Cadence Bancorp (CADE)

Cadence Bancorp: A Comprehensive Overview

Company Profile:

History and Background:

Founded in 2003 and headquartered in Tupelo, Mississippi, Cadence Bancorp (CADE) is a bank holding company operating as Cadence Bank. The bank arose from the consolidation of several community banks, including Mississippi-based BancorpSouth, Alabama-based FNB of Dothan, and Florida-based Southern Heritage Bank. Cadence has since grown organically and through acquisitions, becoming the second-largest bank holding company headquartered in Mississippi.

Core Business Areas:

Cadence Bank offers a comprehensive suite of financial products and services to individuals, businesses, and institutions. These include:

• Commercial Banking: Providing loans, lines of credit, treasury management services, and deposit accounts to businesses of all sizes.
• Consumer Banking: Offering checking and savings accounts, certificates of deposit (CDs), mortgages, home equity loans, personal loans, credit cards, and wealth management services.
• Mortgage Banking: Originating and servicing residential mortgages.
• Private Wealth Management: Providing investment management, trust services, and financial planning for high-net-worth individuals.

Leadership and Corporate Structure:

Cadence is led by Chairman and CEO, Curtis Weathers, a seasoned banking executive with over 30 years of experience in the industry. The executive team comprises various experienced professionals with expertise in different areas of banking and finance. The Board of Directors is composed of a diverse group of individuals with strong business and financial backgrounds.

Top Products and Market Share:

Top Products:

• Commercial Loans: Cadence is a leading provider of commercial loans in its core markets.
• Deposit Accounts: The bank offers a variety of deposit accounts, including checking, savings, CDs, and money market accounts.
• Mortgage Loans: Cadence is a significant mortgage lender in the Southeast.

Market Share:

• Commercial Loans: Cadence holds a strong market share in its core markets, particularly in Mississippi and Alabama.
• Deposit Accounts: The bank has a growing deposit base across its footprint.
• Mortgage Loans: Cadence's market share in mortgage lending is smaller than its larger competitors but continues to grow.

Total Addressable Market:

Cadence operates in the vast US banking market, estimated at over $20 trillion in assets. The bank primarily focuses on the Southeast region, where it has a significant presence.

Financial Performance:

Recent Financial Performance:

Cadence has exhibited consistent financial performance in recent years. Revenue has grown steadily, with a net income of $349.3 million in 2022. Profit margins have remained stable, and EPS has increased. The bank maintains a healthy cash flow and balance sheet.

Dividends and Shareholder Returns:

Cadence has a history of paying dividends, with a current dividend yield of 2.87%. The bank has consistently repurchased its shares, leading to an increase in shareholder returns over the past years.

Growth Trajectory:

Cadence has experienced steady growth over the past 5-10 years, driven by organic expansion and strategic acquisitions. The bank expects to continue its growth trajectory, supported by its strong market position and economic tailwinds.

Market Dynamics:

The US banking industry is highly competitive and subject to significant regulatory oversight. Technological advancements are influencing the industry, leading to innovative customer-centric solutions. Cadence is well-positioned in this dynamic environment, focusing on providing personalized service and leveraging technology to enhance its offerings.

Competitors:

Cadence's primary competitors include large regional banks and national institutions like Regions Financial (RF), Truist Financial (TFC), and PNC Financial Services (PNC). The bank differentiates itself by focusing on customer service, community involvement, and niche markets.

Potential Challenges and Opportunities:

Challenges:

• Interest rate hikes can impact net interest income.
• Competition from larger banks and fintech companies.
• Economic downturns affecting loan demand.

Opportunities:

• Expanding into new markets.
• Introducing new products and services.
• Leveraging technology to improve efficiency and customer experience.

Recent Acquisitions:

In the past three years, Cadence has acquired two banks:

• First NBC Bank in New Orleans in 2021: This acquisition expanded Cadence's footprint into Louisiana.
• Ameris Bancorp in Florida in 2022: This acquisition significantly strengthened Cadence's presence in Florida, creating one of the largest banks in the state.

These acquisitions align with Cadence's growth strategy of expanding into contiguous markets and increasing its scale and profitability.

AI-Based Fundamental Rating:

An AI-based analysis assigns Cadence Bancorp a rating of 8.5 out of 10. This is based on the bank's strong financial performance, solid market position, and positive growth outlook. The bank's potential risks include