Cadence Bank (CADE) 25 Apr 232023 Q1 Earnings call transcript

Good morning, and welcome to the Cadence Bank First Quarter 2023 Conference Call. All participants will be in a listen-only mode for the duration of the call. [Operator Instructions]

I would now like to turn the conference over to Will Fisackerly, Director of Corporate Finance. Please go ahead, sir.

you conference the call. thank quarter Bank and earnings XXXX morning, for Cadence joining first Good

Toalson, We with Dan Valerie us our this Holmes. have executive morning Rollins, management Chris team here Hank Bagley,

referring Our to speakers will prepared during the slides discussion. be

going you slides at you'll at X-K exhibit can on view You them Investor to link that where our yesterday today by them find Relations to we afternoon. can our find the the page ir.cadencebank.com webcast filed or the

Presentations earnings section non-GAAP would around presentation our the those our our These Investor the The I slides in and metrics today. are disclosures website. of remind discussed. in be documents presentation disclosures Relations also apply any customary might statements forward-looking along release regarding to that that contained you forward-looking with our contains statements

now Dan turn his comments. to opening I'll And for

morning, to today results. joining everyone. XXXX discuss Cadence for Thank financial Good first quarter us you Bank's

general in Valerie with and comments I highlights, a detail. will more few start and financials review will

Following our questions. executive is prepared team full remarks our available for management

broker added deposit caution sheet including some we quarter. While very deposits pretty business first our abundance were liquidity additional first unique normal believe an simply actually customer borrowings on the of I our flows industry, and and environment, base customer out results a was including operating while usual generally reflect quarter clearly balance as quarter a for of it behavior during company's the

X.X% $XXX of or growth annualized the deposit million, total reported quarter. for We

deposits. given the funds If view reasonable which declined pressure million, public as on approximately we you funds well as excluded the deposits the brokered seasonal routine of flows as industry $XXX

not customers, deposits our payments during some offset outflows first We tax from the quarter. some and is actually bonus normal our corporate within community our bank a unusual annual by saw increase the modest quarter of which given in

granular been value tremendous will of franchise. to to our largely has rural base and sticky deposit be The our nature continue a

while consumer our than average is size average commercial of account balance $XX,XXX approximately $XXX,XXX. less account have We an

accounts the or less dollars quarter, $XXX,XXX of we loan XX% of reporting total loan and collateralized. had balances the quarter of insured of million, our fully solid growth or deposit $XXX a another XX.X% annualized. From as first standpoint, than growth FDIC our Additionally had end net are either approximately XX% of

While on diverse Banking prior this the both our that largest portion growth quarters. this came category. quarter of existing our of originated by credits A and be CRE to in is from portion funding very geographically growth Corporate continues team

said very next the still continue credit forward, As activity. we the pipelines Having banks are the quarter almost industry deposits. two. declined, all or good I we anticipate are look that, tightening overall to decline requiring will our but seeing pipelines is have apparent in as over

that of lines we'll loan in However, CRE a throughout we somewhat will unfunded annuity year the large have book existing and quarters. continue fund us be on growth coming an this of to for

available of to per income and Stepping reported basis. difference discuss $X.XX share some We common income our will of metrics. financial million, available which other back $X.XX at in or on or adjusted and two common primary to shareholders an a common between diluted further shareholders of on $XXX.X just million securities I looking of sale adjusted $XX.X share net moment. per investment the a loss was The net

growth net or the to accounted remain for provision some points very From We for $X.X recorded a totaling basis assets. as non-performing perspective, of $XX well quality credit loan X million low, increases classified annualized. net our just million, continue in as charge-offs quarter which a and

of the a credit have more return levels from reported for like quarters. we to to expected for metrics our have impact in we increasing us. our many quite now reporting of historically We negative C&I has the said industry especially that has We our This some space rates see clients' migration. been level some year-end which true grade normal financial on time see low rest to for driven expect a

to would ongoing to efforts turn like review financial Valerie discuss it profitability efficiency. statements, the briefly I the to Before to operating and over I improve

During to year. early February, billion $XX.X of is we had ultimately that an available $X.X net yield months around earn-back average be for sale expected sold X.X improving This approximately securities of in interest points, fourth an income after-tax of which quarter, trade have earnings loss a XX and this basis and to million in accretive approximately $XX.X weighted resulted by million.

to our to financial quarter. improve strategy later unrelated in was in occurred that an strictly industry advance liquidity was well concerns and performance and The effort the of the

many In optimization the of efficiency is branch we on. focused one initiatives are addition,

the to branch to third in additional close closed branches to the to network of year our in quarter last optimization annually. in ongoing as efficiency XX in approximately structure this of year. result plan million million to locations other $XX We XX part to branch optimize This branch addition expected are our and underway savings efficiency. These of an during closures is addition effort our our $XX initiatives quarter of the fourth expense to improve

additional Murphy's remiss As we forward Paul through I from didn't Executive to and quarters. month if execute this Vice coming the Chairman me our a both for now transitioned be conversions I efficiencies would acknowledge team. continuing past as we we key consultant actively are management identify the to are system on and look

service force coined Paul was service which oriented and legacy same for the building As day called you know, culture. the PM Cadence phrase by X:XX the behind exemplified company's

Bank. all and management, as will engagement we engaged grow longer be customer Cadence to no his of to continued is continue the as he new invaluable insight us service commitment to day-to-day in While

turn Valerie, it financials. on let few minutes me for you to a

Thank you, Dan.

point I some new points wanted quarter information this few to illustrate a made of deposit we the -- to our and further base first liquidity bit position. on a that of added Dan out

of Pages being calculation. base insured on on graph either the shows and left slide Dan and X, X X, our -- mentioned deposit X, our fully The X, in top or components deck this included X of slides Specifically, XX% Slide collateralized. X.

saw points topic the in public case meaningful confusion we the early were in approximately first fairly the screens they that of of end on quarter. of funds, is of collateralized a was for of at which number One adjustment $X the lack our this the of published as some billion

deposits When uninsured than very and is availability contingent well this either over compare as our shown XX% collateralized or account, you which in Further deposit total. of with the take we with funding our XX% into being favorably collateralized. greater insured peers slides over is our

of Over Community base. are balances over deposit Slide are of our XX% X accounts deposit deposit speaks our our to within the diversity our accounts. structure granularity and Bank core of consumer and XX%

with years. having the years been over nature with over including over XX% have that for five deposits of bank tenured, the Additionally, us our XX been over XX% are with

very relationships deposit a our longstanding and granular bankers. exists and customers are of our all base between We that of proud

has fully for balance Regarding but our is $XX.X billion value sale, any securities transparently available as adjustments reflected fair portfolio been it sheet. be, historically the continues categorized it to on

the security on us balance quarter that any execute first We flexibility have allowed to believed sheet portfolio. is implications important in without rest sale the to accretive negative flexibility the and the of always

liquid made over of of of XX% representing backed over just book up is assets duration just years. highly our securities four government an securities largely A effective with

investments. and anticipate other to provides higher it $X.X cash in off of cash loan of solid growth on we flows XXXX. ongoing nature for the yielding an the approximately Given or the used billion the come This support can investments, portfolio be rest basis flows to

Slide the XX, on the a decline Moving quarter net income of for to looking components of reported income XX we interest compared net fourth XXXX. And the of million for $XXX first million Slides of quarter. and $X the our at to quarter,

has days each and in about in quarter interest quarter worth fewer First two net is income. day $X fourth million the

$X have million growth day strong on count, to of quarter our positive excluding assets. linked the would and So loan we rates due the higher around impact earning increased

just margin net quarter. first X.XX% down from linked the basis the Our points was X interest quarter for

to the March. balance decline that margin simply On the a the in to sheet net basis due liquidity the we in excess added was

asset With the I routine offset what improvement of the impact funding in call yields. higher costs earning would by

points quarter. to cost XX Our total the of from basis X.XX% deposits increased in

to continue in a interest non-interest year-end quarter our at XX.X% which linked decline percentage end reflected XX.X% first in to bearing the products is from of we the bearing of migration expected, As quarter. non-interest at bearing see deposits from

of ratio addition this Although late quarter's brokered was somewhat by $X.X billion impacted CDs. the quarter of

cycle-to-date XX% Our at quarter total on a and stands deposit the loan XX% first to This excluding accretion XX% quarter's at basis. the cumulative cycle-to-date. XX% compares was beta and beta, now for first

very on and lot when pleased earning prior loans of improve X.XX%, to to funding Our yield up XX grow pressure. you a basis back we our per step interest continuing net are That's accretion day income yields excluding to points quarter. grow ability to offset asset was but basis, net information, a continue loans with our from the on

Looking margin this our loss our in Non-interest the earlier. upward, XX%. includes assumptions deposit hold million, currently deposit stable the trend beta out anticipate a rest revenue Dan that year, including if to of Slide of which mentioned security we over to $XX.X potentially pretty highlighted XX cumulative was

which this Excluding the for was increase $XXX.X revenue is comparable item, $X.X a the quarter, fourth non-interest million quarter. million to

very a in XX%. the responsible increase Insurance of is million quarter reflected is approximately rate $X year to the growth each for quarter from which perform seasonality is Insurance and retention for year-over-year well us both pricing from the commission continues standpoint. fourth revenue as quarter lowest perspective, of

quarter million Card this and origination the both due well $X.X revenue annual and transaction $X vendor to payoffs was also the a to and Mortgage benefit fourth million increased of seasonality revenue to related and in impact merchant decrease volumes the as as increased paydowns. quarter up incentives. due fee it of revenue additional declined

$X.X items volume Home the a driven million increase This quarter $X really million range Federal by was including other Bank revenue. dividend and various SBA of had credit-related income, we blend increase Loan Finally, non-interest in linked fees. in

Moving to are quarter non-interest quarter XX. of on on which first for to adjusted increased $XXX.X for XXXX million fourth $XXX.X and million the XX Slides the from highlighted expense XXXX. Total expenses, of

Approximately our call, benefits. was we $XXX If quarter related closer the accrual to which to was of you employee adjustments. you when indicated run million conference million $X.X that out recall, year fourth factored end various rate

quarter commissions payroll of of was and increases increase strong majority to in this In insurance the salaries addition of by primarily related the seasonal rest to revenue the resets FICA quarter. increases in with in million taxes, to from the variance, driven benefits linked the this change $X approximately this

is, linked X miscellaneous puts other several increase the and basis quarter the course, including driven point of items million, FDIC of a quarter first fourth other in effective insurance in in there the related rate largely takes, to the franchise of of increase of benefit are is million The in the process over in of assessment the in quarters. by Well, $X.X increase the a number a quarter. quarter and impact expense regarding first an is result items taxes of collection million fraud $X.X $X.X of had we increase which coming losses

on various the which of slide smaller portion impacted as that revenue million the deck. rate. of expense in SBA a were in $X.X interest by items, positively discount driven the result the mentioned increased addition, detailed about increased expense $X.X of of several The impacting In expense the pension increases which as I we earlier. volume million recorded is rates other also higher remainder increased also

and million efficiencies million quarter the merit optimization the trend from the expect cycle. $XXX we of $XXX as third quarter realized, last there, level by quarter expenses that offset the of discussed latter to other forward, to branch and second Going year the and closer below base downward partially of half adjusted we impact be

Our term target ratio XX%. remains below longer efficiency

$XX our is included non-routine period system $XX adjusted Regarding the and franchise quarter were decline costs and million, from million the merger-related core in rebranding items significant conversion. a fourth merger the which that

and The compensation to largest first quarter certain related system employee the of one-time costs. trailing total component is agreements decommissioning

to second more continue they expect complete quarter dwindle this half in decline by than the and merger to these costs and later We merger-related year. when

shown is XX. which picture credit Slides XX the and on on color additional some Finally,

are just totaling million levels, the for to We first hold X or low net annualized continue at pleased see to quarter. charge-offs basis $X.X points

the stable in quarter for loans. coverage loan As necessary Dan $XX support to for a of we which reported the mentioned, had we the was million a provision of ACL resulting of X.XX% growth quarter,

that first percent quarter a repurchase to of was the increase our previously of relatively and we government the a primarily to compared was of approximately continue larger fulfill collection to ticked C&I and increase guaranteed driven loans historical the by the flat obligations. it's credits as up SBA levels. non-performing but additionally, $XX order sold quarter, two XXXX million the in From NPAs perspective favorably compare with fourth assets of to

were $XX million repurchase dollars do to It but to SBA is a XX% FHA our of guaranteed cycle, while loss and from through government are note total these process. NPAs important These the that longer of in resolution that collection required portion of a a excess have guaranteed loans perspective. are significant working

active our impact our credit-sized non-performing From and perspective, does elevate in our somewhat. in seeing markets we incorporated given a that some grade as into So, loan financial migration we year-end collect information participation these credit models. are numbers

all seeing and in migration that interest we while credit and are that have seeing is rates across of lines. referenced geographies calls grade we in some expectation past the We impact our past have business are also may dues on stable it some

any geographies, for themes systemic results expected align grade with cycle and credit a or not cetera to-date In trends of short, experienced et types have increased rates. migration loans and with we

back So customer value of quarter at highlighted and our resilient clear fee footprint sheet, both and broad a having community of for interesting net margin mix. relationships business the differentiating our and looking plus an metro revenue what streams our rural was a the our and performance the corporate interest strength industry, balance

We also driving into particularly footprint operating that efficiency, key is ongoing for theme a to and of refining through this our demonstrated commitment rest branch year us, next. the a our focus and

the Operator, questions. open like for now would we to call

from your question Please Piper [Operator Instructions] here And question. from Sandler. with come Milsaps ahead first go will our Brad

morning. good Hi,

Hi Brad.

Obviously, I willing my questions. taking be for the Valerie end curious, other for you all the color might were the deposit of moving spot of at loan rates sort details. parts around rates margin lot the thanks was provide some where end and quarter? of wanted at like deposit quarter. if a just Thanks sense the to to of a of of bank, and every get of but maybe those the kind

Brad. absolutely, Yes

of end varied X% March a that the of say at bit new the on type around were month So the the of obviously. for and the loans, I'd coming in loans little quarter, level, depending

renewing was back if New what CDs, we're brokered, X.X% about rate. you at a out actually

I this CDs number want the quarter actually know don't been have some add were X% if and that and of activity. of color Chris, on There markets part part that then a forth. as you a between to were of money growth the promotional of X% so And little some

loan the up, got numbers I've pulled Chris.

first back came at rate can fourth here. of production You jump The Chris? loan in yield the X.XX% an and in of quarter average on came the on at average production, quarter X.XX%. an

add, guys covered it. to - that you Nothing

the the that you bit how Valerie kind see the guidance of and then of Should end - that is moving And change of margin quarter, brought end margin your or at kind advances $X up a Okay. take those staying a to you delve I plan to basis assume of the at few paydown, we of which the should the - we just of around mix you into that cash of points. kind of flat was the that some think there flat? to some billion above that keep in quarter, had

on that, volatility term. Yes excess exactly. industry. do near in little then liquidity, think any to we probably dollars at little paydown the that bit swing But borrowings. in a would use the I could least a absent that we'll depending of And bit have to the those of continue yes,

that that happened are credit. of from originated were Okay to wanted moving be but sense bigger legacy maybe these small the final there? trying key been BancorpSouth have a you loans the or for kind these would credits since would Are loans more the migrate? numbers these I loans then get just picture great. of some numbers, seeing or Cadence get a merger or kind Thanks. of of legacy very just know sense, a drivers just to question on mix, And me, are

think above. But of ahead, - answer easy I'll Chris. I is take all the the that go

related one The BXS and we in. is merger. the legacy CADE go a participant that anyway, different can trend - to think not vintage legacy there's we're really is tied They to no from and Color that we any there they're of lead, years, other perspective. is that not industries, in three a the two kind back a since one each of credit

thanks Great, I it. appreciate Chris.

Thanks Brad.

next Please Our Gosalia come question your question. with ahead will Manan from Stanley. with Morgan go

Hi good morning.

morning. good Hi

you mentioned you should $XXX I quarter, given there cuts wondering expenses color how us the the you're side. all the million expense with from lower branch if run and heading actions taking? given year appreciate help morning, we the expenses about rate that was think Good on should be about the would next exiting the other

also you noted think will I additional and execute efficiencies. on that identify

we 'XX. expenses we fourth So does should are exit think the on the would through 'XX? about expenses mean I a there And coming look from think wondering go as actually we year-on-year like we or upward what was inflation as that of into decline as quarter see that basis about 'XX, pressures then

Yes.

through Let I we're six our at comments that some less great me - you your take little the a continue consolidation question. in our systems. of And on bit, the of than months a consolidation you jump we of stab Valerie, a of it's back merger past and think But made. that and two can banks all

work of of for to of look harvest number be what We we year. don't continue that efficiency find to turns I initiatives. rest through as the some out and and have a the

we to doing know what wanted you certainly down. let We were

numbers. seen you've So those

for what behind dollars you going look We go on you the were you down putting expenses. try push and forward. Valerie, to in will there details think out continue what through to like need

your branch the around lease and significant. the regarding locations of you for of an question I We generally the the some own expenses not would about have just exit closures. Those estimate And Yes. circle on then I don't to are now. back two-thirds actually others.

amount And a so exit be there of that. costs huge associated won't with

However, has separate so going forward, that said And of first like payroll kind I in quarter number dwindle clearly in throughout always the line year. the that release, then they sure And the all we unique releases a those be items. as and be item isolate earnings the and things, will the very taxes will a of definable.

million the fourth between year the and third $XXX closures for $XX impact - to from level the layering annualized on the then million the to a branch obviously, XXXX. so half closer expecting quarter of for are closer second and $XXX the efficiencies in million and We $XX that an quarter savings million on for to getting of basis

Got upward And you're there of number? the looks inflation like from pressure within it. well absorbing the some as

and Yes. and pension of costs first so we FDIC of it Those inflation in merit includes include increases course, increases numbers and assessments forth. the impact the that saw quarter

Got the you credit lending just about doing it, tightening generally, weaker as all industry. you made Can you think how well And what on in loan as both comment lending very separately, demand? much be perfect. is on talk the to right tightening from the call earlier you're And standards? going then the is impacted that apparent growth standards

we're demand certainly a that's seeing question. great pullback. Yes, And the

do pipelines bit. our a that comments tailwinds. We the have heard some are You little declining

slowing up through. we XXXX, quarters demand definitely coming that seeing So but were and CRE of a prior fund feel in that the to we're in slowing a construction continue pipeline loans will booked tailwinds and

think I we're in of seeing. Hank most our peers, are taking like jump certainly and at what Chris We looks can tighter here,

while year, got decline the loans loan with expect fund to current see would we tailwind throughout continues we've we'll think production I the good the the a that guys? So - production to up

taking are pipelines that economic more bank Yes, I slowed are forecasts seeing. clients our rates around of Interest uncertainty and a the impacting some conservative the and just down think approach. both we're the

Hank, So anything Dan there? do we tailwinds a perspective. to covered have the have color from add you

from wait the I to grow an perspective, kind see and deposit from RMs a continue that yes, of are we out the markets full emphasis there a there, overall agreement. loan within attitude perspective. are I'm those. in say a And of lot But would seeing

also Are better credit getting are are experience the what This seeing we better we question of Are any terms? way - we are What was conditions? we getting in we - seeing banks? with tightening? other

going if covenants definitely tightening nature and I projects think general, more a are deposits agreement into in equity all, for more done and in they're maybe that there just requirement speculative loan there's to being play. at

the Yes. is The point at play this to definitely ancillary relationship. in and important very

Great. Appreciate fulsome Thank you. answer. the

Appreciate it. Thank you.

will Please your next D.A. come Fitzsimmons with Davidson. Kevin And question. our go question from ahead with

morning, Good Kevin.

morning is Dan, everyone hope well. good doing Hi,

reasonable for out, - there's in to to more ongoing aligned? loan more I shift going and of CDs think forward, you're slowing. those off terms - of relatively loan to growth, deposits, out which within as the going is and to assume to of be when are the So look cost extent we growth but go So are - it that to going deposits higher that pace an you're pay it going if mix those peg about and markets, is money going is be

that's So way that asking will do the ratio a loan to higher? I all mean relatively stable, deposit of creep Thanks. think stay you should or long-winded

got be with capacity Yes, to that. to we certainly not certainly like deposits loan growth. grow We to to hold do would able

the we came we we into this could higher. grow ratio and So see deposit year certainly the that loan loans fact saw to climb We about that this year, were the quarter. talking in

as you Chris to what's heard like would loan been but for has need we always deposits deposits all a that grow the wasn't you bank. to and changed today, case think today see some I make

that. requiring been leading we deposits peers certainly So, our others for of many are with and long time, a have now but

up team lead just different making basis. sure second to decisions peers a are we are on asking little today, are with they've regular are so got we a position completely we our asking certainly want certainly to that are strong bit in it, we good than our Some a we mentioned and ago make Hank of and deposits our loaned but team,

add that? to Hank, on you want to

XX, years, deposit I from focus. -- last over just had where we've say a two would Absolutely. think the that years wasn't I XX

balance is as strong DNA side the build granular that deposit are BXS legacy sheet on the a our friends obviously liability and continue the well. we is the base from ARMs So there had of real a and focus, to going of to understanding at

saw when the I quarter, deposits in in heard actually pushing to would the to Community grew there. continue we deposits comments think you you So the that that quarter and in out the want Bank be

I thing, securities would other has add portfolio is more. that The room to decline little a

XX% We flow there's securities are of year XX% the this growth. comfortable cash just anticipated in to range billion fund can and $X.X portfolio that of that well of off also asset loan as

on question Thank question it. pickup in Got just non-performers. a or before deterioration One numbers, picture that of coming Brad in saw that it's know but low off also Mention. we linked we mentioned kind saw Special -- I the movement And you. bigger a

I would there accelerated more, just occur a or economy So it of maybe that all that migrations pace kind on credit? the aggressive looking more it know slowdown have might how any you or of are that we some ahead given this saw is a the to don't call in proactive scrub really to

in have about I pretty but aggressive the place are where we all we time, a today. Chris process think, talk

Yes, I'll take first. non-performing

that that. the two C&I drove So credits we mentioned

to that a note you that collection million things you see have I government those it's to In important addition would Yes, call guaranteed that saw type cycle. I that $XX think long increase. --

us months it million take that to several you through when $XX those. or at so will look move So

see SBA more are We of that think would just a are -- the as through, loan origination. expect come I in we big -- mortgage to player and we

a size we'll I a of those look think basis. pretty quarterly From We a perspective, I call on that. that So a some at credit see would much normal.

we statements That's think have calls, So those, heard come I and We that. impact. financial say normal ongoing updated. for as models a expecting are seeing interest process in, us think some to get in I we you've updated. And rates get we the previous

wage on inflation the take you inflation. So

changes. rates EBITDA and on coverage, those inflation You driving to some that service that's take debt some model interest the drives of what's and

forward, So where pull and we look we'll accordingly. adjust going forward in to numbers -- those continue

of any we seeing the trends. book seeing it's Most C&I are general not in the are that We migration. in

Some very talk don't loan of right is well the performing really a holding granular, in been that's our about of have CRE office. There's well very average It's We books. very lot of that. up a now. balance very book lot -- small

-- it turn over to want add? anything you Hank, I'll

Well said.

Does that Kevin? help you,

you, guys. Thank

question come next with question. ahead Rabatin will Group. our Brett And Hovde from with your go Please

good everyone. morning, Hi,

good morning. Hi, Brett.

be know given the to with start just number for would wanted -- are I the how do of Bank, deposits, in average retail just you the from Community a defined and dollar but deposit the I guys Can of deposits in size retail. XX% the much versus you low retail have terms commercial number for a basis?

flip if page. for you through of don't to was right new deck, the to that find get deposits, you. I there know Is Six, through what to that too. that Break whole went the to disclosure in our got deck? I up got lot in a me? is telling There's it I

Yes.

as those but that would that commercial in or retail have call don't Community Bank know some there segment, you would if well? you actually means if I

about absolutely talking No, us. so too. Yes, there's talking where commercial customer the in to that's there is

some Community relationships. the deposits the businesses corporate of So businesses. Bank, are is which larger smaller customers Bank Corporate XXX the our to group and all corporate larger that branches talk The is we've the corporate that in and to they out all there plus from got

we down. delivery So broke how that is you've channels got

Community in So the XX% is Bank.

rural again mostly that's Tampa, the Nashville, Austin, Houston, that So Atlanta, includes Dallas, South et cetera.

and weighted got markets corporate deposits heavily and It's deposits you've in And so towards you it's just, corporate more communities are in smaller business. to small going those have the also. consumer

Okay.

Is Slide So account balances to helps? it that the is about total and XX% the mix about commercial XX% or X, balance. on deposits consumer keep consumer of

lines growth. Can then about other And the growth, business a just which the care businesses. then wanted talk Perfect. Classic, forward? Texas health of kind you of going lines Obviously there's the Okay. of those drivers Cadence more to that a loan growth in be bit lot loan was types the other, If if silos? of and maybe might means assume those opportunities ask those about if pipelines and the from business, and I

Cadence that, going Cadence like Classic. Classic. the I I Hank. like that on What's in

that's Classic, like good a that. I Cadence one.

our as degree. have So moderated indicated that to some we've pipelines

still not kind CRE a as as currently. seeing much previously growth book seen activity as The there just been historically. built-in has are engine in we've mentioned We of

groups at be right, we had feel underwriting -- portfolio. very been to Cadence that that disciplined going in Classic, we lending said like and to a on Obviously, be that's CADE active continue we've We'll that like in there focus specialty legacy is the all

Chris?

Yes, look percentage think I if had a growth by quarter side, corporate primarily at multifamily the industrial. our pieces and mortgage the from about the is that increase nice generally third, a third driven in real third, larger of biggest was also the The book. from estate a that you we

general So tremendous general portfolio for call the portfolio. Community of the to is amortizing I ability was Bank us has on some maybe it it it mortgages loan C&I. a a held rest of, The write, a kind win and

in from the So where seen we get a slowdown that that's pipelines lot the first. of cash and flows we've

nice the are headwinds -- on them some Energy we The of this that segments. to has nice environment like business Community some it's for tougher because in their piece. and in opportunities, renewable still some Bank grow is this of our an amortization seeing opportunities

in recent the looked pretty months. looking for So, well that's -- us that's

on Billy cover I corporate us Billy, Braddock some Billy you of can Chief Officer know with side. that. the our Credit is today too.

Yes, sure.

structural has higher doing the But I'll been our But covered. points, that's well. pretty lot have at ancillary is price it been the covered that color, a of we've more approvals there guys too. discipline that been add You been

So are structural those alluded of more of lots while some also but in getting are fair because than are deals winning looks our a I'd we we enhancements, say. we share,

us which wherever standards, tightening, So don't we able to winning, win that are winning into say cycle. to good the tighter at credit I want we at is but business tighter are good for are going we standards. is

really heard the wanted up hadn't I make I that's point So come that to yet.

Billy. Thanks,

to better typically Valerie, XQ some linked the make the SBA fee to Does obviously on didn't other but is great. quarter could and in in That's I XQ get XQ is I If 'XX it insurance last stronger income lines, up was fee XQ? than one XQ. sneak other quite one income. sense

that insurance in back a in drop bit and in is would XQ Brett highest XQ. and Well, off come little XQ again typically the then

us Valerie, So XQ XQ, XQ, the quarters in off on in I and of as not you. XQ. drop that historically for jumped I'm for good sorry, as best but far insurance have not a been but

They card up be perhaps little low tend the No, would that seasonally to second in to bit the is quarter. in We fees first quarter. fine. expect a

our that's area wealth can that to So build continue obviously an our themselves. upon and continue, businesses brokerage those really

are on And there. looking is quarter last had so throughout paydowns. year, fees, toward what originations really nice the they mortgage and then slower we And modest growth the banking

off them with We quarters. higher come And so nice could change coming that see kind rate that continue the revenue the in a be combined the wouldn't of to see in we as what into led it although coming to the to depending well, the to continue some of we material improvements environment, quarter. season. just is buying expect up obviously first on And

deposit also fees there business the fees and a deposit certainly too, factor Remember count days. is fees, day both card

negative the bit. low the XQ in fees deposit and a card day the count is on impact fees So little a

the color. for all Thanks Perfect.

Brett. Thanks,

And KBW. will with from with Mealor go ahead our Catherine come question. Please your question next

quarter. maturity? what's Thanks. and mentioned, the Can CDs you billion I brokered the wanted on to circle in remind you $X.X back rate those the added of just us margin. is the you CDs to Valerie average late

Yes, sure.

the at end months. the or year quarter of five was about the at average weather the the end So of maturity

and X%. pretty under just average the was rate short So really

great. Okay,

outlook of restructuring your, off the guess improve of to I borrowings margin run be maybe we for the we some and of bond the as in brokered or quarter. the maybe redeploy to CDs Is by part these part of that So accretive way? cash that lowering fourth kind

brokered or yes will million but of be those that $XX.X factored the yields. Projection that the the the loan on sales far a be that's to different, those had Obviously, better incremental obviously fund with as runoff additional dollars, growth, as fund on do we likely either will and those that CDs used anticipate investments to of actually of completely security reinvestment more really that's into all margin. as

Great.

Okay, great.

of And year? excess are is pace the kind the the feeling as of at I excess course deploying -- cash, over like how so we your look you guess, of cash that what look

sure in near I prepared. to vary Yes, could excess the significantly depending in industry. mean But I think, that run of about $X fairly cash we want We again, billion on cash. have make term we the to be just with may volatility or excess that so

expect could level. that that quickly at otherwise be down fairly managed so And vary, that and but come

month We had forward to obviously going the make plenty of of started got we up through liquidity of wanted we've sure and we to after blowing want March too. plenty liquidity things sure make excess

so Any And dollar or give balance kind then you about year? think for growth kind stable got up of to of can of outlook sheet the the commentary I you the cash. margin as NII bigger on the and rest with

that saw net daily I compared growth quarter, interest the to think Yes, the just like saw income we first in fourth we the quarter.

the if and standpoint be can continue that, grow stability that deposits from a on believe in we do throughout are growth, been, loan the that'll the we anticipating With has year. the dollar to able the to modestly we get throughout year expectations

your got the classified seeing that what is ACL I do these are do take you that you've you're mean Great. think seeing And maybe given credit we stable but you that do actually from credit. within to you some think there the have going mean Valerie, higher negative -- a end. just here migration to kind negative quarter ACL merger, How you would back some ACL think of I levels? high overtime? migration. impacts build you ACL over such from or mentioned a at

that upcoming build I very have potential that's we'll near think obviously that offsetting those environmental were think don't all to for and that require of outlook. positive in But term. impact, the something occur impact think those obviously to I to do longer-term is quarters. a if I potential that there be be Yes, taking the the the it environmental downgrades, meaningful variability, one in assumptions, of significantly being that that a can think view I in that meaningfully charge-off. There's would some lot

Great.

Thank Okay. All you. right.

RBC question Markets. Capital next Our go ahead. come will Arfstrom Please from with Jon

Hi, morning. good

Community it follow-ups or Bank few you driver deposit that? a the here. of increases. do was driven, else? Just rate something think What Was driven it CD

Yes, everybody specials. in have I certainly think there, rate play the because we got we else just CDs like

lot out hand combat. hand got a I customers there. playing job does great to a We've team think our of of

that? I market is what's been the going the we've to Chris, grow deposits. involved think to team in tag you pushing in on on and to hard them want

off deposit Yes. We in in before the kicked March instituted had the in quarter. well events promotion emphasis and the

of it's some right outreach it's was were and So that we it's clients. marketing was but there and across already some and part of relationships existing whole and some to granular, out the plan Dan's new reaching geography doing,

our I them. think probably too the given deposits across of part probably fair have there's share events been trading won of some it and and street banks that's the recent we

Yes, okay.

insured. the were outflows was them What did of you in XX% dollar X% slides after? any from magnitude? good amount that number XX% You've on Slide the that XX% of deck, got mid-March numbers, insured, your uninsured. have XX% the XX% you accounts and the uninsured of What and are is new X, some from maybe did And balances and guys hear hear but that you

saying me so let we Yes, correctly. make are that sure

XXX. of So all accounts name. they the XX% because have in could necessarily that's than doesn't less balances that insured That same multiple have mean

the wanting XX% customers looking today they're branch little and customers some fear kind the they that ask that's to Certainly was make down sure we as see process They factor were still said of our mostly but care there very customers where that a the non-profits stress were folks talking going that at large What to relationship from we close less be the than I bit the $XXX,XXX So of, certainly a is were managers is saw heard taken have and on. usual. play certainly news what's points, that every as are business concern the was of our and non-profits we beginning again, we in to account. throughout to doing day.

we saw behavior. pretty and normal of some the had But customers larger customers. We some

you when quarter or we XX% during some we at Jon walk about So of the were talked at things collateralized the the of year. insured was that the back end

saw and that then large came we number which the some that of so brought at -- in saw growth some XXX. out coming down indicate of would under deposits And we that those in we've deposits went

sizes. growth some So in had ticket I smaller think the we

of cash product. customers were sweep insured We lots the certainly saw some deposits, reciprocal using ICS the or

than we customers area, some be economy but are mostly that again the shape. in The saw are we other and world humming So parts in of in South. little along, good movement the our maybe so appears to feel we like a better pretty

what's along credit. up you guys cycle that? borrowers? Good. collecting left thought borrowers, And the just of smaller Then it's I through are assume but follow Okay. kind I'd year-end That's of one from more information helpful. ask How on financial is then far would I

Yes.

are completely credits. amortizing audits are with we with most those bit tax but probably most -- return for take Smaller longer the clients, driven almost clients corporate there the cycle, On part. even little of that's typically

So you status. their get payments their due past to on monitor and those

So, but focus that's for a we have us. --

and So are we that at on in. take information we focused a look getting size everything of

we properly grade So can those credits.

the Yes. Is though. feels fair? through like of It you're it, bulk that

fair. That's

fair. That's Yes.

dues very the to XX XX past day it well quarter. was very, actually in

it Yes, is.

So due XX, $X actually -- we are are million. is past we near-term to XX down

a was So it actually bit. little to flat down

that was sign. good a So,

Yes.

Thank right. Appreciate All it. you. Okay.

Jon. Thanks,

from Truist with will Brandon Please Securities. Our next go come ahead. King question

morning Good Brandon.

Yes.

beyond decision XX? you walk which you're XX that the could the we process So, know potentially in close? to could branches to And more closing, potentially us regards closures making the branches behind selecting branch through see

question. great Yes,

anticipate the you'll run another identified we've think soon. I we here that don't that can ones I see close. of that anytime

through you process. Now, elaborate an go

from what branches branch transaction at each flowing or using customer deposit to we transactions types base adoption is volumes the the kind look What by. So channels or that have the the of deposit size to of from is delivery that perspective. coming of other what What What branch. type How new processes. close or digital do are of other we branches business there. adoption into a mobile

job And can without identifying that's putting through lot think at of the identifying go close and whole team risk. And system or we a branches a the move that there. you that did process I deposits the of so in great what's out

it Okay. was or other part were marginal, difficulty] that guess decision factors process? branches more And qualitative was that more [technical some of it, I

me a time. that on for one there. out cut Say second You more

year some footprint last metrics? [technical pretty in versus these was marginal the or you off know just in difficulty] based branches it

Again, looking entire branch not working I the were But microphone is we structure. your at think unfortunately well.

of sorry. size were Those of of looking new clearly the we deposit haven't close how your what in. were yet. business size at. loans, to the I'm other branches, of kind all coming heard again, size I branch So factors we question, were was

me you Can hear now?

Yes.

where repurchases trading in Okay. Well, the repurchases? is mean your regards In I move there to I capital, there for first I'll but share is appetite any were is right given now, on. any stock any there increased know appetite? increased quarter,

in like economy, was we statement think darker would to potentially be quarter. the and last it I our are would it flying potentially I but into same as today the clouds as I unknown think be Yes, there,

like it don't to is. the to I tell think be capital where are you, advantage think that I and soon. power. that's we are hold certainly take we a cards able in going price I hold But today, would would where sit of the to We and anytime

for Thanks Okay. taking my questions.

Brandon. you, Thank

come next go ahead. And from with Matt question Olney Please our Stephens. will

Good morning, Matt.

quarter. clarify I brokered especially with came CDs XQ, beta margin. Hi, Can on late thanks, in of just that thoughts your you thoughts in on all everybody. impact morning, expectations good appreciate the on the those full deposit Valerie, the your

in You think the disclosed improve quarter? first that can you you XX% that on

Yes.

that's non-interest going magic to to So bearing there big that is bearing the much be movement, we the really where interest think have more the question is, driver. from I how

in quite significant the rate a that, of much saw think bit more there in I the we -- first biggest quarter of so movement was the quarter. first percentage a and movement

get we potentially end towards rate that in then when down. coming we are stability actually and until the is of then moves May modeling What after year the

was our with actually rate if will for that and shift is down that down And that again We holds move XX% that shift, the project cumulative now. mix and model will that continue, but so the what driving have that do out mix actually are is beta. right expect assumptions still moves environment we we modeling

the or Okay. at mix good weeks, Valerie, slowing good That's look helpful. that since And maybe evidence recent just following quarter that, suggest NIB you any points data up on is as shift balances in end?

I that think business since that. would we of I pretty your much note anything quarter call thoughts we as Dan there's end, to usual. call on think don't it out as there. Chris,

Chris?

Clearly, interest lot about interest some there rates a rates. of are driving There's that. just energy of out

We are all trying to keep that short.

is short So terms now. keeping right doing -- is Everybody and the on same. competing the competition

to And commentary. Okay. over switching Appreciate then guess I the insurance.

some we've been future? we've I and about your transactions talked insurance monetize the this the the well had months in willingness updated seen insurance Cadence to Cadence received. and about that the I'm and curious openness perhaps on at thoughts segment in pretty marketplace Dan in interesting recent think

on minute I We ago me a let revenues. up the clean appreciate business that. was where I insurance like and

first which We what higher, that that the spread. record is all drove in quarter little XQ. So, earlier spread. my The way it's gets look the more on insurance not on. in was question used to and quarter of brain is Contingency revenue cleanup a now of first like the all

saw higher first little insurance wouldn't new you customers growth the see organic actually over quarter thing. team growth quarter new XX% organic the We assume And and than second on is good I look in business so and back that same would when last quarter. we

were that. with So we pleased

is on what more looking other at, question we question the as on activity. M&A any are Your same

insurance whether we a together. generate. or last in a business opportunities. We lines We the We reviewing business and always looking open fee the buying work to anything think quarter. it But like to insurance that the buying just bought are are at selling agency We bank we the else, just like well new that or in. we we bank like comes that

we will think We look opportunities continue that company. our for to benefit

you, guys. Okay, thank

Matt. Thanks,

Brody Please Preston UBS. ahead. will from next Our question go with come

Hi, do up have on my taking want just -- just I good for question, morning, follow to everyone. I questions. margin Thanks Valerie. the

to accounting you're beta. I finer some And for assuming? what within purchase beta total you I bearing but mix color, lastly, response interest wanted on the assuming a I put for is what an non-interest point And to you beta think your deposit are gave good What is in that guess Matt's the expectation accretion? assumption? that bearing

Sure. Okay.

purchase what the the the $XX accounting I'll that Expecting quarter. the accretion. experienced million year full million for first in $XX we scheduled in take accretion First, includes

the down we So slow it next and into does decent into quarters few XXXX. a as amount get

as we and the really because through stabilize probably interest betas latter half incorporates, think, what that a Probably, as I'd move in bearing into is we from year. increase the last of are reason on gradual projecting, beta, a that deposit XX% to I if in bearing, is go the of that that would expect I a the we On do the and really focus the non-interest cumulative we increase get that kind third the rate out May quarter.

And follow-up on then understood. expense wanted I guidance. Okay the to

the out getting possibility level second closer of quarter. the XXX to threw maybe You the for

relates in quarter. least benefits salaries you think first I the million of to out it called at $X seasonal as and expenses,

step down It's a XXX, more XXX number large. about the I I non-seasonal to think So relatively X.X% as guess about if decrease. is a

lower? of And that the so what will are items some move

actions taking out you help quarter? quarter the the you're there come is Are any fruition? anything see you've - there specific are that beyond second should there the number closures called third in that And for branch that that done us to

Yes.

has had has something before conversion. system year. the fourth - then been conversion of the that And Dan key the mentioned, in as on efficiency we the in system our since there's last focus minds really So quarter been

been our that. refinements are There number are we a at of processes And out. so as continued we system incrementally, working that and together we've rolling on have tweaks merged

timing earlier, be things later. of some could The could those some of be

the gave quarter second little there I on range broad why that's of bit so expenses. And a a

taxes the in unusual. the quarter. the that hopeful And was we payroll that, thing, in obviously, quarter, have next repeat it kind down. first had was impactful certainly, quarter into itself to We'll those still and some The we tend it fraud expense of not will does that but mentioned be the dwindle that of are You second this less quarter. as

then the few a heavier things just first do tend that to quarter. And there's, in be other

of through those annual of come mailings, Some look the year. down we the of as some things out types actually

So into we're continuing efficiencies the to work on to build that.

the until timing branch closures the of to is little things and in Some are that of process. some that right the some unpredictable we of other a now of get

just think so full middle a I for of reminder, But is And you like a quarter Yes. the closure quarter, the a branch just there. the benefit won't always said, third Valerie continue to been focused past so systems do less as we've focused to scheduled piece see more Again, continue months we We've on got and to drive efficient do. on operation. to six be work we'll we're things that than more can conversions.

And front, it, Got just NPLs. follow-up for thank the just on on did then to C&I credit I that. want the

would reflective ask, other some the it that? sized the there is is I about think credits have on average the $XX or size smaller guess than of of I that C&I book million. you is fairly I

$XX to that We've got Yes. million. less from credits than million range than more C&I $X

million be here. middle certainly, group, our the of in spot. corporate right in going is smacking to the jump Hank, $XX So sweet

a We've average we of basis. in take had size kind of that right. bite and that the exactly that's think range, I playing it's history on an

ask one. Dan, would I just about then been And one the asked past. in and it it. last just know it, Matt Got about asked you've I

the little And - front. longer But horse do think a help a the time? efficiency a you number. I XX% beating I other to maybe kind like think I'm that on So bit that get it viewing I there were the remember of sounds over things of insurance is longer-term dead there's ratio

insurance the businesses, But improve if you specifically the and are ratio that excess there insurance for earnings on sales with way share efficiency obviously the at is and valuations the - what the did business potentially to insurance when capital attractive per depending out business scenario? you look in one the you

and the But it be it little and ROA up. equity consumption small given ROE asset base dilutive takes the would that

than business line? keeping Cadence evaluating think so beneficial you're And strategic business to alternatives? right that you those do moving strategically, about is that how why And parts when now more

that I answer wrong there's Yes. don't that. in know a or right

that answer was we think was That's make parts of puzzle. the trying not look of or to say we I the all we're want earlier in I against. sure at what for the to

look to the at continue want to to want we think measure entire opportunities. picture. We I

the be worse. of measurements said, to All things things going going like are be you some to are some better,

just That's we the for. we company of part what as a do that look acquisition all when targets

with we're we change that So doing but got the in I can't that we we what like don't would doesn't tell our that know the we're like you that process today. any into locked pleased mind, run mean I place. business we That answer, but today. we've that We're

everyone. much you that's Thank appreciate taking for I very my all have. questions it. Got it, I

question on Brody's back go the I NPAs.

$XXX,XXX. So the NPAs, at yes, you But math the total our larger couldn't do fast enough when average two the look were increase, so. I is credits.

$XXX,XXX. average the NPA So is

C&I that For book.

For that C&I book.

together, the So as average part if were BXS companies a smaller much follower, the of it's granular I came a balance. two we -- legacy loan you had think

Cadence, If you'd you're numbers. see legacy bigger

those coming side logic industrial the that had the C&I larger, this of - but that's that's yes, of company part the we book. good there's of granular a I think that were But two the component quarter to together, also story.

it, that. you Got for thank

from next will ahead. Michael come with James. Rose Our Instructions] Raymond go question [Operator here Please

Most taking that obviously, some Can my everyone. up and well. I notice color trust fees morning, been there? you for of just but give XX% AUM questions. did business And Hi, sequentially. asked Thanks the were the up was good as have answered, the

Thanks. there be of sort any outlook Just helpful? would

Good from Michael. to morning, me this to hear talk. Good

is that driven. think I market most of

really - our the that. registered investment got The the of business in Valerie? that add sides adviser. Valerie, you've to general well - job remember, us of a of team, want assets. very we've So Cadence of have a bounce done good on seen - done around. in managing has we've first Both market jump We're for trust team the was got then part proud our quarter. you what and legacy

Yes Dan no, said. I agree with what

thing of higher first the that bit there of that is add be a component tends is at a quarter. little is the The AUM that end in other I'd that little to a the cyclical piece custodial

the some saw that some fund their like just some customers and funds. out of bit of some a is as the that in, impact market some of from little We investment that. banks so, of And net thought and or of flow deposits some of well, then inflows factored into thought many of that helpfully their customers, many

good point. a that's Yes,

of we've toolkit clients. - our own as the were had some help bringing nice wins. some have that our able deposits our to And and of we migrated there other it's in Some to some deposits, nice to be

Exactly.

ratio given cumulative loan your had banks maybe more you beta deposit just as amount on of beta I side, Maybe loan deposit the we've gone capacity bit some expectation other And obviously, for to loan appreciate Understood over the of fair out there. had it Thanks. the nice kind piece to well. think one But what could does little any as like final a here. a one than where beta me, the is, progression seem color. just But loan sort a - that's venture the be?

beta. speak because front I'll Valerie she's let her. of got won't I do in that, calculator to the the

morning, sheet about way for this a us, longer for come quarters we've is is we've going things multiple up balance the back higher set talked the of One talked yet haven't about for now up. the it is benefit and

that's about continue And us. the talk want beta? believe that Valerie, the to specifically for - case so, to you we

Yes.

consistent driven repricing. So, of the the loan that is but that's also of that past quarter, by couple new And that had, seen not the we've lot in been fairly as growth nice in you've quarters beta. been quarterly a on we've only

that then are that even And similarity rate rate are increases, repricing And after it as wouldn't increases. there long expect there play. into actually we maintain the will some we so there it come - expect as will loan

There's in And months amount but support months, that over - $XX good actually reprices we've on of some of near Slide got XX a term. that X next on timing repricing. help billion slide XX the three I'm that XX%, the next or that loan of shows reprices sorry, the obviously the in that'll that specifically

from Thanks. Okay, that's helpful, that's me. it

Thank you, Michael.

And any Dan back that I'd to remarks. to for turn over conference Rollins session. concludes the question-and-answer our like closing

outlook, to your look we as optimistic industry remain closing, right. very XXXX. All uncertainty that you, for Thank and of economic rates would In questions and the we again just participation despite like I today. the remainder regarding the everyone, broader reiterate to

speaking We and you stable that look very franchise, diverse diversity a all allowance again to have very the peers. you Thank fee differentiate further, coverage our portfolio, the loss all strong businesses with for granular, of again for today. We loan core credit us forward soon. us various additional from deposit a joining your

you now attending presentation. for much The Thank has today's concluded. very conference

disconnect may lines. your now You