UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2021

or

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from              to             

Commission File Number: 001-38058

Cadence Bancorporation

(Exact name of registrant as specified in its charter)

Delaware	47-1329858
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

2800 Post Oak Boulevard, Suite 3800

Houston, Texas 77056

(Address of principal executive offices) (Zip Code)

(713) 871-4000

(Registrant’s telephone number, including area code)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    ☒  Yes    ☐  No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    ☒  Yes    ☐  No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

☒	Large accelerated filer	☐	Accelerated filer
☐	Non-accelerated filer	☐	Smaller reporting company
		☐	Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.    ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    ☐  Yes    ☒  No

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol	Name of each exchange on which registered
Class A Common Stock	CADE	New York Stock Exchange

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Class A Common Stock, $0.01 Par Value	124,777,857
Class	Outstanding as of August 5, 2021

Cadence Bancorporation

FORM 10-Q

For the Quarter Ended June 30, 2021

INDEX

PART I: FINANCIAL INFORMATION		3
ITEM 1.	FINANCIAL STATEMENTS (UNAUDITED)	3
	Consolidated Balance Sheets as of June 30, 2021 and December 31, 2020 (Audited)	3
	Consolidated Statements of Operations for the three and six months ended June 30, 2021 and 2020	4
	Consolidated Statements of Comprehensive Income (Loss) for the three and six months ended June 30, 2021 and 2020	5
	Consolidated Statements of Changes in Shareholders’ Equity for the three and six months ended June 30, 2021 and 2020	6
	Condensed Consolidated Statements of Cash Flows for the three and six months ended June 30, 2021 and 2020	7
	Notes to Consolidated Financial Statements	8
ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	35
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	73
ITEM 4.	CONTROLS AND PROCEDURES	77
PART II: OTHER INFORMATION		78
ITEM 1.	LEGAL PROCEEDINGS	78
ITEM 1A.	RISK FACTORS	78
ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	82
ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	82
ITEM 4.	MINE SAFETY DISCLOSURES	83
ITEM 5.	OTHER INFORMATION	83
ITEM 6.	EXHIBITS	83

2

PART I: FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)

CADENCE BANCORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

	June 30, 2021			December 31, 2020
(In thousands, except share and per share data)				(Audited)
ASSETS
Cash and due from banks	$	233,534		$	283,261
Interest-bearing deposits with banks		1,861,886			1,768,847
Federal funds sold		4,679			1,838
Total cash and cash equivalents		2,100,099			2,053,946
Investment securities available-for-sale, amortized cost of $4,245,206 and allowance for credit losses of zero at June 30, 2021 and amortized cost of $3,249,067 and allowance for credit losses of zero at December 31, 2020		4,277,448			3,332,168
FRB and FHLB stock		69,886			76,552
Loans held for sale		35,209			47,018
Loans, net of unearned income		11,634,502			12,719,129
Less: allowance for credit losses		(247,732	)		(367,160	)
Net loans		11,386,770			12,351,969
Premises and equipment, net		124,643			123,630
Cash surrender value of life insurance		187,182			187,626
Net deferred tax asset		49,867			63,699
Goodwill		43,061			43,061
Other intangible assets, net		73,959			83,780
Other assets		344,499			349,118
Total assets	$	18,692,623		$	18,712,567
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Noninterest-bearing deposits	$	5,670,234		$	5,033,748
Interest-bearing deposits		10,313,574			11,018,497
Total deposits		15,983,808			16,052,245
Federal Home Loan Bank advances		100,000			100,000
Senior debt		—			49,986
Subordinated debt		143,659			183,344
Junior subordinated debentures		37,752			37,637
Notes payable		1,277			1,702
Other liabilities		223,389			166,551
Total liabilities		16,489,885			16,591,465
Shareholders' equity:
Common stock, $0.01 par value, authorized 300,000,000 shares; 133,562,513 shares issued and 124,752,738 shares outstanding at June 30, 2021 and 133,214,844 shares issued and 125,978,561 shares outstanding at December 31, 2020		1,336			1,332
Additional paid-in capital		1,886,209			1,880,930
Treasury stock, at cost; 8,809,775 shares and 7,236,283 shares, respectively		(160,884	)		(130,889	)
Retained earnings		429,044			259,643
Accumulated other comprehensive income		47,033			110,086
Total shareholders' equity		2,202,738			2,121,102
Total liabilities and shareholders' equity	$	18,692,623		$	18,712,567

See notes to consolidated financial statements.

3

CADENCE BANCORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

	Three Months Ended June 30,						Six Months Ended June 30,
(In thousands, except share and per share data)	2021			2020			2021			2020
INTEREST INCOME
Interest and fees on loans	$	131,278		$	162,854		$	271,102		$	337,988
Interest and dividends on securities:
Taxable		13,551			12,207			25,372			26,222
Tax-exempt		2,088			1,539			4,124			2,966
Other interest income		1,112			575			2,133			2,753
Total interest income		148,029			177,175			302,731			369,929
INTEREST EXPENSE
Interest on time deposits		3,007			10,451			7,284			23,195
Interest on other deposits		3,036			7,690			6,740			29,674
Interest on borrowed funds		3,445			4,320			7,417			8,878
Total interest expense		9,488			22,461			21,441			61,747
Net interest income		138,541			154,714			281,290			308,182
Provision (release) for credit losses		(51,876	)		158,811			(100,138	)		242,240
Net interest income after provision (release) for credit losses		190,417			(4,097	)		381,428			65,942
NONINTEREST INCOME
Investment advisory revenue		8,222			6,505			15,830			12,111
Trust services revenue		4,888			4,092			10,397			8,908
Credit related fees		5,477			4,401			9,327			10,384
Service charges on deposit accounts		7,228			4,852			13,633			11,268
Mortgage banking income		1,587			2,020			3,702			3,131
Bankcard fees		1,919			1,716			3,672			3,674
Payroll processing revenue		1,258			1,143			2,749			2,510
SBA income		5,810			1,335			9,777			3,243
Other service fees		1,963			1,528			4,172			3,440
Securities gains, net		11			2,286			2,270			5,280
Other income		8,111			72			14,640			1,070
Total noninterest income		46,474			29,950			90,169			65,019
NONINTEREST EXPENSE
Salaries and employee benefits		58,619			47,158			115,689			95,965
Premises and equipment		10,709			10,634			21,084			21,443
Merger related expenses		6,267			—			6,267			1,281
Goodwill impairment		—			—			—			443,695
Intangible asset amortization		4,836			5,472			9,821			11,065
Other expense		25,635			25,356			51,027			52,824
Total noninterest expense		106,066			88,620			203,888			626,273
Income (loss) before income taxes		130,825			(62,767	)		267,709			(495,312	)
Income tax expense (benefit)		29,516			(6,653	)		59,975			(39,887	)
Net income (loss)	$	101,309		$	(56,114	)	$	207,734		$	(455,425	)
Weighted average common shares outstanding (Basic)		124,732,617			125,924,652			124,904,976			126,277,549
Weighted average common shares outstanding (Diluted)		125,548,794			125,924,652			125,584,194			126,277,549
Earnings (loss) per common share (Basic)	$	0.81		$	(0.45	)	$	1.65		$	(3.61	)
Earnings (loss) per common share (Diluted)	$	0.80		$	(0.45	)	$	1.64		$	(3.61	)

See notes to consolidated financial statements.

4

CADENCE BANCORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

	Three Months Ended June 30,					Six Months Ended June 30,
(In thousands)	2021		2020			2021			2020
Net income (loss)	$	101,309	$	(56,114	)	$	207,734		$	(455,425	)
Other comprehensive income (loss), net of tax:
Unrealized gains (losses) on securities available-for-sale:
Net unrealized gains (losses), net of income taxes of $9,209, $1,502, ($11,433), and $16,651		29,925		4,832			(37,156	)		52,957