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Cadence Bank's (CADE) Shares Rise on New Share Buyback Plan

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Cadence Bank (CADE - Free Report) announced that its board of directors authorized a share repurchase program for 2022. The board of directors has approved the repurchase of up to 10 million shares of Cadence.

Following the development, shares of Cadence Bank gained 1.8% on the last day’s trading.

The new share repurchase program is subject to the approval of the Federal Deposit Insurance Corporation and will be effective on Jan 3, 2022. The buyback plan will expire on Dec 30, 2022.

Prior to this, on Dec 9, 2020, Cadence Bank announced a share repurchase program to buy back an aggregate of 6 million shares of its common stock between Jan 4, 2021, through Dec 31, 2021. Cadence Bank has recently completed the repurchase of all shares authorized under this program.

In October, Cadence Bank increased its quarterly dividend. The company announced a dividend per share of 15.8 cents, representing a hike of 5.3% from the prior payout.

The company’s impressive balance sheet position supports such capital deployment activities. It carried investment-grade long-term issuer credit rating of BBB and Baa2 from S&P Global Ratings and Moody’s. Also, as of Sep 30, 2021, Cadence Bank’s cash and due from banks totaled $301 million, while long-term debt aggregated $4.1 million.

Additionally, the company has been actively pursuing growth through strategic acquisitions. In October, Cadence Bank completed its previously announced merger, in which legacy Cadence Bancorporation merged into BancorpSouth Bank, with BancorpSouth as the surviving entity. Following this, BancorpSouth was renamed Cadence Bank.

With the merger, Cadence Bank became the sixth-largest bank headquartered in its nine-state footprint. It had $48 billion in assets and presence in eight of the top 10 largest metropolitan statistical areas. However, low-interest rates remain concerning.

Shares of Cadence Bank have gained 9% in the year-to-date period, underperforming the industry’s rally of 36.7%.

 

Zacks Investment ResearchImage Source: Zacks Investment Research

 

The company currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Other Banks That Took Similar Actions

Over the past couple of months, several banks have rewarded shareholders with new share-repurchase programs. Some of these are Washington Trust Bancorp, Inc. (WASH - Free Report) , United Community Banks, Inc. (UCBI - Free Report) and Columbia Financial, Inc. (CLBK - Free Report) .

Washington Trust’s board of directors has approved the repurchase of about 5% of the outstanding common stock or 850,000 shares. WASH’s new buyback plan expires on Dec 31, 2022.

As of Oct 31, 2021, Washington Trust had 17.3 million shares outstanding.

United Community Banks’ board of directors has approved the repurchase of up to $50 million of UCBI’s outstanding shares. The plan will expire on Dec 31, 2022.

The new repurchase plan replaces the previous one, which authorized United Community Banks to buy back up to $50 million shares till Dec 31, 2021.

Columbia Financial has announced a new share repurchase plan. The board of directors has approved the repurchase of up to 5 million shares or 4.6% of CLBK’s current outstanding shares. The plan has no expiry date.

The new repurchase plan will be effective following the completion of Columbia Financial’s previous buyback program, which was announced this February. Under this plan, the company was authorized to repurchase 5 million shares. As of Nov 30, 2021, 1.2 million shares remained to be repurchased under the authorization.