Cadence Bank

Good morning and welcome to the Cadence Bank fourth quarter 2022 webcast and conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw from the question queue, you may press star then two. Please note, this event is being recorded. I would now like to turn the conference over to Will Sassaker-Lee, Director of Finance. Please go ahead.

Good morning. Thank you for joining the Cadence Bank fourth quarter 2022 earnings conference call. We have our executive management team here with us this morning, Dan, Paul, Chris, Valerie, and Hank. Our speakers will be referring to prepared slides during the discussion. You can find the slides by going to our investor relations page at rr.cadencebank.com, where you'll find them on the link to our webcast. or you can view them at the exhibit today that we filed yesterday afternoon. These slides are also in the presentation section of our investor relations website. I would remind you that the presentation, along with our earnings release, contain our customary disclosures around forward-looking statements and any non-GAAP metrics that may be discussed. These disclosures regarding forward-looking statements contained in those documents apply to our presentation today. And now I'll turn to Dan Rollins for his opening comments.

2022 marked a year of tremendous change, progress, and success for our company, highlighted by the fourth quarter completion of our rebranding across our footprint and the related systems integration. The results of our business development efforts will be discussed this morning will validate the unity, optimism, and excitement shared by our teammates as we are now operating under one name and brand. As we look at our annual and fourth quarter 2022 financial results, The storylines and key highlights are very similar for both the quarter and the full year, so I'd like to make a few comments about both of those. We reported adjusted net income for the fourth quarter of $142.9 million, or 78 cents per common share, which resulted in annual adjusted net income of $542 million, or $2.94 per common share. Adjusted PPNR was 195.5 million or 1.62% of average assets for the fourth quarter. We continue to benefit from a strong pipeline, which is reflected in net loan growth of 1.1 billion or 14% annualized for the fourth quarter and 3.5 billion or 13% for the full year. Our fourth quarter results were, again, very diverse from a product and geographic standpoint. We had six of the seven regions within our company report net growth for the quarter, and our corporate banking team had another outstanding quarter. We also continue to see favorable results from many of our specialized industry verticals, along with our mortgage team. Total deposits were flat for the fourth quarter and down $860 million, or 2.2%, for the year. While we, like many of our peers, have seen a decline in average account balances and a shift towards interest-bearing products, our bankers remain focused on preserving and growing core deposit relationships. We continue to evaluate and tweak our product offerings and our posted rate structure in an effort to ensure our relationship managers have the tools necessary to compete in this highly competitive environment. The rate environment, combined with the balance sheet dynamics that we just discussed, resulted in continued improvement in our net interest margin. Our fourth quarter margin improved five basis points linked quarter and our margin for the full year was 315, up almost 20 basis points compared to the prior year. Valerie will discuss the margin components in just a few more minutes. Credit quality continues to be a positive story. Let me start that again. Our fourth quarter provision of $6 million was necessary to support continued loan growth. We reported net recoveries for both the fourth quarter and the full year. We have now reported net recoveries six out of the previous seven quarters. Our non-performing assets also declined 8% for the quarter and 38% for the full year and now stand at 24 basis points on total assets at year end, which is very low by any standard. We will continue to monitor credit quality very closely as we move into 2023, but as of today, we simply aren't seeing any areas of significant weakness. We continue to improve our operating efficiency. Our fourth quarter adjusted efficiency ratio of 58.7 marks our fifth consecutive quarter of improvement in this metric. As we move into 2023, while there are some headwinds that Valerie will mention in a moment, continuing this improvement is a key strategic focus for our team. Finally, I'd like to briefly touch on capital. We repurchased 6.1 million shares of our 2022 share repurchase authorization during the first half of 2022. Recently, our board approved an authorization of 10 million shares for 2023. While we currently remain on pause with our repurchase activity, we are pleased to have this authorization in our toolkit and will continue to monitor both the economic environment as well as our capital position as we move forward this year. Valerie, I'll give it to you.