Cadence Bancorporation Reports Fourth Quarter and Full Year 2020 Financial Results

Cadence Bancorporation (NYSE: CADE) (“Cadence”) today announced net income for the quarter ended December 31, 2020 of $200.6 million or $1.57 per share, compared to $51.4 million or $0.40 per share for the quarter ended December 31, 2019, and $49.3 million or $0.39 per share for the quarter ended September 30, 2020. For the full year ended December 31, 2020, Cadence reported a net loss of ($205.5) million or ($1.63) per diluted common share (“per share”), compared to net income of $202.0 million or $1.56 per share for the year ended December 31, 2019. The fourth quarter of 2020 included an acceleration of gain recognition from the interest rate collar we terminated in March 2020 which resulted in $129.5 million ($169.2 million pretax) or $1.02 per share being accelerated into fourth quarter earnings (“accelerated hedge revenue”). This acceleration was triggered by the determination of hedge accounting partial ineffectiveness as announced in our related Form 8-K filed January 7, 2021.

“We are pleased to report strong performance across multiple fronts in the fourth quarter. The provision for loan losses is down meaningfully linked quarter, as are nonperforming and criticized assets. With the exception of hospitality, we saw broad-based improvement in credit migration, as many businesses recover, and our portfolios continue to de-risk. Our deposit franchise improved materially in 2020, and in the fourth quarter it was encouraging to see an increase in net interest margin and yields on originated loans. Our hedging activities protected the bank from the sharp decline in interest rates this year, and the unwinding of the hedge has produced a significant increase in regulatory capital, with our Common Equity Tier 1 capital ratio ending the year at 14.0%. Considering these results, we are pleased to announce proactive capital actions, including an increase of our fourth quarter dividend to $0.15 cents per share, payable in the first quarter 2021. Furthermore, we plan to retire maturing and callable debt and reactivate our share buyback program, which had been put on hold during the shutdown. Cadence operates in some of the most attractive markets in America, with a highly motivated and experienced team focused on serving our customers and driving shareholder value. While there clearly remains uncertainty in the broader environment, we are encouraged by our performance and the opportunities to further leverage our excess capital and liquidity in 2021,” stated Paul B. Murphy, Jr., Chairman and Chief Executive Officer of Cadence Bancorporation.

Adjusted Performance Metrics ⁽¹⁾:

• Adjusted net income ⁽¹⁾, excluding non-routine income and expenses ⁽²⁾, was $206.7 million for the full year of 2020 compared to $223.1 million for 2019. For the fourth quarter of 2020, adjusted net income was $199.7 million, an increase of $147.8 million or 284% compared to the fourth quarter of 2019 and an increase of $148.3 million or 288% compared to the third quarter of 2020.
• Adjusted pre-tax pre-provision net revenue ⁽¹⁾ for the full year 2020 was $542.5 million, compared to $400.3 million for the full year 2019. Adjusted pre-tax pre-provision net earnings in the fourth quarter of 2020 was $260.0 million, an increase of $165.2 million or 174% compared to the fourth quarter of 2019 and an increase of $165.4 million or 175% compared to the third quarter of 2020.
• Adjusted EPS ⁽¹⁾ for the full year 2020 was $1.64 compared to $1.72 for 2019. Adjusted EPS for fourth quarter of 2020 of $1.57 increased from the prior year quarter of $0.40 and increased from the linked quarter of $0.40.
• Adjusted annualized returns on average assets ⁽¹⁾ and adjusted tangible common equity ⁽¹⁾ for the full year 2020 were 1.14% and 11.59%, respectively, compared to 1.26% and 13.60% for the full year 2019, respectively, and for the fourth quarter of 2020 were 4.33% and 41.72%, respectively, compared to 1.16% and 11.93%, respectively, for the fourth quarter of 2019 and 1.12% and 11.52%, respectively, for the third quarter of 2020.

Fourth Quarter 2020 Highlights:

Fourth quarter 2020 highlights (compared to the linked quarter where applicable) are as follows:

• The provision for credit losses for the fourth quarter of 2020 was $2.8 million compared to $33.0 million in the linked quarter reflecting improvement in overall credit metrics and lower loan balances. As ofDecember 31, 2020, our allowance for credit losses (“ACL”) increased to 2.89% of total loans, up from 2.86% at September 30, 2020. Excluding Paycheck Protection Program (“PPP”) loans, our ACL ratio to loans was 3.12% at December 31, 2020, up from 3.11% at September 30, 2020. Our ratio of ACL to total nonperforming loans increased to 261% from 204%.
• Our tax equivalent net interest margin (“NIM”) increased to 3.54%, up 5 basis points from prior quarter. The improvement in NIM was driven by continued management of deposit costs, declining 7 basis points to 0.25%, and fees earned on forgiven PPP loans and other loan payoffs.
• Common Equity Tier 1 capital ratio increased to 14.0% and total risk weighted capital increased to 16.7%, reflecting material increases from the prior quarter due to the strong quarterly earnings combined with lower risk weighted assets.
• Non-interest income in the fourth quarter of 2020 included the accelerated hedge revenue of $169.2 million.
• Annualized returns on average assets and tangible common equity ⁽¹⁾ for the fourth quarter of 2020 were 4.35% and 41.90%, respectively, compared to 1.08% and 11.08%, respectively, for the third quarter of 2020, with the increases reflecting the impact of the accelerated hedge revenue combined with lower loan provisions.

Balance Sheet:

Total assets were $18.7 billion as of December 31, 2020, an increase of $912.3 million or 5.1% from December 31, 2019, and an increase of $308.4 million or 1.7% from September 30, 2020. The linked quarter increase was driven by increases in core deposits, cash and securities, partially offset by net declines in loans.

Cash and Cash Equivalents at December 31, 2020 totaled $2.1 billion as compared to $1.0 billion at December 31, 2019 and to $1.2 billion at September 30, 2020. The $806.8 million increase in the fourth quarter of 2020 resulted from a decrease in loans combined with an increase in deposits.

Investment Securities at December 31, 2020 totaled $3.3 billion as compared to $2.4 billion at December 31, 2019 and $3.1 billion at September 30, 2020. Securities as a percent of earning assets was 18.6%, 14.6%, and 17.4% at December 31, 2020, December 31, 2019, and September 30, 2020, respectively. The increase in securities from both the prior year and linked quarter is a result of increased balance sheet liquidity resulting from growth in deposits and the declines in net loans. Securities acquired during the fourth quarter include primarily agency pass-through mortgage-backed securities along with some municipal securities.

Loans at December 31, 2020 totaled $12.7 billion as compared to $13.0 billion at December 31, 2019, a decrease of $264.5 million or 2.0%. Loans decreased $746.4 million or 5.5% from $13.5 billion at September 30, 2020. The decline in the quarter included paydowns and payoffs of $117 million in PPP loans, $113 million in criticized loans, $180 million in Shared National Credits (SNCs), and $94 million in leveraged loans without moderating factors (note there is some overlap between these categories). On a portfolio basis, Restaurants declined $120 million and Energy declined $80 million, reflecting our targeted risk reduction strategy in those portfolios. Commercial Real Estate (“CRE”) declined $200 million, primarily reflective of credits transitioning to the permanent debt markets. The $321 million decline in General Commercial &Industrial (“C&I”) included $90 million in PPP loans as well as paydowns and payoffs resulting from excess borrower liquidity, borrower migration to non-bank and Main Street Lending fundings, and resolutions of problem credits.

Goodwill at December 31, 2020 totaled $43.1 million, down from $486.0 million at December 31, 2019 and unchanged from September 30, 2020. As previously reported, the Company recorded a $443.7 million ($412.9 million, after-tax), non-cash goodwill impairment charge in the first quarter of 2020. The remaining goodwill at December 31, 2020 relates to our registered investment advisory subsidiary and trust division.

Total Deposits at December 31, 2020 were $16.1 billion, an increase of $1.3 billion or 8.9% from the December 31, 2019 level and up $266.0 million or 1.7% from the September 30, 2020 level. Non-interest bearing deposits were $5.0 billion or 31.4% of total deposits at December 31, 2020, up from $3.8 billion or 26.0% at December 31, 2019 and essentially unchanged from September 30, 2020. Total cost of deposits declined to 0.25% for the fourth quarter 2020, significantly lower than both the fourth quarter 2019 cost of 1.14% and the third quarter 2020 cost of 0.32%.

Shareholders’ equity was $2.1 billion at December 31, 2020, a decrease of $339.7 million or 13.8% from December 31, 2019, and an increase of $49.6 million or 2.4% from September 30, 2020. The year over year decrease was driven by the goodwill impairment charge in the first quarter of 2020. The linked quarter increase included quarterly net income of $200.6 million, $9.4 million in cash dividends, and a decrease of $144.6 million in other comprehensive income (“OCI”) driven by the reclassification of hedge revenue into current earnings.

Tangible common shareholders’ equity ⁽¹⁾ was $2.0 billion at December 31, 2020, an increase of $124.4 million or 6.7% from December 31, 2019 and an increase of $54.8 million or 2.8% from September 30, 2020. The full year increase was driven by tangible earnings during the year. The linked quarter increase resulted from the same factors noted above.

• Total shareholders’ equity to total assets and tangible equity to tangible assets were 11.3% and 10.7%, respectively, at December 31, 2020 compared to 13.8% and 10.9% at December 31, 2019, and 11.3% and 10.6% at September 30, 2020, respectively.
• Tangible book value per share ⁽¹⁾ was $15.83 as of December 31, 2020, an increase of $1.18 or 8.1% from $14.65 as of December 31, 2019 and an increase of $0.43 or 2.8% from $15.40 as of September 30, 2020.
• Total outstanding shares at December 31, 2020 were 125.97 million.

Quarter end regulatory capital ratios remained robust and increased significantly during the quarter as follows:

		4Q20		3Q20		4Q19
Common equity Tier 1 capital		14.0%		12.0%		11.5%
Tier 1 leverage capital		10.9%		9.9%		10.3%
Tier 1 risk-based capital		14.0%		12.0%		11.5%
Total risk-based capital		16.7%		14.7%		13.7%

Asset Quality:

Credit quality metrics during the fourth quarter of 2020 reflected a number of improvements including declines in nonperforming and criticized loan balances but continued to reflect ongoing COVID-driven stress and economic uncertainty, particularly in the Hospitality sector.

• Net charge-offs for the full year 2020 were $106.1 million or 0.79% of average loans as compared to $85.8 million or 0.63% for the full year 2019. Net charge-offs for the fourth quarter of 2020 were $21.2 million or 0.64% annualized of average loans compared to $35.3 million or 1.04% annualized and $19.9 million or 0.58% annualized for the quarters ended December 31, 2019 and September 30, 2020, respectively. The current quarter net charge-offs included $4.2 million in Restaurant, $9.2 million in Commercial Real Estate (“CRE”), and $7.3 million in General C&I.
• Provision for credit losses for the full year 2020 was $278.0 million or 2.06% of average loans as compared to $111.0 million or 0.81% of average loans for 2019. Provision for credit losses for the fourth quarter of 2020 was $2.8 million as compared to $27.1 million for the fourth quarter of 2019 and $33.0 million for the third quarter of 2020. The current quarter’s provision was impacted by improvements in nonperforming and criticized loans and lower loan balances. The fourth quarter 2020 loan provision was concentrated in the CRE segment provision of $7.4 million (primarily due to the Hospitality portfolio), which was partially offset by reductions of $3.0 million in C&I and $1.4 million in Consumer segments.
• The ACL was $367.2 million or 2.89% of total loans as of December 31, 2020, as compared to $119.6 million or 0.92% of total loans as of December 31, 2019, and $385.4 million or 2.86% of total loans as of September 30, 2020. Excluding PPP loans, the ACL was 3.12% of total loans at December 31, 2020, increased from 3.11% at September 30, 2020.
• The material increase in the ACL during 2020 incorporated loan provisions of $278.0 million, net charge-offs of $106.1 million and “day 1” CECL adoption impact of $75.6 million.
• Total nonperforming loans (“NPL”) as a percent of total loans were 1.08% at December 31, 2020, compared to 0.92% at December 31, 2019 and 1.40% at September 30, 2020. NPL totaled $138.0 million, $119.6 million and $189.1 million as of December 31, 2020, December 31, 2019 and September 30, 2020, respectively. The linked quarter decline of $51.1 million or 27% was due primarily to payoffs and to a lesser extent, net charge-offs.
• The ACL coverage of NPL increased meaningfully to 266.1% as of December 31, 2020, as compared to 100.1% as of December 31, 2019, and 203.8% as of September 30, 2020.
• Total criticized loans at December 31, 2020 were $871.7 million or 6.85% of total loans as compared to $605.1 million or 4.66% at December 31, 2019 and $1.1 billion or 8.05% at September 30, 2020. The linked quarter decrease of $211.3 million or 20% was primarily in Restaurant, Energy, General C&I, and Healthcare credits, reflecting decreases of 28.7%, 21.0%, 30.2% and 49.0%, respectively.
• Active COVID related loan payment deferrals totaled $135 million at January 15, 2021, down from $376 million at September 30, 2020.
• Loans 30-89 days past due were 0.36% of total loans at December 31, 2020, compared to 0.17% at December 31, 2019 and 0.15% at September 30, 2020. While minor, the increase was primarily due to a small number of loans that includes $9.4 million in Hospitality loans and $4.8 million in Mortgage loans.

Total Revenue:

Total operating revenue ⁽¹⁾ for 2020 was $926.3 million, up $144.2 million or 18.4%, and for the fourth quarter of 2020 was $366.5 million, up $171.7 million or 88.1% from the same period in 2019 and up $181.8 million or 98.5% from the linked quarter.

Net interest income for the full year 2020 was $619.0 million as compared to $651.2 million for 2019, a decrease of $32.2 million or 4.9%. The year-over-year decline in earning asset yields of 117 basis points was driven by lower index rates partially offset by our hedges, combined with an increase in lower yielding securities. This decline was partially offset by our cost of funds declining 81 basis points as we achieved record low-deposit costs and record high levels of non-interest bearing deposits during 2020.

Net interest income for the fourth quarter of 2020 was $156.7 million, a decrease of $4.2 million or 2.6% from the same period in 2019 and an increase of $2.7 million or 1.8% from the third quarter of 2020. Compared to the linked quarter, loan interest income excluding accretion increased $0.9 million as loan fees from loan payoffs offset the impact of lower volumes, funding costs decreased by $2.5 million driven by continued reduction of deposit costs, and hedge interest income increased $0.2 million. These improvements were partially offset by a decrease of $0.5 million in loan accretion and a decrease of $0.3 million in investment income due to lower yielding securities.

• We continued to lower our interest rates on deposits with total cost of deposits dropping from 0.32% to 0.25% linked quarter, down 21.9%. Noninterest-bearing deposits as a percent of total deposits remained stable at 31.4% compared to 31.9% in the linked quarter. Total interest-bearing liability costs declined by 8 basis points from 0.59% to 0.51% linked quarter, down 13.6%. Average interest-bearing liabilities declined $244.2 million or 2.2% from the prior quarter to $10.9 billion.
• Yield on loans excluding accretion and hedge income was 3.89% in the fourth quarter of 2020, up 14 basis points from 3.75% in the third quarter of 2020. Excluding the impact of PPP loans, this yield was 3.98% and 3.87%, for the fourth and third quarters of 2020, respectively. Average loans declined $414.0 million or 3.0% from the prior quarter to $13.2 billion.
• Total hedge income in interest income (which includes the amortized effective collar gain recognition and other hedge income) for the fourth quarter of 2020 totaled $19.9 million as compared to $19.7 million for the third quarter of 2020. The effective portion of the collar gain was and will continue to be reflected in interest income, whereas the ineffective portion of the gain was reflected in noninterest income during the fourth quarter of 2020. At December 31, 2020, the remaining portion of the collar gain (included in OCI) yet to be amortized into revenue was $35.4 million, with $33.5 million expected to be amortized into interest income in 2021 and the final $1.9 million expected in early 2022.
• Accretion on acquired loans totaled $5.9 million for the fourth quarter of 2020 as compared to $6.4 million for the third quarter of 2020.
• Yield on investment securities declined to 1.87% in the fourth quarter of 2020 compared to 2.06% in the linked quarter, with the lower yield reflecting the impact of securities purchased in the fourth quarter and late in the third quarter. Average investment securities increased $241.4 million or 8.2% from the prior quarter to $3.2 billion. Fed funds sold and short-term investments also increased by $237.0 million or 25.2% from the prior quarter due to excess liquidity during the fourth quarter.
• Total earning asset yields declined slightly to 3.85% in the fourth quarter of 2020 compared to 3.86% in the linked quarter, with average balances increasing by $64.0 million or 0.4% to $17.7 billion.
• Our NIM for the full year 2020 decreased to 3.58% compared to 4.00% for 2019. Our net interest spread for 2020 decreased to 3.29% as compared to 3.48% for 2019. Our NIM for the fourth quarter of 2020 was 3.54% as compared to 3.89% for the fourth quarter of 2019 and 3.49% for the third quarter of 2020.

PPP loans averaged $1.0 billion in the fourth quarter at a yield of 2.82%, and along with cash in deposits associated with these loans, negatively impacted our fourth quarter NIM by 10 basis points as illustrated in the table below. Excluding the impact of the PPP program, the fourth quarter 2020 NIM remained stable at 3.64%, as lower deposit costs more than offset the impact of lower loan balances and lower securities yields. Specifically, the NIM change during the quarter included:

Quarterly Change		$ MM		NIM
3Q 2020 Net Interest Income		$154.5		3.49%
3Q 2020 Net Interest Income before PPP loans & associated cash		$148.4		3.64%
Loans (ex PPP & accretion)		(0.5)		(0.04%)
Deposits		2.6		0.07%
Hedge Income		0.2		0.00%
Accretion		(0.5)		(0.01%)
Securities		(0.3)		(0.01%)
Cash		0.2		0.00%
Borrowings		(0.2)		(0.01%)
NIM before PPP loans & cash*		$149.9		3.64%
PPP Loans & associated cash		7.4		(0.10%)
4Q 2020 Net Interest Margin		$157.3		3.54%

*Calculated by removing the quarterly average balance of PPP loans and income, as well as the quarterly average balance of cash associated with unused PPP funds.

Noninterest income for the full year of 2020 was $307.4 million, an increase of $176.4 million or 135% from 2019. Noninterest income for the fourth quarter of 2020 was $209.7 million, an increase of $175.8 million from the same period of 2019 and an increase of $177.2 million from the linked quarter. Adjusted noninterest income ⁽¹⁾ for the fourth quarter of 2020 was $208.4 million, an increase of $176.1 million from the fourth quarter of 2019, and an increase of $175.3 million from the linked quarter.

• The fourth quarter includes the accelerated hedge revenue of $169.2 million reclassified from OCI. The partial accounting ineffectiveness determination resulted from a significant decrease in forecasted LIBOR based loans to support future amortization of the remaining transaction gain on the termination of our interest rate collar. See additional discussion in our Form 8-K filed January 7, 2021.
• Excluding the accelerated hedge revenue, the linked quarter increase was $6.1 million including increases of $3.6 million in earnings from limited partnerships, $1.3 million in securities gains, $0.7 million in investment advisory revenue, and $0.6 million in credit related fees.
• Noninterest income as a percent of total revenue for 2020 was 33.2% as compared to 16.7% for 2019, and for the fourth quarter of 2020 was 57.2% as compared to 17.4% for the fourth quarter of 2019 and 17.5% for the linked quarter. Before the impact of the accelerated hedge revenue of $169.2 million, noninterest income as a percent of total revenue for 2020 and the fourth quarter of 2020 were 18.3% and 20.5%, respectively, both increased from the comparable periods.

Noninterest expense for the full year of 2020 was $826.5 million, an increase of $417.7 million or 102.2% from 2019 due to the goodwill impairment charge of $443.7 million recorded in the first quarter of 2020. Noninterest expense for the fourth quarter of 2020 was $105.3 million, an increase of $4.8 million or 4.8% from the same period in 2019 and an increase of $10.5 million or 11.0% from the linked quarter. Adjusted noninterest expense ⁽¹⁾, which excludes the impact of non-routine items ⁽²⁾, was $377.6 million for the full year of 2020, a decrease of $1.4 million or 0.4% from 2019. For the fourth quarter of 2020, adjusted noninterest expense was $105.1 million, up $6.7 million or 6.9% from the fourth quarter of 2019 and up $12.6 million or 13.6% from the third quarter of 2020. The linked quarter increase in noninterest expenses resulted from an increase of $8.1 million in personnel costs driven by an increase of $8.5 million in incentive compensation due to improved corporate performance partially offset by a reduction of $1.0 million in medical insurance expense due to improved claims experience.

Our adjusted efficiency ratio⁽¹⁾ for the full year of 2020 was 41.0% as compared to 48.6% for 2019. The adjusted efficiency ratio for the fourth quarter of 2020 was 28.8%, compared to the linked quarter ratio of 49.4% and the prior year’s fourth quarter ratio of 50.9%. The full year and linked quarter improvements are both a result of the accelerated hedge revenue of $169.2 million. Before the impact of the accelerated hedge revenue, the full year and fourth quarter 2020 efficiency ratios both reflected slight increases at 50.3% and 53.7%, respectively, with the full year increase reflecting lower revenues in 2020 and the linked quarter increase reflecting the higher fourth quarter expenses.

Taxes:

The effective tax rate for the full year 2020 was (15.3%) as compared to 23.0% for the full year 2019. The effective tax rate for the fourth quarter of 2020 was 22.4% compared to 16.1% for the linked quarter and 23.4% for the fourth quarter of 2019. The full year 2020 effective rate was impacted by $313.3 million in non-deductible goodwill impairment.

_____________________________
(1)		Considered a non-GAAP financial measure. See Table10 “Reconciliation of Non-GAAP Financial Measures” for a reconciliation of our non-GAAP measures to the most directly comparable GAAP financial measure.
(2)		See Table 10 for a detail of non-routine income and expenses. The fourth quarter 2020 accelerated hedge revenue is not included as an adjustment from GAAP earnings to arrive at the non-GAAP adjusted performance metrics presented herein due to the historical and continuing nature of hedge revenue in our earnings, and the revenue resulting from the partial ineffectiveness designation merely representing an acceleration of a portion of the fixed collar gain into earnings as compared to the original amortization expectation. The revised amortization expectation for the remainder of the collar gain is presented within this release for clarification of this component of ongoing hedge revenue.

Dividend:

On January 21, 2021, the board of directors of Cadence Bancorporation declared a quarterly cash dividend in the amount of $0.15 per share of outstanding common stock, representing an annualized dividend of $0.60 per share. The dividend will be paid on February 12, 2021 to holders of record of Cadence’s Class A common stock on February 5, 2021.

Share Repurchase Authorization:

On January 21, 2021, the board of directors of Cadence Bancorporation authorized a share repurchase program providing for the purchase of shares of the Company’s Class A common stock for an aggregate purchase price of up to $200 million, subject to regulatory approvals. The previously approved share repurchase program authorizing up to $100 million is set to expire in February 2021.

Supplementary Financial Tables (Unaudited):

Supplementary financial tables (unaudited) are included in this release following the customary disclosure information.

Fourth Quarter 2020 Earnings Conference Call:

Cadence Bancorporation executive management will host a conference call to discuss fourth quarter 2020 results on Monday, January 25, 2021, at 7:30 a.m. CT / 8:30 a.m. ET. Slides to be presented by management on the conference call can be viewed by visiting www.cadencebancorporation.com and selecting “Events & Presentations” then “Presentations”.

Conference Call Access:

To access the conference call, please dial one of the following numbers approximately 10-15 minutes prior to the start time to allow time for registration and use the Elite Entry Number provided below.

Dial in (toll free):				1-888-317-6003
International dial in:				1-412-317-6061
Canada (toll free):				1-866-284-3684
Participant Elite Entry Number:				3708183

For those unable to participate in the live presentation, a replay will be available through February 8, 2021. To access the replay, please use the following numbers:

US Toll Free:				1-877-344-7529
International Toll:				1-412-317-0088
Canada Toll Free:				1-855-669-9658
Replay Access Code:				10150788

Webcast Access:

The call and corresponding presentation slides will be webcast live on the home page of the Company’s website: www.cadencebancorporation.com.

About Cadence Bancorporation:

Cadence Bancorporation (NYSE: CADE), headquartered in Houston, Texas, is a regional financial holding company with $18.7 billion in total assets as of December 31, 2020. Its wholly owned subsidiary, Cadence Bank, N.A., operates 98 branch locations in Alabama, Florida, Georgia, Mississippi, Tennessee and Texas, and provides corporations, middle-market companies, small businesses and consumers with a full range of innovative banking and financial solutions. Services and products include commercial and business banking, treasury management, specialized lending, asset-based lending, commercial real estate, SBA lending, foreign exchange, wealth management, investment and trust services, financial planning, retirement plan management, payroll and insurance services, consumer banking, consumer loans, mortgages, home equity lines and loans, and credit cards. Clients have access to leading-edge online and mobile solutions, interactive teller machines, and more than 55,000 ATMs. The Cadence team of 1,900 associates is committed to exceeding customer expectations and helping their clients succeed financially.

Cautionary Statement Regarding Forward-Looking Information

This communication contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements reflect our current views with respect to, among other things, future events and our results of operations, financial condition and financial performance. These statements are often, but not always, made through the use of words or phrases such as “may,” “should,” “could,” “predict,” “potential,” “believe,” “will likely result,” “expect,” “continue,” “will,” “anticipate,” “seek,” “estimate,” “intend,” “plan,” “projection,” “would” and “outlook,” or the negative version of those words or other comparable words of a future or forward-looking nature. These forward-looking statements are not historical facts, and are based on current expectations, estimates and projections about our industry, management’s beliefs and certain assumptions made by management, many of which, by their nature, are inherently uncertain and beyond our control. Accordingly, we caution you that any such forward-looking statements are not guarantees of future performance and are subject to risks, assumptions and uncertainties that are difficult to predict.

Although we believe that the expectations reflected in these forward-looking statements are reasonable as of the date made, actual results may prove to be materially different from the results expressed or implied by the forward-looking statements. Such factors include, without limitation, the “Risk Factors” referenced in our Registration Statement on Form S-3 filed with the Securities and Exchange Commission (the “SEC”) on May 21, 2018, and our Registration Statement on Form S-4 filed with the SEC on July 20, 2018, other risks and uncertainties listed from time to time in our reports and documents filed with the SEC, including our Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q, and the following factors: business and economic conditions generally and in the financial services industry, nationally and within our current and future geographic market areas; economic, market, operational, liquidity, credit and interest rate risks associated with our business; deteriorating asset quality and higher loan charge-offs; the laws and regulations applicable to our business; our ability to achieve organic loan and deposit growth and the composition of such growth; increased competition in the financial services industry, nationally, regionally or locally; our ability to maintain our historical earnings trends; our ability to raise additional capital to implement our business plan; material weaknesses in our internal control over financial reporting; systems failures or interruptions involving our information technology and telecommunications systems or third-party servicers; the composition of our management team and our ability to attract and retain key personnel; the fiscal position of the U.S. federal government and the soundness of other financial institutions; the composition of our loan portfolio, including the identity of our borrowers and the concentration of loans in energy-related industries and in our specialized industries; the portion of our loan portfolio that is comprised of participations and shared national credits; the amount of nonperforming and classified assets we hold; the extent of the impact of the COVID-19 pandemic on us and our customers, counterparties, employees, and third-party service providers, and the impacts to our business, financial position, results of operations, and prospects; the impact on our financial condition, results of operations, financial disclosures, and future business strategies related to the implementation of FASB Accounting Standards Update 2016-13, Financial Instruments – Credit Losses, commonly referred to as CECL. Cadence can give no assurance that any goal or plan or expectation set forth in forward-looking statements can be achieved and readers are cautioned not to place undue reliance on such statements. The forward-looking statements are made as of the date of this communication, and Cadence does not intend, and assumes no obligation, to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events or circumstances, except as required by applicable law.

About Non-GAAP Financial Measures

Certain of the financial measures and ratios we present, including “efficiency ratio,” “adjusted efficiency ratio,” “adjusted noninterest expenses,” “adjusted operating revenue,” “tangible common equity ratio,” “tangible book value per share” and “return on average tangible common equity”, “adjusted return on average tangible common equity”, “adjusted return on average assets”, “adjusted diluted earnings per share”, and “pre-tax, pre-provision net revenue” are supplemental measures that are not required by, or are not presented in accordance with, U.S. generally accepted accounting principles (GAAP). We refer to these financial measures and ratios as “non-GAAP financial measures.” We consider the use of select non-GAAP financial measures and ratios to be useful for financial and operational decision making and useful in evaluating period-to-period comparisons. We believe that these non-GAAP financial measures provide meaningful supplemental information regarding our performance by excluding certain expenditures or assets that we believe are not indicative of our primary business operating results or by presenting certain metrics on a fully taxable equivalent basis.

We believe that management and investors benefit from referring to these non-GAAP financial measures in assessing our performance and when planning, forecasting, analyzing and comparing past, present and future periods.

These non-GAAP financial measures should not be considered a substitute for financial information presented in accordance with GAAP and you should not rely on non-GAAP financial measures alone as measures of our performance. The non-GAAP financial measures we present may differ from non-GAAP financial measures used by our peers or other companies. We compensate for these limitations by providing the equivalent GAAP measures whenever we present the non-GAAP financial measures and by including a reconciliation of the impact of the components adjusted for in the non-GAAP financial measure so that both measures and the individual components may be considered when analyzing our performance. A reconciliation of non-GAAP financial measures to the comparable GAAP financial measures is included at the end of the financial statement tables (Table 10).

Table 1 – Selected Financial Data
		As of and for the Three Months Ended																				As of and for the Years Ended December 31,
(In thousands, except per share data)		4Q20				3Q20				2Q20				1Q20				4Q19				2020				2019
Statement of Operations Data
Interest income		$	170,739			$	170,497			$	177,175			$	192,754			$	207,620			$	711,166			$	860,076
Interest expense			13,998				16,455				22,461				39,286				46,709				92,200				208,903
Net interest income			156,741				154,042				154,714				153,468				160,911				618,966				651,173
Provision for credit losses			2,835				32,973				158,811				83,429				27,126				278,048				111,027
Net interest income after provision			153,906				121,069				(4,097	)			70,039				133,785				340,918				540,146
Noninterest income (1)			209,745				32,591				29,950				35,069				33,898				307,355				130,925
Noninterest expense (2)			105,331				94,859				88,620				537,653				100,519				826,464				408,770
Income (loss) before income taxes			258,320				58,801				(62,767	)			(432,545	)			67,164				(178,191	)			262,301
Income tax expense (benefit)			57,737				9,486				(6,653	)			(33,234	)			15,738				27,336				60,343
Net income (loss)		$	200,583			$	49,315			$	(56,114	)		$	(399,311	)		$	51,426			$	(205,527	)		$	201,958
Weighted average common shares outstanding
Basic			125,974				125,957				125,925				126,630				127,954				126,121				128,914
Diluted			126,409				126,095				125,925				126,630				128,003				126,121				129,018
Earnings (loss) per share
Basic		$	1.58			$	0.39			$	(0.45	)		$	(3.15	)		$	0.40			$	(1.63	)		$	1.56
Diluted			1.57				0.39				(0.45	)			(3.15	)			0.40				(1.63	)			1.56
Period-End Balance Sheet Data
Cash and cash equivalents		$	2,053,946			$	1,247,172			$	1,899,369			$	609,351			$	988,764			$	2,053,946			$	988,764
Investment securities			3,332,168				3,088,699				2,661,433				2,461,644				2,368,592				3,332,168				2,368,592
Total loans, net of unearned income			12,719,129				13,465,556				13,699,097				13,392,191				12,983,655				12,719,129				12,983,655
Allowance for credit losses			367,160				385,412				370,901				245,246				119,643				367,160				119,643
Total assets			18,712,567				18,404,195				18,857,753				17,237,918				17,800,229				18,712,567				17,800,229
Total deposits			16,052,245				15,786,221				16,069,282				14,489,505				14,742,794				16,052,245				14,742,794
Noninterest-bearing deposits			5,033,748				5,033,338				5,220,109				3,959,721				3,833,704				5,033,748				3,833,704
Interest-bearing deposits			11,018,497				10,752,883				10,849,173				10,529,784				10,909,090				11,018,497				10,909,090
Borrowings and subordinated debentures			372,669				372,446				372,222				372,440				372,173				372,669				372,173
Total shareholders’ equity			2,121,102				2,071,472				2,045,480				2,113,543				2,460,846				2,121,102				2,460,846
Average Balance Sheet Data
Investment securities		$	3,201,722			$	2,960,357			$	2,487,467			$	2,397,275			$	2,003,339			$	2,763,450			$	1,776,689
Total loans, net of unearned income			13,238,440				13,652,395				13,884,220				13,161,371				13,423,435				13,483,895				13,714,731
Allowance for credit losses			393,306				389,243				267,464				201,785				132,975				313,377				114,256
Total assets			18,354,046				18,248,014				18,500,600				17,694,018				17,843,383				18,199,726				17,689,126
Total deposits			15,736,884				15,628,314				15,774,787				14,574,614				14,749,327				15,430,038				14,628,628
Noninterest-bearing deposits			5,245,478				4,892,079				4,587,673				3,658,612				3,648,874				4,598,544				3,431,300
Interest-bearing deposits			10,491,406				10,736,235				11,187,115				10,916,002				11,100,454				10,831,494				11,197,328
Borrowings and subordinated debentures			372,920				372,304				372,547				439,698				374,179				389,275				437,186
Total shareholders’ equity			2,072,030				2,052,079				2,118,796				2,446,810				2,471,398				2,171,826				2,373,856

(1)		The quarter ended December 31, 2020, includes hedge revenue of $169.2 million, $129.5 million after tax.
(2)		The quarter ended March 31, 2020, includes the non-cash goodwill impairment charge of $443.7 million, $412.9 million after-tax.

Table 1 (Continued) – Selected Financial Data
		As of and for the Three Months Ended																				As of and for the Years Ended December 31,
(In thousands, except per share data)		4Q20 (4)				3Q20				2Q20				1Q20				4Q19				2020 (4)				2019
Per Share Data:
Book value		$	16.84			$	16.45			$	16.24			$	16.79			$	19.29			$	16.84			$	19.29
Tangible book value (1)			15.83				15.40				15.15				15.65				14.65				15.83				14.65
Cash dividends declared			0.075				0.050				0.050				0.175				0.175				0.350				0.700
Dividend payout ratio			4.75	%			12.82	%			(11.11	)%			(5.56	)%			43.75	%			(21.47	)%			44.87	%
Performance Ratios:
Return on average common equity (2)			38.51	%			9.56	%			(10.65	)%			(65.64	)%			8.26	%			(9.46	)%			8.51	%
Return on average tangible common equity (1) (2)			41.90				11.08				(10.56	)			3.86				11.82				11.63				12.40
Return on average assets (2)			4.35				1.08				(1.22	)			(9.08	)			1.14				(1.13	)			1.14
Net interest margin (2)			3.54				3.49				3.51				3.80				3.89				3.58				4.00
Efficiency ratio (1)			28.74				50.83				47.99				285.17				51.60				89.22				52.27
Adjusted efficiency ratio (1)			28.79				49.45				47.93				49.88				50.91				41.04				48.64
Asset Quality Ratios:
Total NPA to total loans, OREO, and other NPA			1.24	%			1.55	%			1.74	%			1.31	%			0.97	%			1.24	%			0.97	%
Total nonperforming loans ("NPL") to total loans			1.08				1.40				1.64				1.19				0.92				1.08				0.92
Total ACL to total loans			2.89				2.86				2.71				1.83				0.92				2.89				0.92
ACL to total NPL			266.05				203.82				165.30				153.61				100.07				266.05				100.07
Net charge-offs to average loans (2)			0.64				0.58				0.94				0.99				1.04				0.79				0.63
Capital Ratios:
Total shareholders’ equity to assets			11.3	%			11.3	%			10.8	%			12.3	%			13.8	%			11.3	%			13.8	%
Tangible common equity to tangible assets (1)			10.7				10.6				10.2				11.5				10.9				10.7				10.9
Common equity Tier 1 capital (3)			14.0				12.0				11.7				11.4				11.5				14.0				11.5
Tier 1 leverage capital (3)			10.9				9.9				9.5				10.1				10.3				10.9				10.3
Tier 1 risk-based capital (3)			14.0				12.0				11.7				11.4				11.5				14.0				11.5
Total risk-based capital (3)			16.7				14.7				14.3				13.8				13.7				16.7				13.7

_____________________
(1)		Considered a non-GAAP financial measure. See Table 10 "Reconciliation of Non-GAAP Financial Measures" for a reconciliation of our non-GAAP measures to the most directly comparable GAAP financial measure.
(2)		Quarterly periods are annualized.
(3)		Current quarter regulatory capital ratios are estimates.
(4)		Asset Quality Ratios do not include nonperforming loans held for sale of $176 thousand.

Table 2 – Average Balances/Yield/Rates
		For the Three Months Ended December 31,
		2020												2019
		Average				Income/				Yield/				Average				Income/				Yield/
(In thousands)		Balance				Expense				Rate				Balance				Expense				Rate
ASSETS
Interest-earning assets:
Loans, net of unearned income (1)
Originated loans		$	10,939,304			$	125,535				4.57	%		$	10,160,970			$	134,450				5.25	%
ANCI portfolio			2,126,553				25,943				4.85				3,017,005				46,247				6.08
PCD portfolio (3)			172,583				3,820				8.81				245,474				9,857				15.93
Total loans			13,238,440				155,298				4.67				13,423,449				190,554				5.63
Investment securities
Taxable			2,895,541				12,597				1.73				1,806,932				11,699				2.57
Tax-exempt (2)			306,181				2,427				3.15				196,407				1,829				3.69
Total investment securities			3,201,722				15,024				1.87				2,003,339				13,528				2.68
Federal funds sold and short-term investments			1,178,973				548				0.18				930,910				3,392				1.45
Other investments			76,878				380				1.97				77,348				530				2.72
Total interest-earning assets			17,696,013				171,250				3.85				16,435,046				208,004				5.02
Noninterest-earning assets:
Cash and due from banks			216,116												107,180
Premises and equipment			125,955												128,458
Accrued interest and other assets			709,268												1,305,674
Allowance for credit losses			(393,306	)											(132,975	)
Total assets		$	18,354,046											$	17,843,383
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing liabilities:
Demand deposits		$	7,881,093			$	4,145				0.21	%		$	8,195,455			$	26,946				1.30	%
Savings deposits			336,304				127				0.15				262,638				320				0.48
Time deposits			2,274,009				5,711				1.00				2,642,361				14,983				2.25
Total interest-bearing deposits			10,491,406				9,983				0.38				11,100,454				42,249				1.51
Other borrowings			149,981				931				2.47				152,102				953				2.49
Subordinated debentures			222,939				3,085				5.51				222,077				3,507				6.27
Total interest-bearing liabilities			10,864,326				13,999				0.51				11,474,633				46,709				1.61
Noninterest-bearing liabilities:
Demand deposits			5,245,478												3,648,874
Accrued interest and other liabilities			172,212												248,478
Total liabilities			16,282,016												15,371,985
Shareholders' equity			2,072,030												2,471,398
Total liabilities and shareholders' equity		$	18,354,046											$	17,843,383
Net interest income/net interest spread							157,251				3.34	%							161,295				3.40	%
Net yield on earning assets/net interest margin											3.54	%											3.89	%
Taxable equivalent adjustment:
Investment securities							(510	)											(384	)
Net interest income						$	156,741											$	160,911

_____________________
(1)		Nonaccrual loans are included in loans, net of unearned income. No adjustment has been made for these loans in the calculation of yields.
(2)		Interest income and yields are presented on a fully taxable equivalent basis using an income tax rate of 21%.
(3)		Prior to the adoption of CECL on January 1, 2020, these loans were referred to as ACI loans, but with the adoption of CECL they are referred to as PCD loans.

Table 2 (Continued) – Average Balances/Yield/Rates
		For the Three Months Ended December 31, 2020												For the Three Months Ended September 30, 2020
		Average				Income/				Yield/				Average				Income/				Yield/
(In thousands)		Balance				Expense				Rate				Balance				Expense				Rate
ASSETS
Interest-earning assets:
Loans, net of unearned income (1)
Originated loans		$	10,939,304			$	125,535				4.57	%		$	11,168,913			$	123,177				4.39	%
ANCI portfolio			2,126,553				25,943				4.85				2,295,097				28,214				4.89
PCD portfolio (3)			172,583				3,820				8.81				188,385				3,460				7.31
Total loans			13,238,440				155,298				4.67				13,652,395				154,851				4.51
Investment securities
Taxable			2,895,541				12,597				1.73				2,694,012				13,164				1.94
Tax-exempt (2)			306,181				2,427				3.15				266,345				2,150				3.21
Total investment securities			3,201,722				15,024				1.87				2,960,357				15,314				2.06
Federal funds sold and short-term investments			1,178,973				548				0.18				942,017				432				0.18
Other investments			76,878				380				1.97				77,262				350				1.80
Total interest-earning assets			17,696,013				171,250				3.85				17,632,031				170,947				3.86
Noninterest-earning assets:
Cash and due from banks			216,116												170,241
Premises and equipment			125,955												127,432
Accrued interest and other assets			709,268												707,553
Allowance for credit losses			(393,306	)											(389,243	)
Total assets		$	18,354,046											$	18,248,014
LIABILITIES AND STOCKHOLDERS' EQUITY
Interest-bearing liabilities:
Demand deposits		$	7,881,093			$	4,145				0.21	%		$	8,037,801			$	4,681				0.23	%
Savings deposits			336,304				127				0.15				319,004				140				0.17
Time deposits			2,274,009				5,711				1.00				2,379,430				7,741				1.29
Total interest-bearing deposits			10,491,406				9,983				0.38				10,736,235				12,562				0.47
Other borrowings			149,981				931				2.47				149,973				931				2.47
Subordinated debentures			222,939				3,085				5.51				222,331				2,961				5.30
Total interest-bearing liabilities			10,864,326				13,999				0.51				11,108,539				16,454				0.59
Noninterest-bearing liabilities:
Demand deposits			5,245,478												4,892,079
Accrued interest and other liabilities			172,212												195,317
Total liabilities			16,282,016												16,195,935
Stockholders' equity			2,072,030												2,052,079
Total liabilities and stockholders' equity		$	18,354,046											$	18,248,014
Net interest income/net interest spread							157,251				3.34	%							154,493				3.27	%
Net yield on earning assets/net interest margin											3.54	%											3.49	%
Taxable equivalent adjustment:
Investment securities							(510	)											(451	)
Net interest income						$	156,741											$	154,042

_____________________
(1)		Nonaccrual loans are included in loans, net of unearned income. No adjustment has been made for these loans in the calculation of yields.
(2)		Interest income and yields are presented on a fully taxable equivalent basis using an income tax rate of 21%.
(3)		Prior to the adoption of CECL on January 1, 2020, these loans were referred to as ACI loans, but with the adoption of CECL they are referred to as PCD loans.

Table 2 (Continued) – Average Balances/Yield/Rates
		For the Year Ended December 31,
		2020												2019
		Average				Income/				Yield/				Average				Income/				Yield/
(In thousands)		Balance				Expense				Rate				Balance				Expense				Rate
ASSETS
Interest-earning assets:
Loans, net of unearned income (1)
Originated loans		$	10,874,853			$	504,036				4.63	%		$	10,053,507			$	542,543				5.40	%
ANCI portfolio			2,415,141				127,774				5.29				3,387,367				219,183				6.47
PCD portfolio (3)			193,902				16,328				8.42				273,857				34,559				12.62
Total loans			13,483,895				648,138				4.81				13,714,731				796,285				5.81
Investment securities
Taxable			2,515,807				51,983				2.07				1,568,599				42,450				2.71
Tax-exempt (2)			247,643				8,332				3.36				208,090				7,983				3.84
Total investment securities			2,763,450				60,315				2.18				1,776,689				50,433				2.84
Federal funds sold and short-term investments			1,023,367				3,092				0.30				759,026				12,762				1.68
Other investments			77,908				1,371				1.76				70,127				2,274				3.24
Total interest-earning assets			17,348,620				712,916				4.11				16,320,573				861,754				5.28
Noninterest-earning assets:
Cash and due from banks			203,413												115,268
Premises and equipment			127,151												128,448
Accrued interest and other assets			833,919												1,239,093
Allowance for credit losses			(313,377	)											(114,256	)
Total assets		$	18,199,726											$	17,689,126
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing liabilities:
Demand deposits		$	8,101,392			$	38,005				0.47	%		$	7,983,237			$	117,462				1.47	%
Savings deposits			305,031				763				0.25				253,170				1,066				0.42
Time deposits			2,425,071				36,647				1.51				2,960,921				69,550				2.35
Total interest-bearing deposits			10,831,494				75,415				0.70				11,197,328				188,078				1.68
Other borrowings			166,730				3,906				2.34				256,815				8,704				3.39
Subordinated debentures			222,545				12,879				5.79				180,371				12,121				6.72
Total interest-bearing liabilities			11,220,769				92,200				0.82				11,634,514				208,903				1.80
Noninterest-bearing liabilities:
Demand deposits			4,598,544												3,431,300
Accrued interest and other liabilities			208,587												249,456
Total liabilities			16,027,900												15,315,270
Shareholders' equity			2,171,826												2,373,856
Total liabilities and shareholders' equity		$	18,199,726											$	17,689,126
Net interest income/net interest spread							620,716				3.29	%							652,851				3.48	%
Net yield on earning assets/net interest margin											3.58	%											4.00	%
Taxable equivalent adjustment:
Investment securities							(1,750	)											(1,678	)
Net interest income						$	618,966											$	651,173

_____________________
(1)		Nonaccrual loans are included in loans, net of unearned income. No adjustment has been made for these loans in the calculation of yields.
(2)		Interest income and yields are presented on a fully taxable equivalent basis using an income tax rate of 21%.
(3)		Prior to the adoption of CECL on January 1, 2020, these loans were referred to as ACI loans, but with the adoption of CECL they are referred to as PCD loans.

Table 3 – Loan Interest Income Detail
	For the Three Months Ended,																				For the Year Ended,
(In thousands)	4Q20				3Q20				2Q20				1Q20				4Q19				December 31, 2020				December 31, 2019
Interest Income Detail
Originated loans	$	125,535			$	123,177			$	125,922			$	129,402			$	134,450			$	504,036			$	542,543
ANCI loans: interest income		20,507				22,850				26,264				32,940				37,637				102,562				180,974
ANCI loans: accretion		5,436				5,364				6,703				7,710				8,610				25,212				38,209
PCD loans: interest income (1)		3,355				2,421				3,111				3,039				3,839				11,926				29,927
PCD loans: accretion (1)		465				1,039				854				2,043				6,018				4,402				4,632
Total loan interest income	$	155,298			$	154,851			$	162,854			$	175,134			$	190,554			$	648,138			$	796,285
Yields
Originated loans		4.57	%			4.39	%			4.53		%		5.10		%		5.25		%		4.63	%			5.40	%
ANCI loans without discount accretion		3.84				3.96				4.20				4.85				4.95				4.25				5.34
ANCI loans discount accretion		1.01				0.93				1.08				1.14				1.13				1.04				1.13
PCD loans without discount accretion		7.73				5.11				6.30				5.65				6.20				6.15				10.93
PCD loans discount accretion		1.08				2.20				1.73				3.80				9.73				2.27				1.69
Total loan yield		4.67	%			4.51	%			4.72		%		5.35		%		5.63		%		4.81	%			5.81	%

(1)

Prior year PCD amounts have been revised to be comparable to the current year presentation. Interest income for PCD loans represents contractual interest.

Table 4 – Allowance for Credit Losses (“ACL”) (1)
		For the Three Months Ended																				For the Year Ended December 31,
(In thousands)		4Q20				3Q20				2Q20				1Q20				4Q19				2020				2019
Balance at beginning of period		$	385,412			$	370,901			$	245,246			$	119,643			$	127,773			$	119,643			$	94,378
Cumulative effect of the adoption of CECL (2)			—				—				—				75,850				—				75,850				—
Charge-offs			(23,956	)			(21,830	)			(33,452	)			(33,098	)			(35,432	)			(112,336	)			(87,001	)
Recoveries			2,770				1,936				901				613				176				6,220				1,239
Net charge-offs			(21,186	)			(19,894	)			(32,551	)			(32,485	)			(35,256	)			(106,116	)			(85,762	)
Provision for loan losses			2,934				34,405				158,206				82,238				27,126				277,783				111,027
Balance at end of period		$	367,160			$	385,412			$	370,901			$	245,246			$	119,643			$	367,160			$	119,643

(1)		This table represents the activity in the ACL for funded loans.
(2)		The Company adopted ASU 2016-13, Financial Instruments – Credit Losses (“CECL”), on January 1, 2020 and recorded this cumulative effect adjustment as a result of accounting change.

Table 5 – ACL Activity by Segment
		For the Three Months Ended December 31, 2020
(In thousands)		Commercial and Industrial				Commercial Real Estate				Consumer				Total Allowance for Credit Losses				Reserve for Unfunded Commitments (1)				Total
As of September 30, 2020		$	202,197			$	143,008			$	40,207			$	385,412			$	2,395			$	387,807
Provision for credit losses			(2,990	)			7,372				(1,448	)			2,934				(99	)			2,835
Charge-offs			(12,870	)			(10,500	)			(586	)			(23,956	)			—				(23,956	)
Recoveries			1,028				1,307				435				2,770				—				2,770
As of December 31, 2020		$	187,365			$	141,187			$	38,608			$	367,160			$	2,296			$	369,456
		For the Year Ended December 31, 2020
(In thousands)		Commercial and Industrial				Commercial Real Estate				Consumer				Total Allowance for Credit Losses				Reserve for Unfunded Commitments (1)				Total
As of December 31, 2019		$	89,796			$	15,319			$	14,528			$	119,643			$	1,699			$	121,342
Cumulative effect of the adoption of CECL			32,951				20,599				22,300				75,850				332				76,182
As of January 1, 2020			122,747				35,918				36,828				195,493				2,031				197,524
Provision for credit losses			157,580				117,792				2,411				277,783				265				278,048
Charge-offs			(96,277	)			(14,283	)			(1,776	)			(112,336	)			—				(112,336	)
Recoveries			3,315				1,760				1,145				6,220				—				6,220
As of December 31, 2020		$	187,365			$	141,187			$	38,608			$	367,160			$	2,296			$	369,456

(1)

The reserve for unfunded commitments is recorded in other liabilities in the consolidated balance sheets.

Table 6 – Criticized Loans by Segment
		As of December 31, 2020
(Amortized cost in thousands)		Special Mention				Substandard				Doubtful				Total Criticized
Commercial and industrial
General C&I		$	61,910			$	90,896			$	12,583			$	165,389
Energy			93,708				150,810				8,115				252,633
Restaurant			55,141				133,709				6,987				195,837
Healthcare			761				29,614				—				30,375
Total commercial and industrial			211,520				405,029				27,685				644,234
Commercial real estate
Industrial, retail, and other			35,992				26,540				—				62,532
Hospitality (1)			54,449				83,460				—				137,909
Multifamily			90				198				—				288
Office			4,863				7,843				—				12,706
Total commercial real estate			95,394				118,041				—				213,435
Consumer
Residential			—				14,023				—				14,023
Other			—				4				—				4
Total consumer			—				14,027				—				14,027
Total		$	306,914			$	537,097			$	27,685			$	871,696
		As of September 30, 2020
(Amortized cost in thousands)		Special Mention				Substandard				Doubtful				Total Criticized
Commercial and industrial
General C&I		$	71,384			$	156,323			$	9,270			$	236,977
Energy sector			146,772				165,277				7,816				319,865
Restaurant industry			97,315				169,899				7,624				274,838
Healthcare			722				58,802				—				59,524
Total commercial and industrial			316,193				550,301				24,710				891,204
Commercial real estate
Industrial, retail, and other			29,574				11,856				—				41,430
Hospitality (1)			64,323				46,465				—				110,788
Multifamily			91				200				—				291
Office			346				13,250				3,029				16,625
Total commercial real estate			94,334				71,771				3,029				169,134
Consumer
Residential real estate			—				22,770				—				22,770
Other			—				358				—				358
Total consumer			—				23,128				—				23,128
Total		$	410,527			$	645,200			$	27,739			$	1,083,466

(1)

Hospitality balances have historically been included in Industrial, retail, and other.

Table 7 – Nonperforming Assets
		As of
(In thousands)		4Q20 (3)				3Q20				2Q20				1Q20				4Q19
Nonperforming loans (1)
Commercial and industrial		$	109,000			$	145,570			$	182,839			$	136,712			$	106,803
Commercial real estate			14,969				27,163				25,261				8,133				1,127
Consumer			14,033				16,364				16,284				14,808				7,289
Small business (2)			—				—				—				—				4,337
Total nonperforming loans ("NPL")			138,002				189,097				224,384				159,653				119,556
Foreclosed OREO and other NPA			19,788				20,344				13,949				15,679				5,958
Total nonperforming assets		$	157,790			$	209,441			$	238,333			$	175,332			$	125,514
NPL as a percentage of total loans			1.08	%			1.40	%			1.64	%			1.19	%			0.92	%
NPA as a percentage of loans plus OREO/other			1.24	%			1.55	%			1.74	%			1.31	%			0.97	%
NPA as a percentage of total assets			0.84	%			1.14	%			1.26	%			0.99	%			0.71	%
Total accruing loans 90 days or more past due		$	13,880			$	7,260			$	3,123			$	1,999			$	23,364

(1)		Amounts are not comparable due to our adoption of CECL on January 1, 2020. Prior to this date, pools of individual ACI loans were excluded because they continued to earn interest income from the accretable yield at the pool level. With the adoption of CECL, the pools were discontinued, and performance is based on contractual terms for individual loans. Additionally, prior to January 1, 2020, we used recorded investment in this table. With the adoption of CECL, we now use amortized cost.
(2)		Upon the adoption of CECL, small business loans are included in commercial and industrial and commercial real estate loans.
(3)		Nonperforming loans do not include nonperforming loans held for sale of $176 thousand.

Table 8 – Noninterest Income
		For the Three Months Ended																				Years Ended December 31,
(In thousands)		4Q20				3Q20				2Q20				1Q20				4Q19				2020				2019
Noninterest Income
Hedge revenue		$	169,248			$	—			$	—			$	—			$	—			$	169,248			$	—
Investment advisory revenue			7,457				6,797				6,505				5,605				6,920				26,364				24,890
Trust services revenue			4,885				4,556				4,092				4,815				4,713				18,349				18,066
Service charges on deposit accounts			6,028				5,847				4,852				6,416				5,181				23,143				20,503
Mortgage banking income			3,062				3,535				2,020				1,111				841				9,727				3,174
Credit-related fees			4,766				4,202				4,401				5,983				5,094				19,352				21,265
Bankcard fees			1,775				1,745				1,716				1,958				1,933				7,194				8,486
Payroll processing revenue			1,309				1,255				1,143				1,367				1,373				5,074				5,149
SBA income			2,889				3,037				1,335				1,908				2,153				9,169				7,232
Other service fees			1,751				1,450				1,528				1,912				1,701				6,641				7,412
Securities gains, net			1,353				79				2,286				2,994				317				6,712				2,018
Other			5,222				88				72				1,000				3,672				6,382				12,730
Total noninterest income		$	209,745			$	32,591			$	29,950			$	35,069			$	33,898			$	307,355			$	130,925

Table 9 – Noninterest Expenses
		For the Three Months Ended																				Years Ended December 31,
(In thousands)		4Q20				3Q20				2Q20				1Q20				4Q19				2020				2019
Noninterest Expenses
Salaries and employee benefits		$	59,833			$	51,734			$	47,158			$	48,807			$	54,840			$	207,532			$	213,874
Premises and equipment			11,036				10,716				10,634				10,808				11,618				43,194				44,637
Merger related expenses			—				2,105				—				1,282				925				3,386				28,497
Intangible asset amortization			5,164				5,299				5,472				5,592				5,876				21,528				23,862
Data processing			3,047				3,024				3,084				3,352				3,343				12,507				13,013
Software amortization			4,480				4,432				4,036				3,547				3,427				16,495				13,352
Consulting and professional fees			3,450				3,320				3,009				2,707				3,552				12,485				10,301
Loan related expenses			1,709				953				735				760				654				4,157				2,383
FDIC insurance			3,007				2,528				3,939				2,436				1,245				11,910				5,394
Communications			1,175				1,119				1,002				1,156				1,236				4,453				5,116
Advertising and public relations			956				716				920				1,464				1,764				4,057				5,017
Legal expenses			726				681				579				411				306				2,398				1,608
Other			10,748				8,232				8,052				11,636				11,732				38,667				41,716
Noninterest expenses excluding goodwill impairment charge			105,331				94,859				88,620				93,958				100,519				382,769				408,770
Goodwill impairment charge			—				—				—				443,695				—				443,695				—
Total noninterest expenses		$	105,331			$	94,859			$	88,620			$	537,653			$	100,519			$	826,464			$	408,770

Table 10 – Reconciliation of Non-GAAP Financial Measures
	As of and for the Three Months Ended															As of and for the Year Ended December 31,
(In thousands, except share and per share data)	4Q20			3Q20			2Q20			1Q20			4Q19			2020			2019
Efficiency ratio
Noninterest expenses (numerator)	$	105,331		$	94,859		$	88,620		$	537,653		$	100,519		$	826,464		$	408,770
Net interest income	$	156,741		$	154,042		$	154,714		$	153,468		$	160,911		$	618,966		$	651,173
Noninterest income		209,745			32,591			29,950			35,069			33,898			307,355			130,925
Operating revenue (denominator)	$	366,486		$	186,633		$	184,664		$	188,537		$	194,809		$	926,321		$	782,098
Efficiency ratio		28.74	%		50.83	%		47.99	%		285.17	%		51.60	%		89.22	%		52.27	%
Adjusted efficiency ratio
Noninterest expenses	$	105,331		$	94,859		$	88,620		$	537,653		$	100,519		$	826,464		$	408,770
Less: non-cash goodwill impairment charge		—			—			—			443,695			—			443,695			—
Less: merger related expenses		—			2,105			—			1,282			925			3,386			28,497
Less: pension plan termination expense		—			—			—			—			1,225			—			1,225
Less: expenses related to COVID-19 pandemic		215			235			1,205			122			—			1,777			—
Adjusted noninterest expenses (numerator)	$	105,116		$	92,519		$	87,415		$	92,554		$	98,369		$	377,606		$	379,048
Net interest income	$	156,741		$	154,042		$	154,714		$	153,468		$	160,911		$	618,966		$	651,173
Noninterest income		209,745			32,591			29,950			35,069			33,898			307,355			130,925
Plus: impairment charge on branch building		—			538			—			—			—			538			—
Less: gain on sale of acquired loans		—			—			—			—			1,263			—			2,777
Less: securities gains, net		1,353			79			2,286			2,994			317			6,712			2,018
Adjusted noninterest income		208,392			33,050			27,664			32,075			32,318			301,181			128,130
Adjusted operating revenue (denominator)	$	365,133		$	187,092		$	182,378		$	185,543		$	193,229		$	920,147		$	779,303
Adjusted efficiency ratio		28.79	%		49.45	%		47.93	%		49.88	%		50.91	%		41.04	%		48.64	%
Tangible common equity ratio
Shareholders’ equity	$	2,121,102		$	2,071,472		$	2,045,480		$	2,113,543		$	2,460,846		$	2,121,102		$	2,460,846
Less: goodwill and other intangible assets, net		(126,841	)		(132,005	)		(137,318	)		(142,782	)		(590,949	)		(126,841	)		(590,949	)
Tangible common shareholders’ equity		1,994,261			1,939,467			1,908,162			1,970,761			1,869,897			1,994,261			1,869,897
Total assets		18,712,567			18,404,195			18,857,753			17,237,918			17,800,229			18,712,567			17,800,229
Less: goodwill and other intangible assets, net		(126,841	)		(132,005	)		(137,318	)		(142,782	)		(590,949	)		(126,841	)		(590,949	)
Tangible assets	$	18,585,726		$	18,272,190		$	18,720,435		$	17,095,136		$	17,209,280		$	18,585,726		$	17,209,280
Tangible common equity ratio		10.73	%		10.61	%		10.19	%		11.53	%		10.87	%		10.73	%		10.87	%
Tangible book value per share
Shareholders’ equity	$	2,121,102		$	2,071,472		$	2,045,480		$	2,113,543		$	2,460,846		$	2,121,102		$	2,460,846
Less: goodwill and other intangible assets, net		(126,841	)		(132,005	)		(137,318	)		(142,782	)		(590,949	)		(126,841	)		(590,949	)
Tangible common shareholders’ equity	$	1,994,261		$	1,939,467		$	1,908,162		$	1,970,761		$	1,869,897		$	1,994,261		$	1,869,897
Common shares outstanding		125,978,561			125,946,793			125,930,741			125,897,827			127,597,569			125,978,561			127,597,569
Tangible book value per share	$	15.83		$	15.40		$	15.15		$	15.65		$	14.65		$	15.83		$	14.65

Table 10 (Continued) – Reconciliation of Non-GAAP Measures
	As of and for the Three Months Ended															As of and for the Year Ended December 31,
(In thousands, except share and per share data)	4Q20			3Q20			2Q20			1Q20			4Q19			2020			2019
Return on average tangible common equity
Average common equity	$	2,072,030		$	2,052,079		$	2,118,796		$	2,446,810		$	2,471,398		$	2,171,826		$	2,373,856
Less: average intangible assets		(130,146	)		(135,491	)		(140,847	)		(584,513	)		(595,439	)		(247,121	)		(598,546	)
Average tangible common shareholders’ equity	$	1,941,884		$	1,916,588		$	1,977,949		$	1,862,297		$	1,875,959		$	1,924,705		$	1,775,310
Net income (loss)	$	200,583		$	49,315		$	(56,114	)	$	(399,311	)	$	51,426		$	(205,527	)	$	201,958
Plus: non-cash goodwill impairment charge, net of tax		—			—			—			412,918			—			412,918			—
Plus: intangible asset amortization, net of tax		3,939			4,042			4,174			4,261			4,477			16,416			18,240
Tangible net income (loss)	$	204,522		$	53,357		$	(51,940	)	$	17,868		$	55,903		$	223,807		$	220,198
Return on average tangible common equity(1)		41.90	%		11.08	%		(10.56	)%		3.86	%		11.82	%		11.63	%		12.40	%
Adjusted return on average tangible common equity
Average tangible common shareholders’ equity	$	1,941,884		$	1,916,588		$	1,977,949		$	1,862,297		$	1,875,959		$	1,924,705		$	1,775,310
Tangible net income (loss)	$	204,522		$	53,357		$	(51,940	)	$	17,868		$	55,903		$	223,807		$	220,198
Non-routine items:
Plus: merger related expenses		—			2,105			—			1,282			925			3,386			28,497
Plus: pension plan termination expense		—			—			—			—			1,225			—			1,225
Plus: expenses related to COVID-19 pandemic		215			235			1,205			122			—			1,777			—
Plus: impairment loss on branch building		—			538			—			—			—			538			—
Less: gain on sale of acquired loans		—			—			—			—			1,263			—			2,777
Less: securities gains, net		1,353			79			2,286			2,994			317			6,712			2,018
Tax Expense:
Less: income tax effect of tax deductible non-routine items		(270	)		664			(256	)		(464	)		48			(326	)		5,756
Total non-routine items, after tax		(868	)		2,135			(825	)		(1,126	)		522			(684	)		21,171
Adjusted tangible net income (loss)	$	203,654		$	55,492		$	(52,765	)	$	16,742		$	56,425		$	223,122		$	241,369
Adjusted return on average tangible common equity(1)		41.72	%		11.52	%		(10.73	)%		3.62	%		11.93	%		11.59	%		13.60	%
Adjusted return on average assets
Average assets	$	18,354,046		$	18,248,014		$	18,500,600		$	17,694,018		$	17,843,383		$	18,199,726		$	17,689,126
Net income (loss)	$	200,583		$	49,315		$	(56,114	)	$	(399,311	)	$	51,426		$	(205,527	)	$	201,958
Return on average assets		4.35	%		1.08	%		(1.22	)%		(9.08	)%		1.14	%		(1.13	)%		1.14	%
Net income (loss)	$	200,583		$	49,315		$	(56,114	)	$	(399,311	)	$	51,426		$	(205,527	)	$	201,958
Plus: non-cash goodwill impairment charge, net of tax		—			—			—			412,918			—			412,918			—
Total non-routine items, after tax		(868	)		2,135			(825	)		(1,126	)		522			(684	)		21,171
Adjusted net income (loss)	$	199,715		$	51,450		$	(56,939	)	$	12,481		$	51,948		$	206,707		$	223,129
Adjusted return on average assets(1)		4.33	%		1.12	%		(1.24	)%		0.28	%		1.16	%		1.14	%		1.26	%
Adjusted diluted earnings (loss) per share
Diluted weighted average common shares outstanding		126,408,959			126,094,868			125,924,652			126,630,446			128,003,089			126,120,534			129,017,599
Net income (loss) allocated to common stock	$	198,765		$	48,884		$	(56,114	)	$	(399,311	)	$	51,248		$	(205,527	)	$	201,275
Plus: non-cash goodwill impairment, net of tax		—			—			—			412,918			—			412,918			—
Total non-routine items, after tax		(868	)		2,135			(825	)		(1,126	)		522			(684	)		21,171
Adjusted net income (loss) allocated to common stock	$	197,897		$	51,019		$	(56,939	)	$	12,481		$	51,770		$	206,707		$	222,446
Adjusted diluted earnings (loss) per share	$	1.57		$	0.40		$	(0.45	)	$	0.10		$	0.40		$	1.64		$	1.72
Adjusted pre-tax, pre-provision net revenue
Income (loss) before taxes	$	258,320		$	58,801		$	(62,767	)	$	(432,545	)	$	67,164		$	(178,191	)	$	262,301
Plus: provision for credit losses		2,835			32,973			158,811			83,429			27,126			278,048			111,027
Plus: non-cash goodwill impairment		—			—			—			443,695			—			443,695			—
Plus: Total non-routine items before taxes		(1,138	)		2,799			(1,081	)		(1,590	)		570			(1,011	)		26,927
Adjusted pre-tax, pre-provision net revenue	$	260,017		$	94,573		$	94,963		$	92,989		$	94,860		$	542,541		$	400,255

(1)

Quarterly periods are annualized.

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20210125005363/en/