•

First quarter of 2018 net income was $38.8 million, representing an increase compared to the fourth quarter of 2017 of $5.1 million, or 15.2%, excluding the one-time tax charge⁽¹⁾, (an increase of $24.1 million, or 164.3%, as reported), and an increase of $12.7 million, or 48.7%, compared to first quarter of 2017.  

o

On a per-share basis, net income was $0.46 per share for the first quarter of 2018, compared to $0.39 per share excluding the one-time tax charge⁽¹⁾ for the fourth quarter of 2017, (or $0.17 per share as reported), and $0.35 per share for the first quarter of 2017.  

o

Annualized returns on average assets, common equity and tangible common equity⁽¹⁾ for the first quarter of 2018 were 1.44%, 11.73% and 15.52%, respectively, compared to 1.26%, 9.92% and 13.11%, respectively, excluding the one-time tax charge⁽¹⁾, for the fourth quarter of 2017, (0.55%, 4.32% and 5.71%, respectively, as reported), and 1.10%, 9.71% and 13.96%, respectively, for the first quarter of 2017.    

•

Total revenue for the first quarter of 2018 was $116.1 million, up 2.2% from the linked quarter and up 17.4% from the same period in 2017 driven by strong loan growth and increases in net interest margin.  

•

Our fully tax-equivalent net interest margin (“NIM”) for the first quarter of 2018 was 3.64%, an increase from 3.59% for the fourth quarter of 2017 and 3.46% for the first quarter of 2017, reflecting our asset sensitivity.  Our NIM excluding recovery accretion for acquired-impaired loans was 3.62% for the first quarter of 2018, up 14bp from 3.48% in the fourth quarter of 2017 and up 19bp from 3.43% in the first quarter of 2017.  

•

The efficiency ratio⁽¹⁾ for the first quarter of 2018 was 53.35%, an improvement from both linked and prior quarter efficiency ratios of 58.44% and 54.95%, respectively.  The first quarter of 2018 included approximately $3.1 million of non-routine secondary offering and legal costs.  

•

Loans were $8.6 billion as of March 31, 2018, an increase of $393.6 million, or 4.8%, as compared to $8.3 billion at December 31, 2017, and an increase of $1.1 billion, or 14.4%, as compared to $7.6 billion at March 31, 2017.

•

Core deposits (total deposits excluding brokered) were $8.2 billion as of March 31, 2018, up $15.8 million, or 0.2%, from December 31, 2017, and up $1.5 billion, or 21.4%, from March 31, 2017.  Both the increases in loans and deposits were 100% organically derived.

-

Deposit increases reflect growth in core deposits, specifically with success in expanding commercial deposit relationships and treasury management services.  

-

Noninterest bearing deposits as a percent of total deposits were 22.6%, compared to 24.9% at December 31, 2017 and 23.9% at March 31, 2017.  

-

The year-over-year core deposit growth supported a $246.2 million reduction in brokered deposits since March 31, 2017.  As of March 31, 2018, brokered deposits totaled $0.8 billion, or 9.0% of total deposits, up slightly from 8.8% of total deposits at December 31, 2017 and down from 13.6% of total deposits at March 31, 2017, respectively.  

-

The linked quarter decline in shareholders’ equity was impacted by a decline in Other Comprehensive Income due to unrealized losses related to the impact of rising interest rates on the fair market valuation of our securities portfolio.

-

In March 2018, Cadence paid a $0.125 per common share dividend totaling $10.5 million.  

-

The year-over-year increase in shareholders’ equity includes $155.6 million in net proceeds from our April 2017 initial public offering that was added to tangible common equity during the second quarter of 2017.  This offering resulted in increasing average diluted shares to 84.7 million for the first quarter of 2018, as compared to 75.7 million and 84.7 million in the first quarter of 2017 and fourth quarter of 2017, respectively.  

-

In November 2017 and February 2018, Cadence completed secondary offerings whereby its controlling stockholder, Cadence Bancorp LLC, sold 10,925,000 and 9,200,000 Cadence Bancorporation shares, respectively, reducing its ownership in Cadence to 76.6% and 65.6%, respectively.  All proceeds from these transactions were received by Cadence Bancorp LLC and did not impact Cadence Bancorporation’s equity or outstanding shares.

-

Annualized net-charge offs as a percent of average loans for the quarter ended March 31, 2018 were $0.4 million, or 0.02%, compared to $4.4 million, or 0.06%, for the full year of 2017.  

-

NPAs totaled $72.7 million, or 0.8%, of total loans, OREO and other NPAs as of March 31, 2018, compared to $70.7 million, or 0.9%, as of December 31, 2017, and down from $171.0 million, or 2.3%, as of March 31, 2017.

-

Of the $37.3 million in energy nonperforming loans included in total NPAs as of March 31, 2018, 85% were paying in accordance with contractual terms.

-

The allowance for credit losses (“ACL”) was $91.5 million, or 1.06% of total loans, as of December 31, 2017, as compared to $87.6 million, or 1.06% of total loans, as of December 31, 2017 and $88.3 million, or 1.17% of total loans, as of March 31, 2017.  The year-over-year decline in the ACL as a percentage of total loans resulted primarily from the reduction in non-performing loans and related valuation reserves (largely from the energy portfolio) and improved environmental factors in the energy sector over the past year.  

-

Our fully tax-equivalent net interest margin (“NIM”) for the first quarter of 2018 was 3.64% as compared to 3.59% for the fourth quarter of 2017 and 3.46% for the first quarter of 2017.  The increases in NIM are primarily a result of our asset sensitive balance sheet and earning asset yields increasing more significantly than our funding costs in the recent rising rate environment.  Our NIM excluding recovery accretion for acquired-impaired loans was 3.62%, 3.48% and 3.43% for the first quarter of 2018, fourth quarter of 2017 and first quarter of 2017 respectively.

-

Earning asset yields for the first quarter of 2018 were 4.51%, up 10 basis points from 4.41% in the fourth quarter of 2017, and up 38 basis points from 4.13% in the first quarter of 2017, driven by increases in loan yields.  

o

Over 72% of our loan portfolio is floating rate and has benefited from the short-term rate increases during the periods.  

o

Yield on loans, excluding acquired-impaired loans, increased meaningfully to 4.81% for the first quarter of 2018, as compared to 4.47% and 4.14% for the fourth quarter of 2017 and first quarter of 2017, respectively.

o

Total accretion for acquired-impaired loans was $5.6 million in the first quarter of 2018, down $2.5 million from the fourth quarter of 2017 and down $1.3 million from the first quarter of 2017.  The declines in accretion were due to recovery timing.  Recovery accretion was $0.4 million, $2.8 million and $0.6 million for the first quarter of 2018, fourth quarter of 2017 and first quarter of 2017, respectively.  

o

Total loan yields increased to 4.94% for the first quarter of 2018 versus 4.72% for the fourth quarter of 2017 and 4.34% for the first quarter of 2017.  

o

The impact of the lower tax rate in the first quarter of 2018 on the tax-equivalent yield served to reduce the first quarter of 2018 NIM by (4) basis points.

-

Total cost of funds for the first quarter of 2018 was 94 basis points versus 89 basis points in the linked quarter and 71 basis points in the first quarter of 2017.  

o

Total cost of deposits for the first quarter of 2018 was 75 basis points versus 69 basis points in the linked quarter and 49 basis points in the first quarter of 2017.  

-

Total service fees and revenue for the first quarter of 2018 were $23.9 million, an increase of $1.5 million, or 6.7%, from the fourth quarter of 2017, and an increase of $1.4 million, or 6.3%, from the same period of 2017.  The first quarter of 2018 increases compared to the linked quarter were driven throughout various fee categories due to broad based business growth, notably in trust services, service charges on deposit accounts, credit related fees and insurance revenue.  Mortgage banking revenue declined slightly due to the rate environment and overall seasonality.  Compared to the prior year’s quarter, increases were also broad-based, with notable increases in credit-related fees and investment advisory revenue, and softer mortgage banking revenue.  

-

Total other noninterest income for the first quarter of 2018 was $1.1 million, a decrease of $2.2 million from the fourth quarter of 2017, and a decrease of $0.5 million from the same period of 2017.  The decline from linked quarter was largely a result of the $1.6 million gain on sale of a loan in the fourth quarter of 2017.  

-

Consulting and professional fees in the first quarter of 2018 included $0.9 million in expenses specific to the February 2018 secondary offering.

-

Legal expense for the first quarter of 2018 included $2.2 million in legal costs associated with litigation related to a pre-acquisition matter of a legacy acquired bank.  This matter was resolved in the first quarter of 2018 and is not expected to result in any future expenses.

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Replay Access Code: 

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End Date:

May 10, 2018

As of and for the Three Months Ended

(In thousands, except per share data)

March 31,

2018

December 31,

2017

September 30,

2017

June 30,

2017

March 31,

2017

Statement of Operations Data:

Interest income

$

113,093

$

108,370

$

99,503

$

99,375

$

89,619

Interest expense

21,982

20,459

18,340

16,991

14,861

Net interest income

91,111

87,911

81,163

82,384

74,758

Provision for credit losses

4,380

(4,475

)

1,723

6,701

5,786

Net interest income after provision

86,731

92,386

79,440

75,683

68,972

Noninterest income  - service fees and revenue

23,904

22,405

23,014

22,144

22,489

- other noninterest income

1,079

3,251

4,110

845

1,616

Noninterest expense

61,939

66,371

56,530

56,134

54,321

Income before income taxes

49,775

51,671

50,034

42,538

38,756

Income tax expense

10,950

36,980

17,457

13,570

12,639

Net income

$

38,825

$

14,691

$

32,577

$

28,968

$

26,117

Period-End Balance Sheet Data:

Investment securities

$

1,251,834

$

1,262,948

$

1,198,032

$

1,079,935

$

1,116,280

Total loans, net of unearned income

8,646,987

8,253,427

8,028,938

7,716,621

7,561,472

Allowance for credit losses

91,537

87,576

94,765

93,215

88,304

Total assets

10,999,382

10,948,926

10,502,261

9,811,557

9,720,937

Total deposits

9,048,971

9,011,515

8,501,102

7,930,383

7,841,710

Noninterest-bearing deposits

2,040,977

2,242,765

2,071,594

1,857,809

1,871,514

Interest-bearing deposits

7,007,994

6,768,750

6,429,508

6,072,574

5,970,196

Borrowings and subordinated debentures

471,335

470,814

572,683

499,266

682,568

Total shareholders’ equity

1,357,103

1,359,056

1,340,848

1,304,054

1,105,976

Average Balance Sheet Data:

Investment securities

$

1,234,226

$

1,228,330

$

1,169,182

$

1,099,307

$

1,125,174

Total loans, net of unearned income

8,443,951

8,226,294

7,867,794

7,650,048

7,551,173

Allowance for credit losses

89,097

94,968

94,706

90,366

82,258

Total assets

10,922,274

10,586,245

10,024,871

9,786,355

9,670,593

Total deposits

9,012,390

8,635,473

8,139,969

7,940,421

8,025,068

Noninterest-bearing deposits

2,128,595

2,170,758

1,982,784

1,845,447

1,857,657

Interest-bearing deposits

6,883,795

6,464,715

6,157,185

6,094,974

6,167,411

Borrowings and subordinated debentures

444,557

502,428

484,798

510,373

474,976

Total shareholders’ equity

1,342,445

1,348,867

1,320,884

1,251,217

1,090,905

As of and for the Three Months Ended

(In thousands, except per share data)

March 31,

2018

December 31,

2017

September 30,

2017

June 30,

2017

March 31,

2017

Per Share Data:⁽³⁾

Earnings

Basic

$

0.46

$

0.18

$

0.39

$

0.35

$

0.35

Diluted

0.46

0.17

0.39

0.35

0.35

Book value per common share

16.23

16.25

16.03

15.59

14.75

Tangible book value ⁽¹⁾

12.32

12.33

12.10

11.64

10.33

Weighted average common shares outstanding

Basic

83,625,000

83,625,000

83,625,000

81,918,956

75,000,000

Diluted

84,674,807

84,717,005

83,955,685

81,951,795

75,672,750

Cash dividends declared

$

0.125

$

—

$

—

$

—

$

—

Dividend payout ratio

27.17

%

—

%

—

%

—

%

—

%

Performance Ratios:

Return on average common equity ⁽²⁾

11.73

%

4.32

%

9.78

%

9.29

%

9.71

%

Return on average tangible common equity ^{(1) (2)}

15.52

5.71

13.04

12.63

13.96

Return on average assets ⁽²⁾

1.44

0.55

1.29

1.19

1.10

Net interest margin ⁽²⁾

3.64

3.59

3.52

3.71

3.46

Efficiency ratio ⁽¹⁾

53.35

58.44

52.20

53.27

54.95

Asset Quality Ratios:

Total nonperforming assets ("NPAs") to total loans and OREO and other NPAs

0.84

%

0.85

%

1.51

%

1.82

%

2.25

%

Total nonperforming loans to total loans

0.60

0.58

0.96

1.36

1.77

Total ACL to total loans

1.06

1.06

1.18

1.21

1.17

ACL to total nonperforming loans ("NPLs")

175.30

183.62

122.66

88.81

65.80

Net charge-offs to average loans ⁽²⁾

0.02

0.13

0.01

0.09

(0.01

)

Capital Ratios:

Total shareholders’ equity to assets

12.34

%

12.41

%

12.77

%

13.29

%

11.38

%

Tangible common equity to tangible assets ⁽¹⁾

9.65

9.71

9.95

10.27

8.25

Common equity tier 1 (CET1)

10.42

10.57

10.79

10.92

8.99

Tier 1 leverage capital

10.57

10.68

11.12

11.00

9.10

Tier 1 risk-based capital

10.79

10.94

11.17

11.31

9.36

Total risk-based capital

12.63

12.81

13.18

13.41

11.43

_____________________

(1) - Considered a non-GAAP financial measure. See Table 7 "Reconciliation of Non-GAAP Financial Measures" for a reconciliation of our non-GAAP

        measures to the most directly comparable GAAP financial measure.

(2) - Annualized.

(3) - As of the completion of a secondary offering on February 13, 2018, 54,875,000 of our outstanding shares are owned by our parent-holding company

        Cadence Bancorp LLC.

For the Three Months Ended March 31,

2018

2017

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 and ANCI loans

$

8,189,448

$

97,168

4.81

%

$

7,234,671

$

73,869

4.14

%

ACI portfolio

254,503

5,623

8.96

316,502

6,941

8.89

Total loans

8,443,951

102,791

4.94

7,551,173

80,810

4.34

Investment securities

    Taxable

827,227

5,118

2.51

722,465

4,301

2.41

Tax-exempt⁽²⁾

406,999

4,134

4.12

402,709

5,252

5.29

Total investment securities

1,234,226

9,252

3.04

1,125,174

9,553

3.44

Federal funds sold and short-term investments

515,017

1,529

1.20

264,355

425

0.65

Other investments

48,986

389

3.22

48,047

669

5.65

Total interest-earning assets

10,242,180

113,961

4.51

8,988,749

91,457

4.13

Noninterest-earning assets:

Cash and due from banks

92,878

53,450

Premises and equipment

62,973

66,298

Accrued interest and other assets

613,341

644,354

   Allowance for credit losses

(89,097

)

(82,258

)

Total assets

$

10,922,275

$

9,670,593

LIABILITIES AND STOCKHOLDERS' EQUITY

Interest-bearing liabilities:

Demand deposits

$

4,795,114

$

9,025

0.76

%

$

4,455,742

$

5,531

0.50

%

Savings deposits

179,662

114

0.26

182,247

112

0.25

Time deposits

1,909,019

7,491

1.59

1,529,422

4,122

1.09

Total interest-bearing deposits

6,883,795

16,630

0.98

6,167,411

9,765

0.64

Other borrowings

309,323

2,956

3.88

340,470

2,802

3.34

Subordinated debentures

135,233

2,396

7.19

134,506

2,294

6.92

Total interest-bearing liabilities

7,328,351

21,982

1.22

6,642,387

14,861

0.91

Noninterest-bearing liabilities:

Demand deposits

2,128,595

1,857,657

Accrued interest and other liabilities

122,884

79,644

Total liabilities

9,579,830

8,579,688

Stockholders' equity

1,342,445

1,090,905

Total liabilities and stockholders' equity

$

10,922,275

$

9,670,593

Net interest income/net interest spread

91,979

3.29

%

76,596

3.22

%

Net yield on earning assets/net interest margin

3.64

%

3.46

%

Taxable equivalent adjustment:

Investment securities

(868

)

(1,838

)

Net interest income

$

91,111

$

74,758

_____________________

(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 a tax rate of 21% for the three months ended March 31, 2018,

     and using a tax rate of 35% for the three months ended March 31, 2017.

For the Three Months Ended

March 31, 2018

For the Three Months Ended

December 31, 2017

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 and ANCI loans

$

8,189,448

$

97,168

4.81

%

$

7,961,692

$

89,762

4.47

%

ACI portfolio

254,503

5,623

8.96

264,602

8,145

12.21

Total loans

8,443,951

102,791

4.94

8,226,294

97,907

4.72

Investment securities

    Taxable

827,227

5,118

2.51

817,971

5,000

2.43

Tax-exempt⁽²⁾

406,999

4,134

4.12

410,359

5,047

4.88

Total investment securities

1,234,226

9,252

3.04

1,228,330

10,047

3.25

Federal funds sold and short-term investments

515,017

1,529

1.20

409,317

1,151

1.12

Other investments

48,986

389

3.22

51,318

1,030

7.96

Total interest-earning assets

10,242,180

113,961

4.51

9,915,259

110,135

4.41

Noninterest-earning assets:

Cash and due from banks

92,878

66,849

Premises and equipment

62,973

64,730

Accrued interest and other assets

613,341

634,375

   Allowance for credit losses

(89,097

)

(94,968

)

Total assets

$

10,922,275

$

10,586,245

LIABILITIES AND STOCKHOLDERS' EQUITY

Interest-bearing liabilities:

Demand deposits

$

4,795,114

$

9,025

0.76

%

$

4,424,371

$

7,844

0.70

%

Savings deposits

179,662

114

0.26

177,413

112

0.25

Time deposits

1,909,019

7,491

1.59

1,862,931

7,129

1.52

Total interest-bearing deposits

6,883,795

16,630

0.98

6,464,715

15,085

0.93

Other borrowings

309,323

2,956

3.88

367,373

3,021

3.26

Subordinated debentures

135,233

2,396

7.19

135,055

2,353

6.91

Total interest-bearing liabilities

7,328,351

21,982

1.22

6,967,143

20,459

1.17

Noninterest-bearing liabilities:

Demand deposits

2,128,595

2,170,758

Accrued interest and other liabilities

122,884

99,477

Total liabilities

9,579,830

9,237,378

Stockholders' equity

1,342,445

1,348,867

Total liabilities and stockholders' equity

$

10,922,275

$

10,586,245

Net interest income/net interest spread

91,979

3.29

%

89,676

3.24

%

Net yield on earning assets/net interest margin

3.64

%

3.59

%

Taxable equivalent adjustment:

Investment securities

(868

)