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Cadence Bank (CADE - Free Report) reported first-quarter 2022 adjusted earnings per share of 65 cents per share, beating the Zacks Consensus Estimate of 60 cents. However, the bottom line compares unfavorably with 78 cents reported in the year-ago quarter.
Higher revenues were aided by an increase in net interest revenues. Moreover, higher deposit balances and loans strengthened its balance sheet. Nevertheless, shrinking net interest margins, weak capital ratios and elevated expenses were major drags.
Management noted, “We continue to be pleased with our business development efforts, especially so soon after legal merger last fall. Our results for the quarter reflect successes on both sides of the balance sheet within our community and commercial banks as well as many of our other lines of business, including mortgage, insurance and wealth management. Our results also reflect a stable net interest margin positioned for improvement, and continued strong credit quality."
The company’s net income available to common shareholders for the first quarter amounted to $112.6 million, up 42.2% from the year-ago quarter.
Revenues Climb on Net Interest Revenues, Expenses Rise
Total revenues for the reported quarter increased 68.9% year over year to $440.3 million. In addition, the top-line figure surpassed the Zacks Consensus Estimate of $423 million.
Net interest revenues for the quarter were $311.8 million, up 80.5% year over year. The fully taxable equivalent net interest margin (NIM) was 2.92%, contracting from 3.15% in the prior-year quarter.
Non-interest revenues improved 46.1% year over year to $128.4 million. The upside resulted from the increase in card and merchant fees, service charges, and brokerage fees.
Non-interest expenses were $291.7 million, increasing 87.2% year over year. The increase stemmed primarily from a rise in all the components.
As of Mar 31, 2022, total deposits were $40.6 billion, up 1.9% sequentially, while loans and leases, net of unearned income, increased 1.1% sequentially to $27.2 billion.
Credit Quality Decent
Non-performing loans and leases were 0.44% of net loans and leases as of Mar 31, 2022, down from 0.67% as of Mar 31, 2021. Additionally, in the first quarter, the company did not record a provision for credit losses.
However, non-performing assets were $147.7 million, up from $110.7 million in the prior-year quarter. Allowance for credit losses to net loans and leases was 1.61% as of Mar 31, 2022, up 1 bp year over year.
Capital Position Weak
As of Mar 31, 2022, tier 1 capital and tier 1 leverage capital ratios were 11.05% and 8.24%, respectively, compared with 11.95% and 8.59% recorded at the end of the prior-year quarter.
Also, the ratio of tangible shareholders' equity to tangible assets was down to 6.31% from the prior-year quarter’s 7.04%. Additionally, the ratio of its total shareholders' equity to total assets was 9.48% at the end of the first quarter, down from 10.30% as of Mar 31, 2021.
Capital Deployment Update
In the reported quarter, the company repurchased 5.1 million shares and had 4.9 million shares remaining on its current share repurchase authorization, which will expire on Dec 30, 2022.
Our Viewpoint
Cadence put up a decent performance in the first quarter. Inorganic growth moves have strengthened the company’s balance-sheet position. This supports its capital-deployment strategies.
However, elevated expenses might impede bottom-line growth in the upcoming quarters.
First Horizon National Corporation’s (FHN - Free Report) first-quarter 2022 adjusted earnings per share of 38 cents beat the Zacks Consensus Estimate of 34 cents. However, the figure declined 25% year over year. Results excluded after-tax impacts of 4 cents per share from notable items related to the IBERIABANK Corporation and TD-Bank merger transactions.
First Horizon’s results reflect higher loan balance, provision benefits and declining expenses. However, declines in NII and fee income affected revenues. Also, pressure on margin due to low interest rates was a spoilsport for FHN.
M&T Bank Corporation (MTB - Free Report) reported net operating earnings per share of $2.73 in first-quarter 2022, surpassing the Zacks Consensus Estimate of $2.26. However, MTB’s bottom line compares unfavorably with the $3.41 per share reported in the year-ago period.
A rise in non-interest income and a strong capital position were tailwinds for M&T Bank. However, a fall in NII, net interest margin, and a rise in expenses were the key undermining factors.
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Cadence (CADE) Q1 Earnings & Revenues Surpass, Loans Rise
Cadence Bank (CADE - Free Report) reported first-quarter 2022 adjusted earnings per share of 65 cents per share, beating the Zacks Consensus Estimate of 60 cents. However, the bottom line compares unfavorably with 78 cents reported in the year-ago quarter.
Higher revenues were aided by an increase in net interest revenues. Moreover, higher deposit balances and loans strengthened its balance sheet. Nevertheless, shrinking net interest margins, weak capital ratios and elevated expenses were major drags.
Management noted, “We continue to be pleased with our business development efforts, especially so soon after legal merger last fall. Our results for the quarter reflect successes on both sides of the balance sheet within our community and commercial banks as well as many of our other lines of business, including mortgage, insurance and wealth management. Our results also reflect a stable net interest margin positioned for improvement, and continued strong credit quality."
The company’s net income available to common shareholders for the first quarter amounted to $112.6 million, up 42.2% from the year-ago quarter.
Revenues Climb on Net Interest Revenues, Expenses Rise
Total revenues for the reported quarter increased 68.9% year over year to $440.3 million. In addition, the top-line figure surpassed the Zacks Consensus Estimate of $423 million.
Net interest revenues for the quarter were $311.8 million, up 80.5% year over year. The fully taxable equivalent net interest margin (NIM) was 2.92%, contracting from 3.15% in the prior-year quarter.
Non-interest revenues improved 46.1% year over year to $128.4 million. The upside resulted from the increase in card and merchant fees, service charges, and brokerage fees.
Non-interest expenses were $291.7 million, increasing 87.2% year over year. The increase stemmed primarily from a rise in all the components.
As of Mar 31, 2022, total deposits were $40.6 billion, up 1.9% sequentially, while loans and leases, net of unearned income, increased 1.1% sequentially to $27.2 billion.
Credit Quality Decent
Non-performing loans and leases were 0.44% of net loans and leases as of Mar 31, 2022, down from 0.67% as of Mar 31, 2021. Additionally, in the first quarter, the company did not record a provision for credit losses.
However, non-performing assets were $147.7 million, up from $110.7 million in the prior-year quarter. Allowance for credit losses to net loans and leases was 1.61% as of Mar 31, 2022, up 1 bp year over year.
Capital Position Weak
As of Mar 31, 2022, tier 1 capital and tier 1 leverage capital ratios were 11.05% and 8.24%, respectively, compared with 11.95% and 8.59% recorded at the end of the prior-year quarter.
Also, the ratio of tangible shareholders' equity to tangible assets was down to 6.31% from the prior-year quarter’s 7.04%. Additionally, the ratio of its total shareholders' equity to total assets was 9.48% at the end of the first quarter, down from 10.30% as of Mar 31, 2021.
Capital Deployment Update
In the reported quarter, the company repurchased 5.1 million shares and had 4.9 million shares remaining on its current share repurchase authorization, which will expire on Dec 30, 2022.
Our Viewpoint
Cadence put up a decent performance in the first quarter. Inorganic growth moves have strengthened the company’s balance-sheet position. This supports its capital-deployment strategies.
However, elevated expenses might impede bottom-line growth in the upcoming quarters.
Cadence Bank Price, Consensus and EPS Surprise
Cadence Bank price-consensus-eps-surprise-chart | Cadence Bank Quote
Currently, Cadence carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Banks
First Horizon National Corporation’s (FHN - Free Report) first-quarter 2022 adjusted earnings per share of 38 cents beat the Zacks Consensus Estimate of 34 cents. However, the figure declined 25% year over year. Results excluded after-tax impacts of 4 cents per share from notable items related to the IBERIABANK Corporation and TD-Bank merger transactions.
First Horizon’s results reflect higher loan balance, provision benefits and declining expenses. However, declines in NII and fee income affected revenues. Also, pressure on margin due to low interest rates was a spoilsport for FHN.
M&T Bank Corporation (MTB - Free Report) reported net operating earnings per share of $2.73 in first-quarter 2022, surpassing the Zacks Consensus Estimate of $2.26. However, MTB’s bottom line compares unfavorably with the $3.41 per share reported in the year-ago period.
A rise in non-interest income and a strong capital position were tailwinds for M&T Bank. However, a fall in NII, net interest margin, and a rise in expenses were the key undermining factors.