects on the level, cost, and composition of, and competition for, deposits, loan demand and timing of payments, the values of loan collateral, securities, and interest sensitive assets and liabilities; the ability to attract new or retain existing deposits, to retain or grow loans or additional interest and fee income, or to control noninterest expense; the effect of pricing pressures on the Company's net interest margin; the failure of assumptions underlying the establishment of reserves for possible credit losses, fair value for loans and other real estate owned; changes in real estate values; uncertainties surrounding the impact of the U.S.'s proposed tariffs, including potential negative impact to our loan portfolio and profitability, potential for increases in problem loans, potential re-evaluation of credit marks and interest rates, and lower equity valuation and potential slowdown in capital markets; uncertain duration of trade conflicts; magnitude of the impact that the proposed tariffs may have on our customers' businesses; a deterioration of the credit rating for U.S. long-term sovereign debt, actions that the U.S. government may take to avoid exceeding the debt ceiling, or uncertainties surrounding the debt ceiling and the federal budget; uncertainties surrounding the functionality of the federal government; potential delays or other problems in implementing and executing the Company's growth, expansion, acquisition, or divestment strategies, including delays in obtaining regulatory or other necessary approvals, or the failure to realize any anticipated benefits or synergies from any acquisitions, growth, or divestment strategies; the ability to pay dividends on the Company's 5.5% Series A Non-Cumulative Perpetual Preferred Stock, par value $0.01 per share; possible downgrades in the Company's credit ratings or outlook which could increase the costs or availability of funding from capital markets; changes in legal, financial, accounting, and/or regulatory requirements (including those related to stock repurchases); the costs and expenses to comply with such changes; the enforcement efforts of federal and state bank regulators; the ability to keep pace with technological changes, including changes regarding maintaining cybersecurity and the impact of generative artificial intelligence; increased competition in the financial services industry, particularly from regional and national institutions; the impact of a failure in, or breach of, the Company's operational or security systems or infrastructure, or those of third parties with whom the Company does business, including as a result of cyber-attacks or an increase in the incidence or severity of fraud, illegal payments, security breaches or other illegal acts impacting the Company or the Company's customers. The Company also faces risks from natural disasters or acts of war or terrorism; international or political instability, including the impacts related to or resulting from U.S.'s proposed tariffs and international trade conflicts, Russia's military action in Ukraine, the escalating conflicts in the Middle East, and additional sanctions and export controls, as well as the broader impacts to financial markets and the global macroeconomic and geopolitical environments.

The Company also faces risks from: possible adverse rulings, judgments, settlements or other outcomes of pending, ongoing and future litigation, as well as governmental, administrative and investigatory matters; the impairment of the Company's goodwill or other intangible assets; losses of key employees and personnel; the diversion of management's attention from ongoing business operations and opportunities; and the Company's success in executing its business plans and strategies, and managing the risks involved in all of the foregoing.

The foregoing factors should not be construed as exhaustive and should be read in conjunction with those factors that are set forth from time to time in the Company's periodic and current reports filed with its primary federal regulator, including those factors included in the Company's Annual Report on Form 10-K for the year ended December 31, 2024, particularly those under the heading "Item 1A. Risk Factors," in the Company's Quarterly Reports on Form 10-Q under the heading "Part II-Item 1A. Risk Factors," and in the Company's Current Reports on Form 8-K.

Although the Company believes that the expectations reflected in these forward-looking statements are reasonable as of the date of this news release, if one or more events related to these or other risks or uncertainties materialize, or if the Company's underlying assumptions prove to be incorrect, actual results may prove to be materially different from the results expressed or implied by the forward-looking statements. Accordingly, undue reliance should not be placed on any forward-looking statements. The forward-looking statements speak only as of the date of this news release, and the Company does not undertake any obligation to publicly update or review any forward-looking statement, except as required by applicable law. All written or oral forward-looking statements attributable to the Company are expressly qualified in their entirety by this section.