Cadence Bank

The stable outlook reflects S&P Global Ratings' expectation that over the next two years, Cadence will maintain financial metrics commensurate with similarly rated regional bank peers. We also expect loan losses will gradually rise to more normal levels and funding ratios will deteriorate somewhat given the elevated interest rate environment and expected loan growth. However, we expect capital ratios to decline modestly over the next two years. We could lower the rating within the next two years if asset quality deteriorates substantially more than similarly rated peers or worse than historical averages, or if the bank has unforeseen and significant operational, legal, or regulatory issues. We view an upgrade as unlikely over the next two years given already appropriate peer

...Cadence Bank's (Cadence) sale of its insurance business improved the bank's financial metrics, including higher capital ratios, but we think they are roughly offset by narrower revenue diversification and lower noninterest income. The insurance sale closed in the fourth quarter of 2023 for $904 million, with net gain on sale of approximately $525 million. That said, insurance made up roughly 9% of operating revenues before the sale, which resulted in reduced revenue diversity at the bank. However, considering the roughly $48 billion in total assets and more than 350 branches across nine southeastern states, we think Cadence maintains a good market position, which we view favorably. We view Cadence's funding and liquidity as satisfactory. The bank's deposits rose 3% in the third quarter of 2024 from the previous quarter, driven by non-interest-bearing and time deposits, offset by a decline in public deposits. The bank paid back $1.5 billion of its Bank Term Funding Program (BTFP) borrowings...

Full Report